November 8, 2024

REPUBLIC ACT NO. 12066

AN ACT AMENDING SECTIONS 27, 28, 32, 34, 57, 106, 108, 109, 112, 135, 237, 237-A,
269, 292, 293, 294, 295, 296, 297, 300, 301, 308, 309, 310, AND 311, AND ADDING NEW
SECTIONS 135-A, 295-A, 296-A, AND 297-A OF THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES

SECTION 1. Section 27 (A) of the National Internal Revenue Code of 1997,

as amended, is hereby further amended to read as follows:
"SEC. 27. Rates of Income Tax on Domestic Corporations. —
(A) In General. — Except as otherwise provided in this Code, an
income tax rate of twenty-five percent (25%) effective July 1, 2020 is hereby
imposed upon the taxable income derived during each taxable year from all
sources within and without the Philippines by every corporation, as defined in
Section 22(B) of this Code and taxable under this Title as a corporation,
organized in, or existing under the laws of the Philippines: Provided, That
corporations with net taxable income not exceeding Five million pesos
(P5,000,000) and with total assets not exceeding One hundred million pesos
(P100,000,000), excluding land on which the particular business entity's office,
plant, and equipment are situated during the taxable year for which the tax is
imposed, shall be taxed at twenty percent (20%): Provided, further, That
registered business enterprises under the enhanced deductions regime as
provided in Section 294(C) of this Code shall be taxed at a rate equivalent to
twenty percent (20%) on their taxable income derived from registered projects
or activities during each taxable year. HTcADC

xxx xxx xxx."

SECTION 2. Section 28 (A) (1) of the National Internal Revenue Code of
1997, as amended, is hereby further amended to read as follows:
"SEC. 28. Rates of Income Tax on Foreign Corporations. —
(A) Tax on Resident Foreign Corporations. —
(1) In General. — Except as otherwise provided in this Code, a
corporation organized, authorized, or existing under the laws of any foreign
country, engaged in trade or business within the Philippines, shall be subject to
an income tax equivalent to twenty-five percent (25%) of the taxable income
derived in the preceding taxable year from all sources within the Philippines
effective July 1, 2020: Provided, That registered business enterprises under the
enhanced deductions regime as provided in Section 294(C) of this Code, shall
be subject to a tax rate equivalent to twenty percent (20%) of their taxable
income derived from registered projects or activities during each taxable year.
xxx xxx xxx.
(B) Tax on Nonresident Foreign Corporation. —
(1) In General. — x x x."
SECTION 3. Section 32 of the National Internal Revenue Code of 1997, as
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 amended, is hereby further amended to read as follows:
"SEC. 32. Gross Income. —
(A) General Definition. — x x x
(B) Exclusion from Gross Income. — The following items shall not be
included in the gross income and shall be exempt from taxation under this Title:
(1) x x x;
(2) x x x;
(3) x x x;
(4) x x x;
(5) Income Exempt under Treaty. — Income of any kind, to the
extent required by any treaty obligation, including agreements entered into by
the President with economies and administrative regions, subject to the
concurrence of the Senate, binding upon the Government of the Philippines.
(6) x x x; and
(7) x x x."
SECTION 4. Section 34 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows: CAIHTE

"SEC. 34. Deductions from Gross Income. —

xxx xxx xxx
(B) Interest. — x x x
(C) Taxes. — x x x
(1) In General. — x x x
(2) Limitations on Deductions. — x x x
(3) Credit Against Tax for Taxes of Foreign Countries. — x x x
(4) Limitations on Credit. — x x x
(5) Adjustments on Payment of Incurred Taxes. — x x x
(6) Year in Which Credit Taken. — x x x
(7) Proof of Credits. — x x x
(8) Input Tax Attributable to VAT-exempt Sales . — Input tax paid on
local purchases attributable to VAT-exempt sales shall be deductible from the
gross income of the taxpayer.
xxx xxx xxx."
SECTION 5. Section 57 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 57. Withholding of Tax at Source. —
(A) Withholding of Final Tax on Certain Incomes. — x x x
(B) Withholding of Creditable Tax at Source. — The Secretary of
Finance may, upon the recommendation of the Commissioner, require the
withholding of a tax on the items of income payable to natural or juridical
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 persons, residing in the Philippines, by payor-corporation/persons as provided
for by law, at the rate of not more than fifteen percent (15%) thereof, which
shall be credited against the income tax liability of the taxpayer for the taxable
year.
(C) Tax-free Covenant Bonds. — x x x
xxx xxx xxx."
SECTION 6. Section 106 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 106. Value-Added Tax on Sale of Goods or Properties. —
(A) Rate and Base of Tax. — x x x.
(1) 'Goods or Properties.' The term 'goods' or 'properties' x x x;
(2) The following sales by VAT-registered persons shall be subject
to zero percent (0%) rate:
(a) Export Sales. — The term 'export sales' means:
(1) x x x;
(2) Sale of raw materials or packaging materials to a non-resident
buyer for delivery to a resident local export-oriented enterprise to be used in
manufacturing, processing, packing or repacking in the Philippines of the said
buyer's goods and paid for in acceptable foreign currency and accounted for in
accordance with the rules and regulations of the Bangko Sentral ng Pilipinas
(BSP); aScITE

