2007 Revised Rules in the Availment of Income Tax Holiday

(1) March 1, 2007

BOARD OF INVESTMENTS

REVISED RULES AND REGULATIONS IN THE AVAILMENT OF INCOME TAX HOLIDAY

The following Rules and Regulations are hereby promulgated to govern the availment of Income Tax Holiday (ITH) incentive. RULE I General Principles SECTION 1. Legal Basis for the Grant of ITH. — Article 39 (a) of E.O. 226, as amended by R.A. 7918, provides that for six (6) years from commercial operation for pioneer firms and four (4) years for non-pioneer firms, new registered firms shall be fully exempt from income taxes levied by the National Government. It also provides that for a period of three (3) years from commercial operation, registered expanding and modernizing firms shall be entitled to an exemption from income taxes levied by the National Government proportionate to their expansion under such terms and conditions as the Board of Investments (BOI) may determine. Provided, however, that during the period within which this incentive is availed of by the registered firm, it shall not be entitled to additional deduction for incremental labor expense. SECTION 2. Legal Basis for the Forfeiture of ITH. — Article 7 of E.O. 226 states that the Board of Investments (BOI) shall be responsible for the regulation and promotion of investments in the Philippines. As such, the BOI is empowered to process and approve applications for registration with the Board, imposing such terms and conditions as it may deem necessary to promote the objectives of this Code, and to cancel the registration or suspend the enjoyment of incentives benefits of any registered enterprise and/or require refund of incentives including interests and Copyright 2016

CD Technologies Asia, Inc. and Accesslaw, Inc.

Philippine Taxation Encyclopedia 2015

1

monetary penalties for violation of any provision of the Code, of the rules and regulations issued pursuant thereto, of the terms and conditions of registration, or of laws for the protection of labor or of the consuming public. aITECD

RULE II Definition of Terms SECTION 1. Definitions. — As used in these rules and regulations, the following terms shall be construed to mean:

Copyright 2016

a.

Registered Enterprise — shall mean any individual, partnership, cooperative, corporation or other entity incorporated and/or organized and existing under Philippines laws and registered with the Board in accordance with Book I of E.O. 226; Provided, however, That the term "registered enterprise" shall not include commercial banks, savings and mortgage banks, rural banks, savings and loan associations, building and loan associations, development banks, trust companies, investment banks, finance companies, brokers and dealers in securities, consumer's cooperatives and credit unions, and other business organizations whose principal purpose or principal source of income is to receive deposits, lend or borrow money, buy and sell or otherwise deal, trade or invest in common or preferred shares of stocks, debentures, bonds or other marketable instruments generally recognized as securities; or discharge of fiduciary functions.

b.

Pioneer Enterprise — shall mean a registered enterprise whose status of registration is reflected as such in its BOI Certificate of Registration and (1) engaged in the manufacture, processing or production, and not merely in the assembly or packaging of goods, products, commodities or raw materials that have not been or are not being produced in the Philippines on a commercial scale or (2) which uses a design, formula, scheme, method, process or system of production or transformation of any element, substance or raw materials into another raw material or finished goods which is new and untried in the Philippines or (3) engaged in the pursuit of agricultural, forestry and mining activities and/or services including the industrial aspects of food processing whenever appropriate, pre-determined by the Board, in consultation with the appropriate Department, to be feasible and highly essential to the attainments of the national goal in relation to the declared specific



2

national food and agricultural program for self sufficiency and other social benefits of the project or (4) which produces non-conventional fuels or manufactures equipment which utilize non-conventional fuels or sources of energy or uses or converts to coal or other non-conventional fuels or sources of energy in its production, manufacturing or processing operations: Provided, That the foregoing definitions shall not in any way limit the rights and incentives granted to less-developed-area enterprises provided under Title V, Book I of E.O. 226. DacTEH

Copyright 2016

c.

Non-pioneer Enterprise — shall include all registered producer enterprises other than pioneer enterprises whose status of registration are classified as such in their BOI Certificate of Registration.

d.

New Firm — shall mean a BOI registered newly formed/incorporated enterprise or any firm classified as such in its BOI Certificate of Registration.

e.

