PRESCRIBING INCENTIVES FOR THE ESTABLISHMENT OF REGIONAL OR AREA HEADQUARTERS OF MULTINATIONAL COMPANIES IN THE PHILIPPINES.

WHEREAS, it would be desirable to make of the Philippines
the business and financial capital of Southeast Asia, thereby hastening the
economic and social development of the Philippines, which objective can be
accomplished by attracting the regional or area headquarters of multinational
companies to base their offices in the Philippines;

WHEREAS, the said headquarters do not earn or derive any
income from the host country and all their expenses are financed by their head
offices or parent companies; and

WHEREAS, the attainment of the aforesaid goal will mean
additional foreign exchange receipts to the Philippines, a boost to air travel,
new construction and real estate development, new job opportunities, increase in
local tourism and potential investors;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution as
Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to
Proclamation No. 1081, dated September 21, 1972, and General Order No. 1, dated
September 22, 1972, as amended, do hereby order and decree as follows:

SECTION 1. Foreign personnel of regional or area
headquarters of multinational companies, their respective spouses, and unmarried
children under twenty-one years of age if accompanying them or if following to
join them after their admission into the Philippines as non-immigrant shall be
issued a multiple entry special visa, valid for a period of one year to enter
the Philippines: Provided, That a responsible officer of the applicant
company submits a certificate to the effect that the person who seeks entry into
the Philippines is an executive of the applicant company and will work
exclusively for applicant’s regional or area headquarters which is duly licensed
to operate in the Philippines; and that he will receive a salary and will be
paid by the headquarters in the Philippines an amount equivalent to at least
twelve thousand United States dollars, or its equivalent in other foreign
currencies, per annum.

The admission and stay shall be co-terminus with the validity of the multiple
entry special visa. The stay, however, is extendible yearly upon submission to
the Commission on Immigration and Deportation of a sworn certification by a
responsible officer of the regional or area headquarters: that its license to
operate remains valid and subsisting; that he has been paid in the Philippines
from the date of original admission, the equivalent of at least one thousand
United States dollars per month, or its equivalent in other foreign currencies;
and that the regional or area headquarters has withheld the tax due on said
compensation and the same has been paid to the Bureau of Internal Revenue.

Non-immigrants who have been admitted under the multiple entry special visa,
as well as their respective spouses and dependents, shall be exempt from: the
payment of all fees due under the immigration and alien registration laws;
securing alien certificates of registration; and obtaining emigration clearance
certificates, and all types of clearances required by any government department
or agency, except that upon final departure from the Philippines the employer of
the said non-immigrants shall so advise in writing the Commission on Immigration
and Deportation at least five (5) working days prior to the non-immigrant’s
departure, and the finally departing non-immigrant employee shall be required to
submit to the said office a tax clearance from the Bureau of Internal
Revenue.

SEC. 2. Section 22 of Commonwealth Act Numbered 466, as
amended, is hereby amended to include an additional Subsection (c) to read as
follows:

“(c) Aliens employed by regional or area headquarters or multinational
corporations. There shall be levied, collected and paid for each taxable year
upon the gross income received by every alien individual employed by regional or
area headquarters established in the Philippines by multinational corporations
as salaries, wages, annuities, compensations, remunerations and emoluments from
such regional or area headquarters a tax equal to fifteen per centum of such
gross income.”

SEC. 3. Section 24(b) (1) of Commonwealth Act Numbered 466,
as amended, is hereby amended to include an additional proviso to read as
follows:

“(b) Tax on foreign corporations. (1) Non-resident corporations.

“Provided, finally, That regional or area headquarters established
in the Philippines by multinational corporations and which, headquarters do not
earn or derive income from the Philippines and which act as supervisory,
communications and coordinating centers for their affiliates, subsidiaries or
branches in the Asia-Pacific Region shall not be subject to
tax.”

SEC. 4. In the case of aliens employed by regional or area
headquarters established in the Philippines by multinational corporations, there
shall be deducted and withheld at the source in the same manner and conditions
as that provided under Supplement A — Withholding on Wages of
Commonwealth Act No. 466, as amended, on the gross salaries, wages, annuities,
compensations, remunerations and emoluments from such regional headquarters a
tax equal to fifteen per centum of the gross thereof.

