PRESIDENTIAL DECREE NO. 1449, June 11, 1978
AMENDING PRESIDENTIAL DECREE NO. 66 DATED NOVEMBER 20, 1972, ENTITLED “CREATING THE EXPORT PROCESSING ZONE AUTHORITY AND REVISING REPUBLIC ACT NO. 5490.”
provisions of Presidential Decree No. 66 in order to make it more responsive to
the requirements of investments in export processing zones, and to insure the
effectiveness of the Export Processing Zone Authority in the performance of its
duties and responsibilities and in the attainment of the national policy
enunciated in the law;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers vested in me by the Constitution, do hereby
decree and promulgate the following amendments to Presidential Decree No. 66
dated November 20, 1972, which are hereby approved, adopted and made part of the
law of the land:
SECTION 1. Section four of Presidential Decree No. 66 is
hereby amended by adding two new paragraphs after paragraph (k) thereof to read
as follows:
“SEC. 4. Purpose and Specific Powers.—The purposes
and specific powers of the Authority are as follows:
- To invest in, acquire or otherwise deal in real estate, or any interest
therein, as well as in personal property of every kind and description; and in
meritorious cases and upon prior approval of the National Economic and
Development Authority, to grant loans and advances for the operation or
expansion of zone registered enterprises upon such terms and conditions as the
Board may prescribe;
- By itself or in cooperation with private persons or entities, to organize,
finance, invest in or operate subsidiary corporations when such an arrangement
is necessary to provide utilities and other amenities which cannot be reasonably
provided by existing entities. All other investments in zone registered
enterprises shall need prior approval of the NEDA.”
SEC. 2. Section five of the same Decree is hereby amended to
read as follows:
“SECTION 5. Capitalization.—The capital of the
Authority shall consist of (1) its existing assets and such other properties as
may be contributed to the Authority by the Government to form part of capital,
(2) all capitalized surplus, and (3) cash contribution by the Government in the
amount of one billion pesos, which is hereby appropriated out of any fund in the
National Treasury not otherwise appropriated, be they collection from any or all
taxes accruing to the general fund or proceeds from loans, the issue of bonds,
treasury bills or notes, or derived from any other sources of income, by or of
the National Government, which amount shall be programmed and released by the
Budget Commission with approval of the President, in accordance with the
schedule of development and expenditure to be prepared and submitted by the
Authority: Provided, however, That any budgetary outlay allocated and
released in favor of the Export Processing Zone Authority and/or Foreign Trade
Zone Authority shall be correspondingly credited to the authorized
capitalization herein provided.”
SEC. 3. Paragraph (d) of Section eleven of the same Decree
is hereby amended to read as follows:
“SECTION 11. Powers and Duties of the Board.—The
Board shall have the following powers and duties:
- Upon the recommendation of the Administrator, to determine the
organizational structure, the number, salaries and other fringe benefits of the
officers, employees and consultants of the Authority and its subsidiaries. As
far as practicable, the remunerations and allowances shall be competitive with
rates prevailing in the private sector as shall be determined by the Board.”