Expanding firm — shall mean a BOI-registered firm involved in an activity that results in an increase of its existing volume or value of production and classified as such in its BOI Certificate of Registration.

f.

Modernizing Firm — shall mean a BOI-registered firm involved in retrofitting or upgrading of existing facilities to attain optimum capacities, better product quality and improved operating efficiencies and classified as such in its BOI Certificate of Registration.

g.

Income — refers to income earned by enterprises engaged in activities duly registered with the BOI.

h.

Taxable Income — refers to taxable income derived from the activities of firms duly registered with the BOI.

i.

Date of Commercial Operation — shall mean the date of scheduled start of commercial operation which is indicated in the firm's specific registration terms and conditions.

j.

Date of Official Filing — shall mean the date stamped on the application by the BOI's Record Section as recorded in its Record/Log Book for applications for incentives.



3

RULE III Rules in the Availment of Income Tax Holiday SECTION 1. Period of Availment. — In accordance with Rule VI of the Rules and Regulations to Implement E.O. 226, new, expanding modernizing projects duly registered with BOI may avail of the ITH incentive. Period of availment shall be as follows: IDTHcA

1.

New registered pioneer firms — 6 years from commercial operations.

2.

Registered projects locating in Less Developed Areas (LDA) — 6 years from commercial operation regardless of status (pioneer or non-pioneer) or type of project (new or expansion).

3.

New registered non-pioneer firms — 4 years from commercial operations.

4.

Expanding firms — 3 years from commercial operations of the expansion.

5.

Modernizing firms — 3 years from commercial operations of the modernization.

SECTION 2. Criteria for Additional Period for Availment. — For new registered enterprises, the ITH incentive may be extended for an extra year for each of the following cases, but in no case to exceed the total period of eight (8) years for pioneer registered enterprises:

Copyright 2016

1.

If the ratio of the total imported and domestic capital equipment to the number of workers for the project does not exceed US$10,000 to one (1) worker.

2.

If the average cost of indigenous raw materials used in the manufacture of the registered product is at least fifty (50%) percent of the total cost of raw materials for the preceding years prior to the extension unless the Board (BOI) prescribes a higher percentage.

3.

If the net foreign exchange savings or earnings amount to at least US$500,000.00 annually during the first three (3) years of operation to be determined by the Board (BOI) at the end of such three-year period:



4

Provided, That the foreign exchange savings criterion shall apply as a general rule, to registered firms whose products are totally imported into the country at the time of registration and duly indicated as imports substituting in the firm's certificate of registration. SCEDaT

For purposes of availment of the bonus year/s, the registered firm shall file a letter-request to the Board (BOI) applying for the additional period and shall submit proof/s of compliance of the criterion/a above-indicated. SECTION 3. Who are Required to File Application. — All new and expanding enterprises registered under E.O. 226, as amended by R.A. 7918, that were issued Certificates of Entitlement by the BOI and claimed income tax exemptions in their Income Tax Returns (ITR) are required to file their applications for ITH incentive with the Board. SECTION 4. When Application should be Filed. — Applications for ITH shall be filed in the prescribed form within thirty (30) days from the date of filing of the annual ITR with the BIR or from the last day prescribed by law for the filing of the ITR, whichever comes later. For enterprises which filed tentative ITRs, the application shall filed within thirty (30) days from the filing of the final ITR or within thirty (30) days after the lapse of the three (3) year period within which to file the final ITR. SECTION 5.

Conditions for the Availment of Income Tax Holiday. —

1.

In general, new, expanding and modernizing enterprises registered under E.O. 226, as amended by R.A. 7918, are entitled to ITH incentives unless expressly withheld from the firm under the terms and conditions of its registration with the BOI.

2.

In accordance with the locational restriction policy of the Board, only firms located outside the National Capital Region (NCR) are entitled to ITH. Exemption from the locational restriction however may be given to the following: a.