SEC. 5. Section 191 of Commonwealth Act Numbered 466, as
amended, is hereby amended as follows:

“SEC. 191. Contractors, proprietors or operators of
dockyards and others. — A contractor’s tax of three per centum of the gross
receipts is hereby imposed on the following:

X X X

“The term ‘independent contractor’ shall not include regional or area
headquarters established in the Philippines by multinational corporations,
including their alien executives, and which headquarters do not earn or derive
income from the Philippines and which act as supervisory, communications and
coordinating centers for their affiliates, subsidiaries or branches in the
Asia-Pacific Region.”

SEC. 6. The alien executives of the regional or area
headquarters of multinational companies shall enjoy the privileges extended to
foreigners coming to settle in the Philippines for the first time as
provided for under Section 105(h) of the Tariff and Customs Code, as
amended.

SEC. 7. The regional or area headquarters of multinational
companies shall be exempt from all forms of local licenses, fees, dues, imposts,
or any other local taxes or burdens.

SEC. 8. Any foreign business entity formed, organized or
existing under any laws other than those of the Philippines whose purpose, as
expressed in its organizational documents or by resolution of its Board of
Directors or its equivalent, is to supervise, superintend, inspect or coordinate
its own affiliates, subsidiaries or branches in the Asia-Pacific Region may
establish a regional or area headquarters in the Philippines, after securing a
license therefor from the Securities and Exchange Commission, upon the Favorable
recommendation of the Secretary of Trade.

The Securities and Exchange Commission shall, within thirty (30) days from
the effectivity of this Decree, issue the implementing rules and regulations.
The following minimum requirements shall, however, be complied; with by the said
foreign entity:

1. A certification from the Philippine Commercial Attache or in the absence of
   such an official, a Philippine Consul in the foreign firm’s home country that
   said foreign firm is an entity engaged in international trade with affiliates,
   subsidiaries, or branch offices in the Asia-Pacific Region.
2. A certification from a principal officer of the foreign entity to the effect
   that the said foreign entity has been authorized by its board of directors or
   governing body to establish its regional headquarters in the Philippines,
   specifying that:

   (1) The activities of the regional headquarters shall be limited to acting as
   a supervisory, communications and coordinating center for its affiliates
   subsidiaries and branches of the region;
   (2) The headquarters will not derive
   any income from sources within the Philippines and will not participate in any
   manner in the management of any subsidiary or branch office it might have in the
   Philippines;

3. An undertaking that the multinational company will remit into the country
   such amount as may be necessary to cover its operations in the Philippines but
   which amount will not be less than fifty thousand United States dollars or its
   equivalent m other foreign currencies annually. Within thirty (30) days from
   receipt of Certificate of Registration from the Securities and Exchange
   Commission the multinational company will submit to the Securities and Exchange
   Commission, the certificate of inward remittance from a local bank showing that
   it has remitted to the Philippines the amount of at least thirty thousand United
   States dollars or its equivalent in other foreign currencies and converted the
   same to Philippine currency. Annually, within thirty days from the anniversary
   date of the multinational company’s registration as a regional or area
   headquarters with the Securities and Exchange Commission, it will submit proof
   to the Securities and Exchange Commission of inward remittance amounting to at
   least fifty thousand United States dollars or its equivalent in other foreign
   currencies during the past year.
4. Any willful violation by the regional or area headquarters of a
   multinational company of any of the provisions of this Decree, or its
   implementing rules and regulations, or other terms and conditions of its
   registration, or any provision of existing laws shall constitute a sufficient
   cause for the cancellation of its license or registration.

SEC. 9. The regional or area headquarters of multinational
companies shall be exempt from the provisions of Republic Act No. 5455.

SEC. 10. Any provision of existing general or special laws
inconsistent with the provisions of this Decree shall be considered modified,
amended, or repealed accordingly.

SEC. 11. This Decree shall take effect immediately.

Done in the City of Manila, this 16th day of June, in the year of Our Lord,
nineteen hundred and seventy-three.

			(Sgd.) FERDINAND E. MARCOS President Republic of the Philippines
	By the President:
	(Sgd.) ROBERTO V. REYES
		Assistant Executive Secretary