(3) Sale of goods to an export-oriented enterprise whose export

sales is at least seventy percent (70%) of the total annual production of the
preceding taxable year: Provided, That such goods are directly attributable to
the export activity of the export-oriented enterprise: Provided, further, That the
Export Marketing Bureau of the Department of Trade and Industry (DTI) shall
determine compliance with the aforementioned threshold. Any export-oriented
enterprise that fails to meet the threshold shall be disqualified from availing of
VAT zero-rating on local purchases in the immediately succeeding year:
Provided, finally, That input tax otherwise due on VAT zero-rated local
purchases attributable to VAT-exempt sales shall be paid and deductible from
the gross income of the taxpayer. For this purpose, 'directly attributable' shall
refer to goods and services that are incidental to and reasonably necessary for
the export activity of the export-oriented enterprise, including janitorial, security,
financial, consultancy, marketing and promotion services, and services
rendered for administrative operations such as human resources, legal, and
accounting;
(4) The sale of goods, supplies, equipment, and fuel to persons
engaged in international shipping or international air transport operations:
Provided, That the goods, supplies, equipment, and fuel shall be used for
international shipping or air transport operations; and
(5) Sales to bonded manufacturing warehouses of export-oriented
enterprises.
The Department of Finance (DOF) shall establish a VAT refund center in
the Bureau of Internal Revenue (BIR) and in the Bureau of Customs (BOC) that
will handle the electronic processing and granting of cash refunds of creditable
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 input tax.
An amount equivalent to five percent (5%) of the total VAT collection of
the BIR and the BOC from the immediately preceding year shall be
automatically appropriated annually and shall be treated as a special account in
the General Fund or as trust receipts for the purpose of funding claims for VAT
refund: Provided, That any unused fund, at the end of the year shall revert to
the General Fund: Provided, further, That the BIR and the BOC shall be
required to submit to the Congressional Oversight Committee on the
Comprehensive Tax Reform Program (COCCTRP) a quarterly report of all
pending claims for refund and any unused fund.
(b) xxx
(c) xxx
(d) Those sales subject to zero percent (0%) VAT under special
laws.
xxx xxx xxx."
SECTION 7. Section 108 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows: DETACa

"SEC. 108. Value-Added Tax on Sale of Services and Use or Lease

of Properties. —
(A) Rate and Base of Tax. — x x x
(B) Transactions Subject to Zero Percent (0%) Rate. — The
following services performed in the Philippines by VAT-registered persons shall
be subject to zero percent (0%) rate:
(1) x x x;
(2) x x x;
(3) x x x;
(4) x x x;
(5) Services performed for an export-oriented enterprise whose
export sales is at least seventy percent (70%) of the total annual production of
the preceding taxable year: Provided, That such services are directly
attributable to the export activity of the export-oriented enterprise: Provided,
further, That the Export Marketing Bureau of the DTI shall determine
compliance with the aforementioned threshold. Any export-oriented enterprise
that fails to meet the threshold shall be disqualified from availing of VAT zero-
rating in the immediately succeeding year: Provided, finally, That input tax
otherwise due on VAT zero-rated local purchases attributable to VAT-exempt
sales shall be paid and deductible from the gross income of the taxpayer. For
this purpose, 'directly attributable' shall follow the same definition under Section
106 of this Code.
(6) x x x;
(7) x x x; and
(8) Sales subject to zero percent (0%) VAT under special laws.
The DOF shall establish a VAT refund center in the BIR and in the BOC
that will handle the electronic processing and granting of cash refunds of
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 creditable input tax. HEITAD

xxx xxx xxx."

SECTION 8. Section 109 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 109. Exempt Transactions. —
(1) Subject to the provisions of Subsection (2) hereof, the following
transactions shall be exempt from the VAT:
xxx xxx xxx
(u) Importation of fuel, goods, and supplies used for international
shipping or air transport operations;
xxx xxx xxx
(dd) Importation of goods by an export-oriented enterprise whose
export sales is at least seventy percent (70%) of the total annual production of
the preceding taxable year: Provided, That such goods are directly attributable
to the export activity of the export-oriented enterprise: Provided, further, That
the Export Marketing Bureau of the DTI shall determine the compliance with the
aforementioned threshold. For this purpose, 'directly attributable' shall follow the
same definition under Section 106 of this Code."
SECTION 9. Section 112 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 112. Refunds or Tax Credits of Input Tax. —
(A) Zero-Rated or Effectively Zero-Rated Sales. — x x x
(B) Cancellation of VAT Registration. — x x x
(C) Period within which the Refund or Tax Credit of Input Taxes shall
be Made. — In proper cases, the Commissioner shall grant a refund for
creditable input taxes within ninety (90) days from the date of submission of
certified true copies of invoices and other documents specifically limited to
those prescribed in the revenue issuances and in support of the application
filed in accordance with Subsections (A) and (B) hereof: Provided, That for this
purpose, the VAT refund claims shall be classified into low-, medium-, and high-
risk claims, with the risk classification to be based on the amount of VAT refund
claim, tax compliance history, frequency of filing VAT refund claims, among
others: Provided, further, That medium- and high-risk claims shall be subject to
audit or other verification processes in accordance with the BIR's national audit
program for the relevant year. Should the Commissioner find that the grant of
refund is not proper, the Commissioner must, within the ninety (90)-day period,
communicate in writing to the taxpayer, the legal and factual basis for the
denial, including the deficiencies of the VAT refund claim.
The taxpayer shall have fifteen (15) days from receipt of the full or partial
denial to file a request for reconsideration. The Commissioner shall decide on
the request for reconsideration within fifteen (15) days from receipt thereof.
Failure to file a request for reconsideration within the fifteen (15)-day period
shall render the decision final. aDSIHc