Copyright 2016

Projects locating in the following government industrial estates declared as such by national law or by presidential proclamation



5

prior to 1 January 1989: •

Dagat-Dagatan (P.D. 569 dated 30 Oct. 1974)

•

Vitas Industrial Estate, Tondo (E.O. 1086 dated 31 January 1986, as amended/expanded through Presidential Proclamation No. 39 dated 9 September 1992 and Proclamation No. 465 dated 1 August 1994) (Vitas Industrial Estate/Smokey Mountain)

•

Bagong Silang Industrial Estate, Caloocan (Presidential Proc. No. 843 dated 26 July 1971)

•

FTI, Taguig (LOI 900 dated 25 July 1979)

•

Navotas Fishing Port Complex (E.O. 772 dated 8 Feb. 1982)

City

b.

Projects that will engage in service-type activities.

c.

Export-oriented projects; and

d.

Other projects listed in the IPP as exempt from locational restriction.

SECTION 6. Rate of Exemption. — New enterprises shall be entitled to 100% income tax exemption on their income derived from their registered operation. acIASE

a. New firms shall be entitled to 100% income tax exemption on their income derived from their registered operation. b. Expanding firms shall be entitled to the income tax holiday incentive only to the extent of their actual increase in production. The rate of exemption from income tax shall be computed as follows: Rate of Exemption

Incremental Sales of the Registered Product/Activity = ––––––––––––––––––––––––––––––––––––––– Total Sales of the Registered Product/Activity

The term "sales" as indicated in the above formula shall be expressed in volume in cases of homogeneous products and value in case of heterogeneous Copyright 2016



6

products. 1.

Homogeneous products shall refer to products of the same kind or category using a common unit of measurement.

2.

Heterogeneous products shall refer to products of different kinds and characteristics as well as those of the same kind but with various categories using different units of measurement. aETDIc

c. For projects without increase in capacity, the ITH rate of exemption shall be computed as follows: 1.

for single product/activity New Investment (in US$) Rate of Exemption (ROE) = –––––––––––––––––––x 100 Total Investments (existing + new) relative to the concerned plant (in US$)

2.

for multiple products/activities or when ITH entitlement of other products/activities has lapsed

% Share to Total Sales

=

Sales of the Product subject of retooling –––––––––––––––––––x 100 Total Sales

New Investment (in US$) Rate of Exemption (ROE) = ––––––––––––––––––– x 100 Total Investments (existing + new) relative to the concerned plant (in US$) Where:

Copyright 2016

•

The ROE shall be fixed for the ITH entitlement period.

•

The exchange rate shall be the existing rate at the time of actual investment.



7

•

For purposes of determining existing investments, the Total Fixed Assets relative to the concerned plant including the land on which the project is situated shall be based on the latest audited financial statements at the time of application for registration. IHCacT

•

The % share in Total Sales shall be based on actual sales value for the year of availment.

d. The rate of exemption of those with less than a year availment including for those with multiple registrations with the same product/activity where the period of entitlement to ITH of one registration expires within the availment year and for those whose operation ceased during the last year of availment shall be based on audited segregated income statement subject to the condition that registered enterprises availing of ITH for less-than-a-year shall be required to submit certified true copies of the quarterly corporate income tax returns preceding the period covered by ITH. SECTION 7. Penalty Provision. — All applications for ITH covering the taxable year 2006 onwards, which are filed beyond the prescribed period provided in Section 4, Rule III hereof shall be meted a penalty to be computed as follows: a.

Within the 31st and 180th day from the date of filing of the annual ITR with the BIR or from the last day prescribed by law for the filing of the ITR, whichever comes later — Penalty = Amount of ITH x 1% but not less than P500.00 nor more than P2Million

b.

After 6 months (180 days) from the date of filing of the annual ITR with the BIR or from the last day prescribed by law for the filing of the ITR, whichever comes later Penalty = Forfeiture of ITH for the taxable year RULE IV Procedural Steps in the Availment of ITH

SECTION 1. Copyright 2016

Documentary Requirements. — Enterprises availing of the



8

ITH incentive shall file the following documents with the Incentives Department of the BOI: ATcaID

1.

Two (2) sets of duly accomplished and notarized BOI application form.

2.

Supporting documents: a.

Certificate of Entitlement.

b.

Secretary's Certificate stating the authorized signatory of the application for ITH incentive.

c.

BOI Certificate of Registration showing ITH entitlement per terms and conditions thereof.

d.

Income Tax Return with the following:

e.

f.

