AMENDING SECTIONS 187 AND 202 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND PROVIDING FOR THE REGISTRATION OF EXPORT PRODUCERS AND TRADERS WITH THE PHILIPPINE EXPORT CO…

WHEREAS, the development and promotion of Philippine export
is essential to economic growth;

WHEREAS, there are many export producers which lack the
facilities and expertise necessary for direct exports;

WHEREAS, it is necessary to encourage these producers to
sell to export traders by extending to them the tax benefits available to direct
exporters under the National Internal Revenue Code, as amended:

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Republic of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby decree:

SECTION 1. Section 187 of the National Internal Revenue
Code, as amended, is hereby amended by adding the following definition of words
and phrases:

“(y) ‘Registered export producer’ shall mean any person, corporation,
partnership, or other entity doing business in the Philippines, (1) registered
with Philippine Export Council, (2) engaged in the manufacture, production or
processing of articles or products for export in commercial quantity, and (3)
directly exporting its products, or selling them (a) to a registered export
trader that subsequently exports the said products, or (b) to another export
producer who utilizes said products as direct materials or input in product
subsequently manufactured or processed by them and thereafter exported or (c) to
foreign tourists, when paid for acceptable foreign currency and actually brought
out of the Philippines by the buyers upon their departures.

“(z) ‘Registered export trader’ shall mean any person, corporation,
partnership or other entity doing business in the Philippines (1) registered
with the Philippine Export Council and (2) who is engaged in the buying of
Philippine-made products and subsequently exporting the same.

“(aa) ‘Export sales’ shall mean the Philippine port F. O. B. value, determine
from invoices, bills of lading, inward letters of credit, landing certificates,
and other commercial documents, of export products exported directly by a
registered export producer or registered export trader, or the net selling price
of export products sold by a registered export producer to another export
producer, or registered export trader who subsequently exports the same, or the
net selling price of export products in acceptable foreign currencies sold by a
registered export producer or registered export trader to foreign tourists and
foreign travelers. Sales of export products to another export producer or to a
registered export trader shall only be deemed export sales when actually
exported by the latter.”

SEC. 2. Section 202 of the National Internal Revenue Code is
hereby amended by adding sub-paragraph (f) in the enumeration of articles not
subject to percentage tax on sales, as follows:

“(f) Articles sold by ‘registered export producers’ to (1) other ‘registered
export producers’, (2) ‘registered export traders’ or (3) foreign tourists or
travelers, which are considered as ‘export sales’.

SEC. 3. Conditions for Availment of Tax
Benefit.—Any export producer or export trader who wants to avail of the tax
benefits extended to indirect exports under this Decree, must register as such
with the Philippine Export Council.

SEC. 4. Requirements for Registration. —

1. Any export producer applying for registration must show proof of the
   following:
   1. He/it is actually engaged in the manufacture, processing or production of
      articles or products for export; and
   2. His/its products meet the quality standards set by the Bureau of Standards
      for such products.

2. An export trader applying for registration must show proof of his/its export
   operations indicating (a) the products or potential products for exportation,
   (b) expected revenues and (c) selling and administrative costs.

SEC. 5. Issuance of Certificate of Registration: Grounds
for Revocation.—Upon qualification for registration, the applicant export
producer or export trader shall be issued the corresponding certificate of
registration by the Philippine Export Council.

The certificate of registration shall be subject to revocation on any of the
following grounds:

1. Any violation of the provisions of this Decree or the rules and regulations
   implementing the same;
2. Any violation of laws relating to taxation, currency, immigration and
   national economy or security; or
3. Failure to meet the quality standards set by the Bureau of Standards.

SEC. 6. The Secretary of Finance shall, upon the
recommendation of the Commissioner of Internal Revenue in consultation with the
Chairman President of the Philippine Export Council, promulgate the necessary
rules and regulations for the effective implementation of the provisions of this
Decree.

SEC. 7. This Decree shall take effect upon approval.

DONE in the City of Manila this 11th day of June, in the year of Our Lord,
nineteen hundred and seventy-eight.

			(Sgd.) FERDINAND E. MARCOS President of the Philippines
	By the President:
	(Sgd.) JACOBO C. CLAVE
		Presidential Executive Assistant