SEC. 4. Section eighteen of the same Decree is hereby
amended by adding three new paragraphs after paragraph (f) thereof and amending
paragraph (f) to read as follows:
- Exemption from Local Taxes and Licenses.—Notwithstanding the
provisions of law to the contrary, zone registered enterprises shall, to the
extent of their construction, operation or production inside the zone be exempt
from the payment of any and all local government imposts, fees, licenses or
taxes except real estate taxes which shall be collected by the Municipality
responsible for the collection thereof under the provisions of the Real Property
Tax Code: Provided, That machineried owned by zone registered
enterprises which are actually installed and operated in the Zone for
manufacturing, processing or for industrial purposes shall not be subject to the
payment of real estate taxes for the first three (3) years of operation of such
machineries: Provided, further, That fifty percent of the proceeds of
the real estate taxes collected from all real properties located in the Zone and
such other areas owned or administered by the Authority shall be remitted to the
Authority by the municipality responsible for the collection of such taxes under
the provisions of the Real Property Tax Code. All real estate taxes accruing to
the Authority as herein provided shall be expended for such community
facilities, utilities and/or services as the Board may determine. - Deduction for Labor Training Expenses.—A deduction from taxable
income of one-half the value of labor training expenses incurred for upgrading
the productivity and efficiency of unskilled labor shall be granted to a zone
registered enterprise: Provided, That such training program is duly
approved by the appropriate government agency or in the absence thereof by the
Board: Provided, further, That such deduction shall not exceed ten
(10%) percent of the direct labor wage. - Deduction for Organizational and Pre-Operating Expenses.—All
capitalized organizational and pre-operating expenses attributable to the
establishment of a zone registered enterprise may be deducted from its taxable
income over a period of not more than ten (10) years beginning with the month
the enterprise indicated the desired amortization period at the time of the
filing of income tax returns for the first taxable year. For the purpose of this
provision, organizational and pre-operating expenses shall include expenses for
pre-investment studies, start-up costs, cost of initial recruitment and training
and similar expenses. - Tax Credit.—Every registered zone enterprise shall enjoy a tax
credit equivalent to the sales, compensating and specific taxes and duties on
supplies, raw materials and semi-manufacture products used in the manufacture,
processing or production of its export products and forming part thereof:
Provided, That the tax credit shall accrue to the registered zone
enterprise only after the final product has in fact been exported. The tax
credit shall be used by the Secretary of Finance, upon presentation of the
export documents, and shall be in lieu of refunds. It may be used to pay taxes,
duties, charges and fees due to the national government in connection with its
operations. A tax credit shall be non-transferable, except when such transfer is
by hereditary succession or occurs by operation of law; it may be use by the
person or entity to whom it is issued only for as long as its enjoys the
benefits and incentives provided for in this Decree; and may not be used so as
to result in a refund.”
SEC. 5. The second paragraph of Section nineteen of the same
Decree is hereby amended to read as follows:
“SECTION 19. Power to Issue Bond or Incur
Indebtedness.—x x x.The total principal domestic indebtedness of the Authority payable in
Philippine currency shall not at any one time exceed seven hundred fifty million
pesos, while the total principal indebtedness of the Authority payable in
foreign currency shall not at any one time exceed one hundred million United
States dollar or the equivalent thereof in other foreign currencies qualified to
form part of the international reserves of the Central Bank: Provided,
That such foreign indebtedness may be contracted from foreign governments or any
public or private fund sources; and Provided, further, That such
borrowing shall be subject to approval by the President under such rules and
regulations as he may promulgate. The bonds and other instruments of
indebtedness which the authority is authorized to issue under this section and
any income derived therefrom shall, except those contracted with private
international banking and financial institutions, be exempt from the payment of
all taxes of whatever kind and nature including withholding taxes imposed by the
Republic of the Philippines, its agencies, instrumentalities or political
subdivisions, which fact may be expressed on the face thereof, and shall be
eligible as collateral in any transaction with the national or any local
government, its agencies and instrumentalities, including government-owned or
controlled corporations and government banking and financial institutions, in
which collateral is required. Any or all loans or instrument of indebtedness
which the authority is authorized to contract or issue under this section shall
be unconditionally guaranteed both as to principal and interest by the
Government of the Republic of the Philippines.”
SEC. 6. Section twenty-three of the same Decree is hereby
amended to read as follows:
“SECTION 23. Eminent Domain.—For the acquisition of
right of way, or for any property for the establishment of export processing
zones, low-cost housing projects, schools, hospitals, markets, playgrounds and
such other facilities and utilities as are normally required of a modern human
settlement, or for the protection of watershed areas, or for the construction of
dims, reservoirs, wharves, piers, docks, quays, warehouses and other terminal
facilities, structures and approaches thereto, the Authority shall have the
right and power to acquire the same by purchase, by negotiation, or by
condemnation proceedings. Should the Authority elect to exercise the right of
eminent domain, condemnation proceedings shall be maintained by and in the name
of the Authority and it may proceed in the manner provided by
law.”
SEC. 7. Repealing Clause.—All laws, executive
orders, rules and regulations or part thereof inconsistent with this Decree are
hereby repealed and/or modified accordingly.
SEC. 8. Effectivity.—This Decree shall take effect
upon its 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