Copyright 2016

•

Computation of taxable income per ITR/application in case there is no detail of the reconciling items to arrive at taxable income.

•

Gross interest income subjected to final tax for purposes of computing non-deductible interest expense.

•

Breakdown of miscellaneous income, if any.

Audited Financial Statements supported by the following schedules: •

Audited Segregated Income Statement of registered and non-registered activity certified by external auditor

•

In case of multi-registered activities, Audited Segregated Income Statement for each of the registered activity

•

Breakdown of Miscellaneous/Other/Various Income, if different in amount per ITR

•

Details of scrap sales, if any

Duly accomplished Cost Benefit Analysis Data form



9

g.

Summary of sales, in volume and value, made during the taxable year. Export sales should include values in US$ and in Pesos and the exchange rates used aIcTCS

h.

List of stockholders

i.

Statement of Management Responsibility

j.

SSS Certificate of Good Standing (if required)

k.

Compliance with other conditions for entitlement to ITH under general/specific terms and conditions of registration

l.

For Less Than A Year Availment — in addition to requirements (a) to (g)

m.

•

Audited Segregated Income Statement segregating period still entitled to ITH from period no longer entitled to ITH

•

Certified true copies of Quarterly Corporate Income Tax Returns for Period Covered by ITH

For First Time Availors — In addition to requirements (a) to (k) •

BOI Certificate of Registration with terms and conditions

•

Certificate of Registration with BIR

•

Sworn Statement as to actual start of commercial operation of registered activity to be signed by the President/Owner.

SECTION 2. Procedural Steps. — Enterprises availing of the ITH incentive shall observe the following procedural steps: 1.

The applicant enterprise shall secure a Certificate of ITH Entitlement (CE) from the BOI before filing the ITR with the BIR. HIEASa

2.

Copyright 2016

The applicant enterprise shall file the ITR with BOI-issued CE and ITH claim to the BIR. For large taxpayers filing on-line, submission of CE shall be done manually. Date of filing of ITR if done on-line shall be the



10

date of e-filing. 3.

Within thirty (30) days from the date of filing of the annual ITR with the BIR or from the last day prescribed by law for the filing of the ITR, whichever comes later, applicant enterprise shall file with the BOI duly-accomplished application form together with all the supporting documents enumerated under the preceding Section.

4.

The staff of the Incentives Department of the BOI checklists and/or pre-evaluates the application as to the applicant's eligibility and completeness of documents. Application being filed after six (6) months (180 days) from the date of filing of the annual ITR with the BIR or from the last day prescribed by law for the filing of the ITR, whichever comes later, or without the Certificate of Entitlement shall not be accepted and the BIR shall be informed of the forfeiture of the ITH incentive for the taxable year. DIcTEC

Copyright 2016

5.

Stamping shall be done by the Incentives Department (ID) of the BOI with "OK FOR ACCEPTANCE" for applications with complete documents or with "FOR PROVISIONAL ACCEPTANCE" for applications with incomplete documents that have submitted at least a basic application with ITR, CE and AFS and a notarized undertaking to submit deficiencies within fifteen (15) working days from date of provisional acceptance. Deficiencies not submitted within six (6) months (180 days) from the date of filing of the annual ITR with the BIR or from the last day prescribed by law for the filing of the ITR, whichever comes later, shall mean the forfeiture of the ITH incentive for the taxable year.

6.

The staff of the Incentives Department's Director shall issue the Order of Payment for the filing fee. The official filing of the application shall be done at the Records Section of the BOI after paying the corresponding filing fee. BOI's Record Section stamps the Date of Official Filing and the Application Number on the application and transmits it to the BOI's Incentives Department.

7.

Within one year from receipt of the application/s, the BOI shall process, review and endorse to the Assessment Service of the BIR National Office, copy furnished the concerned Revenue District Office, all applications for ITH incentive, including dockets bearing on the



11

evaluation thereof, financial statements, schedules and supporting documents attached thereto. 8.

