REDUCING THE RATES OF DUTY ON CAPITAL EQUIPMENT, SPARE PARTS AND ACCESSORIES IMPORTED BY BOARD OF INVESTMENTS (BOI)-REGISTERED NEW AND EXPANDING ENTERPRISES

WHEREAS, Executive
Order No. (EO) 528 (s. 2006), provided for zero percent duty on certain
articles imported by BOI-registered new and expanding enterprises for a
period of five (5) years from the date of its effectivity or until the
enactment of a law amending EO 226, otherwise known as the Omnibus
Investments Code of 1987, as amended, whichever comes earlier;

WHEREAS, the five-year effectivity of EO 528 has expired and a law amending EO 226 remains to be enacted;

WHEREAS, there
is a need to extend zero percent duty on importation of capital
equipment, spare parts and accessories currently being enjoyed by
BOI-registered enterprises located within economic zones and freeports;

WHEREAS, importation of capital equipment is one of the major cost burdens of business enterprises in their start-up operations;

WHEREAS, allowing
zero percent duty importation will make the Philippines more
competitive in attracting investments in the face of an increasingly
competitive Asian market for foreign direct investments; and

WHEREAS, Section
401 of the Tariff and Customs Code of the Philippines (TCCP), as
amended, empowers the President of the Philippines, upon the
recommendation of the National Economic and Development Authority
(NEDA), to increase, reduce or remove existing protective rates of
import of duty.

NOW, THEREFORE, I, BENIGNO S. AQUINO III, President of the Philippines, by virtue of the powers vested in me by law, do hereby order:

SECTION 1.Zero Percent Duty. Any
importation of capital equipment, spare parts and accessories by
BOI-registered enterprises shall be subjected to zero percent duty, as
indicated in Section 2 hereof.

SECTION 2.Coverage. The
zero percent duty shall be granted to BOI-registered new and expanding
enterprises on article or equipment classified under Chapters 40, 59,
68, 69, 70, 73, 76, 82, 83, 84, 85, 86, 87, 89, 90, 91 and 96 of the
TCCP, as amended, upon issuance by the BOI of a Certificate of
Authority, provided that, the importation of machinery, equipment, spare
parts and accessories shall comply with the following conditions:

a. They are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices; and

b.
They are reasonably needed and will be used exclusively by the
enterprise in its registered activity, unless prior approval of the BOI
is secured.

SECTION 3. Prohibition to Sell, Transfer, or Dispose. The
BOI-registered enterprise cannot sell, transfer or dispose of the
aforementioned capital equipment, machinery, spare parts and
accessories, without prior BOI approval within five (5) years from the
date of importation; otherwise, the BOI-registered enterprise will be
solidarily liable to pay twice the amount of the duty foregone or five
hundred thousand pesos (Php 500,000.00), whichever is higher, without
prejudice to other applicable penalties under EO 226.

SECTION 4. Implementing Rules and Regulations (IRRs). The BOI shall promulgate the IRRs governing the implementation hereof.

SECTION 5. Repealing Clause. All
issuances, orders, rules and regulations, or parts thereof, which are
inconsistent with this EO are hereby repealed, amended or modified
accordingly.

SECTION 6. Separability Clause. If
any provision of this EO is declared invalid or unconstitutional, the
other provisions not affected thereby shall remain valid and subsisting.

SECTION 7. Effectivity Clause. This EO shall
take effect thirty (30) days following its complete publication in a
newspaper of general circulation in the Philippines and shall be availed
for a period of five (5) years from the date of effectivity of this EO
or upon enactment of a law amending EO 226, otherwise known as the
Omnibus Investment Code of 1987, as amended, whichever is earlier.

DONE, in the City of Manila, this 29th of March, in the year of our Lord, Two Thousand and Twelve.

 

	(Sgd.) BENIGNO S. AQUINO III
	President of the Philippines
By the President:
(Sgd.) PAQUITO N. OCHOA, JR.
Executive Secretary