The staff of the Incentives Department of the BOI shall evaluate the application and notify applicant of any problems/issues encountered during evaluation process. The applicant shall be given a deadline to comply with the additional requirements, if any. In the event an ITH application cannot be processed and evaluated within the prescribed one-year period due to policy and/or legal issues, the BOI shall immediately inform the BIR within one (1) month after the end of the said one-year period so as not to prejudice the duty of the latter to make an assessment within the three (3)-year period prescribed under Section 203 of the Tax Reform Act of 1997. aHcACT

Copyright 2016

9.

The staff shall prepare an evaluation report showing the firm's eligibility to avail of the ITH incentive, its rate of exemption and the actual amount of income tax exemption for approval and signature of the Incentives Department Director.

10.

The evaluation report shall be presented to the TSG Executive Director for approval and then to the Board of Governors for confirmation.

11.

The Incentives Department shall prepare an endorsement to the Assessment Service (Main Office) of the BIR signed by the BOI Executive Director and a letter of advice to the registered enterprise signed by the BOI Incentives Department Director informing them of the BOI's action on the firm's ITH application.

12.

The letter of advice to the registered enterprises shall be released to the Records Section for mailing or for pick-up by the proponent while the endorsement to the BIR including a complete set of application and evaluation report shall only be released to the Records Section of the BOI for delivery/mailing to the BIR Office after compliance with prior release requirements such as submission of reports, proof of payment of issuance fee, etc. The firm shall be furnished a copy of such endorsement.

13.

Prior to the end of the prescriptive period provided under Section 203 of R.A. No. 8424, the BIR, through the Assessment Service in the BIR National Office, shall post-audit/review the dockets bearing the ITH



12

incentive availment endorsed by the BOI. 14.

If any deficiency tax assessment arises from the post-audit/review, the Assessment Service shall transmit its findings and the corresponding dockets to the concerned RDOs who shall enforce the immediate collection thereof, including increments accruing thereon.

15.

The BIR shall defer issuance of Letter of Authority (LOA)/Letter Notice (LN)/Tax Verification Notice (TVN) to applicant enterprises whose operations are 100% registered with the BOI/BOI-ARMM, until after the completion of BOI evaluation of ITH application but not to exceed one and a half (1 1/2) years from the last day prescribed by law for the filing of the annual ITR. SCcHIE

However, for applicant enterprises, with mixed operations (i.e., registered and unregistered activities), the above deferment shall only be for one (1) year from the last day prescribed by law for the filing of the annual ITR. Applicant enterprises described above may be entitled to the above deferment, except those falling under any of the following instances: a.

Cases handled by the BIR under the Run After Tax Evader (RATE) Program;

b.

Persons under investigation as a result of verified information filed by a Tax Informer under Section 282 of the NIRC, duly processed and recorded in the BIR Official Registry Book;

c.

Cases involving claims for tax refund; and

d.

Cases in which Letter Notices (LNs) were issued, where the discrepancy in sales exceeds 30% of sales of base year or the discrepancy in purchases exceeds 30% of the purchases of the base year. RULE V Repeal/Effectivity Clause

SECTION 1. Copyright 2016

Amendment, Modification and/or Repeal. — The BOI has



13

the power and authority to amend, modify and/or repeal any of the provisions of the Rules and Regulations on the Availment of Income Tax Holiday Incentive. SECTION 2. Effectivity. — The foregoing Rules and Regulations shall take effect immediately. ScCIaA

MEMORANDUM OF AGREEMENT KNOW ALL MEN BY THESE PRESENTS: This Agreement is made and entered into by and between: The BOARD OF INVESTMENTS, with principal office at the Industry and Investments Building, 385 Sen. Gil J. Puyat Avenue, Makati City represented herein by Undersecretary Elmer C. Hernandez, hereinafter referred to as the BOI; The BOARD OF INVESTMENTS AUTONOMOUS REGION OF MUSLIM MINDANAO, with principal office at ORC Compound, Cotabato City, Maguindanao, represented herein by Chairman & Managing Head Sheryl B. Siao, hereinafter referred to as the BOI-ARMM; and The BUREAU OF INTERNAL REVENUE, with principal office at the BIR National Office Building, Agham Road, Diliman, Quezon City, represented herein by Commissioner Jose Mario C. Buñag, hereinafter referred to as the BIR; TCASIH

WITNESSETH THAT: WHEREAS, the National Internal Revenue Code of 1997 (Tax Code), as amended, mandates the BIR to administer and execute all internal revenue tax laws; WHEREAS, Section 5 (B) thereof authorizes the BIR Commissioner to obtain, on a regular basis, from any person, government agencies and instrumentalities, any information to ascertain the liability of any person for any internal revenue tax; WHEREAS, Section 203 thereof provides for a three (3)-year statute of limitations or prescriptive period for the BIR to make a deficiency tax assessment to be reckoned from the last day prescribed by law for the filing of tax return, or from Copyright 2016



14

the date of filing of the said return, whichever comes later; WHEREAS, Article 7, Chapter II of Executive Order (E.O.) No. 226, as amended, also known as the Omnibus Investments Code of 1987, provides that the BOI/BOI-ARMM shall be responsible for the regulation and promotion of investments in the Philippines. As such, it is empowered to process and approve applications for registration with the Board, imposing such terms and conditions as it may deem necessary to promote the objectives of the Code, and to cancel the registration or suspend the enjoyment of incentives benefits of any registered enterprise and/or require refund of incentives including interests and monetary penalties for violation of any provision of the Code, its implementing rules and regulations, or of the terms and conditions of the registration agreement; WHEREAS, there is a need to provide for an effective mechanism to monitor registered enterprises enjoying Income Tax Holiday (ITH) incentives under Art. 39 (a) of E.O. No. 226, as amended; WHEREAS, the parties mutually agree to assist one another in the implementation of strategies to enhance tax enforcement and collection efforts towards an efficient tax incentives system; NOW, THEREFORE, for and in consideration of the foregoing premises, the parties, through their respective representatives, and subject to the confidentiality and disclosure provisions of E.O. No. 226, as amended, and the Tax Code, as amended, do hereby agree to undertake the following: I.

The BOI/BOI-ARMM shall: 1.

Coordinate and work closely with the BIR to ensure effective monitoring of ITH availments by BOI/BOI-ARMM-registered enterprises, and provide documents, records and such other valuable information relevant to the ITH claims; CASTDI

2.

Furnish the BIR the following: a.

Copyright 2016

Within a month following the close of each semester (i.e., on or before July 31 and on or before January 31), an updated alphabetical master list of BOI/BOI-ARMM — registered enterprises entitled to ITH incentives with the following column headings:



15

•

Name of Registered Enterprise

•

TIN of Registered Enterprise

•

Registered Address

•

BOI/BOI-ARMM Registration Number

•

Date of Registration

•

Validity Period of ITH entitlement plus extension, if any

•

Start of ITH

•

Registered Activity (including registered capacity, if applicable)

•

Date of Filing of Application for ITH Availment and the Period Covered (Indicate if no application was filed) HSDaTC

Copyright 2016

•

Performance Data for the Taxable Year

•

Amount of ITH Applied

•

Amount of ITH Approved and Date of Approval

•

% of Income Tax Exemption Approved

•

Other relevant information

b.

Within thirty (30) days after issuance to the BOI/BOI-ARMM-registered enterprise, the second copy of the Certificate of ITH Entitlement (CE) stating that the said enterprise is a bonafide BOI/BOI-ARMM-registered entitled to ITH incentive;

c.

Not later than November 30 of each year, an alphabetical list of BOI/BOI-ARMM -registered enterprises that have filed applications for ITH incentives with the BOI/BOI-ARMM within six (6) months from the date of filing of the annual Income Tax Returns (ITRs) with the BIR or from the last day prescribed by law for the filing of the annual ITR, whichever comes later,



16

indicating therein the amount of the ITH incentives applied for; and d.

3.

Within thirty (30) days after the end of every month, an alphabetical list of BOI/BOI-ARMM-registered enterprises whose ITH incentives entitlements have expired during the preceding month;

Consider any of the following as grounds for forfeiture of the BOI/BOI-ARMM-registered enterprise's ITH incentives for the taxable year: a.

Failure by the BOI/BOI-ARMM-registered enterprise to secure CE from the BOI/BOI-ARMM and to attach the same in the annual ITR upon its filing with the BIR;

b.

Failure by the BOI/BOI-ARMM-registered enterprise with issued CE to apply for ITH incentive with the BOI/BOI-ARMM within six (6) months from the date of filing of the annual ITR with the BIR or from the last day prescribed by law for the filing of the annual ITR, whichever comes later; or EHSIcT

c.

4.

Failure by the BOI/BOI-ARMM-registered enterprise with and without CE to file the ITH application with the BOI/BOI-ARMM;

Process, review and endorse to the Assessment Service of the BIR National Office all applications for ITH incentive, including dockets bearing on the evaluation thereof, financial statements, schedules and supporting documents attached thereto, for taxable year 2006 and every year thereafter within one year from official receipt of the ITH applications; In the event an ITH application cannot be processed and evaluated within the prescribed one-year period due to policy and/or legal issues, the BOI/BOI-ARMM shall immediately inform the BIR within one (1) month after the end of the said one-year period so as not to prejudice the duty of the latter to make an assessment within the three (3)-year period prescribed

Copyright 2016



17

1(2) under Section 203 of the Tax Code, as amended. II.

The BIR shall: 1.

Require the BOI/BOI-ARMM-registered enterprise to attach the BOI/BOI-ARMM-issued CE upon filing of the annual ITR. In the absence thereof, the BIR shall not allow any claim for ITH incentive that is reflected in the annual ITR. For large taxpayers filing on-line, submission of CE shall be done manually until such time that the BIR's Electronic Integrated Tax System (e-ITS) facility is enhanced for this purpose;

2.

Defer issuance of Letter of Authority (LOA)/Letter Notice (LN)/Tax Verification Notice (TVN) to BOI/BOI-ARMM-registered enterprises whose operations are 100% registered with the BOI/BOI-ARMM, until after the completion of BOI/BOI-ARMM evaluation of ITH application but not to exceed one and a half (1 1/2) years from the last day prescribed by law for the filing of the annual ITR; IcCEDA

However, for BOI/BOI-ARMM-registered enterprises, with mixed operations (i.e., registered and unregistered activities), the above deferment shall only be for one (1) year from the last day prescribed by law for the filing of the annual ITR; BOI/BOI-ARMM-registered enterprises described above may be entitled to the above deferment, except those falling under any of the following instances:

Copyright 2016

a.

Cases handled by the BIR under the Run After Tax Evader (RATE) Program;

b.

Persons under investigation as a result of verified information filed by a Tax Informer under Section 282 of the NIRC, duly processed and recorded in the BIR Official Registry Book;

c.

Cases involving claims for tax refund; and

d.

Cases in which Letter Notices (LNs) were issued, where the discrepancy in sales exceeds 30% of sales of base year



18

or the discrepancy in purchases exceeds 30% of the purchases of the base year; 3.

Conduct post-audit/review of the dockets bearing on ITH incentive availment endorsed by the BOI/BOI-ARMM prior to the end of the prescriptive period provided under Section 203 of the Tax Code, as amended, through the Assessment Service in the BIR National Office; If any deficiency tax assessment arises from the review of incentive availment, the Assessment Service shall transmit its findings of discrepancy and the corresponding documents to the concerned RDOs to enforce the immediate collection thereof, including increments accruing thereon; cDCEHa

III.

4.

Conduct immediate investigation of BOI/BOI-ARMM-registered enterprises that claimed ITH incentives in their annual ITR but failed to attach the CE, failed to file or filed applications for ITH incentives with the BOI/BOI-ARMM beyond the six (6)-month period as provided in Item I (3) (b) above for purposes of enforcing collection of income taxes pertaining to forfeited ITH claims, including all increments accruing thereon;

5.

Inform the BOI/BOI-ARMM of its findings on the post audit and/or review it has conducted within thirty (30) days from the approval by the concerned BIR official;

6.

Furnish BOI/BOI-ARMM with copies of pertinent BIR regulations, rulings, other revenue issuances, and other information within thirty (30) days from issuance thereof, the latter however, is subject to the provisions of Sec. 270, in conjunction with Sec. 71 of the Tax Code, as amended; and

7.

Issue a Revenue Memorandum Circular for the effective implementation of the provisions of this Agreement.

The BOI/BOI-ARMM and BIR shall: 1.

Copyright 2016

Within thirty (30) days from signing of this Agreement, create a Working Group, with the inclusion of one representative each from the Department of Finance (DOF) and Department of Trade and Industry



19

(DTI), that shall oversee and monitor the proper implementation of the provisions of this Agreement, including the creation of a database on investment incentives for policy purposes; ACDIcS

IV.

2.

Within thirty (30) days from the creation of the Working Group, promulgate and disseminate their respective rules and regulations for the execution of the provisions of this Agreement;

3.

Undertake to promptly resolve any issue involving discrepancies in exchanged data/information; and

4.

Carry out information campaign of the contents of this Agreement through letters and publications in newspapers of general circulation for the awareness of all concerned.

Transitory Provisions: a.

All applications covering taxable years 2004 and 2005 received prior to the effectivity of this Agreement and still pending processing by the BOI/BOI-ARMM shall be immediately processed/reviewed for transmittal to the BIR, for post-audit, not later than August 31, 2007; and

b.

All BOI/BOI-ARMM-registered enterprises entitled to ITH incentives for taxable years 2004/2005 shall be required by BOI/BOI-ARMM to file their ITH applications not later than May 31, 2007. Processed applications for said taxable years shall be transmitted to the BIR, for post-audit, not later than August 31, 2007. EHTIDA

V.

Effectivity:

Subject to the provisions of item IV of this Agreement, the rest of the herein provisions shall apply to ITH incentives availments covering taxable year 2006 and onwards, unless revoked by the parties. IN WITNESS WHEREOF, the parties hereto have affixed their signatures this 1st day of March, 2007, in the City of ___________, Philippines.

BOARD OF INVESTMENTS By: Copyright 2016



20

(SGD.) ELMER C. HERNANDEZ Vice Chairman and Managing Head BOI-AUTONOMOUS REGION OF MUSLIM MINDANAO By: (SGD.) SHERYL B. SIAO Chairman & Managing Head BUREAU OF INTERNAL REVENUE By: (SGD.) JOSE MARIO C. BUÑAG Commissioner SIGNED IN THE PRESENCE OF:

ACKNOWLEDGMENT Republic of the Philippines ) Quezon City ) S.S. BEFORE ME, a Notary Public for and in the City of Quezon City, Metro Manila, this 5th day of March 2007, personally appeared: IHaECA

NAME

CTC NO.

DATE ISSUED

Elmer C. Hernandez Jose Mario C. Buñag

09467608 00003277

02-04-07 02-27-07

Copyright 2016



PLACE ISSUED Meycauayan, Bulacan Quezon City

21

Sheryl B. Siao

25002795

03-01-07

Cotabato City

known to me and to me known to be the persons who executed the foregoing Memorandum of Agreement consisting of seven (7) pages including the page wherein this Acknowledgment is written and acknowledged to me that the same is their free act and voluntary deed and that of the government agencies they represent: WITNESS MY HAND AND SEAL on the date and place above written. Doc. No. 211 Page No. 43 Book No. XV Series of 2007 Footnotes 1.

The 3 year prescriptive period is reckoned after the last day prescribed by law for the filing of the Annual ITR, or from the day such return was filed, whichever comes later. For taxpayers adopting an accounting period on a calendar year basis, the last day for filing shall be on or before the fifteenth (15th) day of April of the succeeding year. For taxpayers on a fiscal year basis, however, the last day for filing shall be on or before the fifteenth (15th) day of the fourth month following the close of the fiscal year. HTaSEA

Copyright 2016



22

Endnotes 1 (Popup - Popup) EO 226-1987

2 (Popup - Popup) 1.

The 3 year prescriptive period is reckoned after the last day prescribed by law for the filing of the Annual ITR, or from the day such return was filed, whichever comes later. For taxpayers adopting an accounting period on a calendar year basis, the last day for filing shall be on or before the fifteenth (15th) day of April of the succeeding year. For taxpayers on a fiscal year basis, however, the last day for filing shall be on or before the fifteenth (15th) day of the fourth month following the close of the fiscal year. HTaSEA

Copyright 2016



23

2007 Revised Rules in the Availment of Income Tax Holiday

Recommend Documents