In case of full or partial denial of the request for reconsideration, or

failure on the part of the Commissioner to act on the application for refund or
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 request for reconsideration within the periods prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the decision denying the
request for reconsideration, or after the expiration of the ninety (90)-day period
to decide on the application for refund, or after the lapse of the fifteen (15)-day
period to decide on the request for reconsideration in cases where no action is
made by the Commissioner on the request for reconsideration, appeal the
decision with the Court of Tax Appeals: Provided, however, That failure on the
part of any official, agent, or employee of the BIR to act on the application for
VAT refund within the ninety (90)-day period and on the request for
reconsideration within the fifteen (15)-day period shall be punishable under
Section 269 of this Code.
(D) Manner of Giving Refund. — Refunds shall be made upon
warrants drawn by the Commissioner or by a duly authorized representative
without the necessity of being countersigned by the Chairperson of the
Commission on Audit, the provisions of the Administrative Code of 1987 to the
contrary notwithstanding: Provided, That refunds under this paragraph shall be
subject to post audit by the Commission on Audit following the risk-based
classification above-described: Provided, further, That the BIR shall publish
statistics on the aggregated volume, processing time, approval rate of refund
claims, and other relevant statistics in their official website: Provided, finally,
That in case of disallowance by the Commission on Audit, only the taxpayer
shall be liable for the disallowed amount without prejudice to any administrative
liability on the part of any employee of the BIR who may be found to be grossly
negligent in the grant of refund."
SECTION 10. Section 135 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 135. Petroleum Products Sold to International Carriers and
Exempt Entities or Agencies. — Petroleum products sold to the following are
exempt from excise tax:
(a) International carriers of Philippine or foreign registry directly
importing petroleum products, on their use or consumption outside the
Philippines: Provided, That the petroleum products sold to these international
carriers shall be stored in a bonded storage tank and may be disposed of only
in accordance with the rules and regulations to be prescribed by the Secretary
of Finance, upon recommendation of the Commissioner:
Suppliers of petroleum products to international carriers shall be allowed
to file a claim for refund of excise tax paid on such products, upon presenting
proof that the petroleum products were sold to international carriers of
Philippine or foreign registry, for their use or consumption outside the
Philippines, following the procedure under Section 135-A of this Code.
(b) xxx
(c) x x x."
SECTION 11. A new Section 135-A shall be introduced in the National
Internal Revenue Code of 1997, as amended. The new Section 135-A shall read as
follows: ATICcS

"SEC. 135-A. Refund of Excise Tax on Petroleum Products. — No

refund or credit of excise tax paid by suppliers on otherwise exempt sales
under Section 135 shall be allowed, unless the taxpayer files a written claim for
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 refund with the Commissioner, within two (2) years after the payment of excise
tax: Provided, however, That a return filed showing an overpayment shall be
considered a written claim for refund.
The Commissioner shall process and decide the refund under this
provision within ninety (90) days from the submission of complete documents
supporting the application filed. Should the Commissioner deny the claim for
refund in full or in part, the Commissioner shall communicate in writing to the
taxpayer, the legal and/or factual basis for the denial.
The taxpayer shall have fifteen (15) days from receipt of the denial to file
a request for reconsideration, which shall be resolved by the Commissioner
within fifteen (15) days from the receipt thereof. Failure to file a request for
reconsideration within the fifteen (15)-day period shall render the decision final.
In case of full or partial denial of the request for reconsideration, or
failure on the part of the Commissioner to act on the application for refund or
request for reconsideration within the periods prescribed above, the taxpayer
affected may, within thirty (30) days from the receipt of the decision denying the
request for reconsideration, or after the lapse of the period to decide on the
application for refund or request for reconsideration, in cases where no action is
made by the Commissioner, appeal the decision with the Court of Tax Appeals.
Failure on the part of any official agent or employee of the BIR to
process and decide on the application within the ninety (90)-day period and on
the request for reconsideration within the fifteen (15)-day period shall be
punishable under Section 269 of this Code."
SECTION 12. Section 237 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows: ETHIDa

"SEC. 237. Issuance of Invoices. —

(A) Issuance. — x x x
Upon the establishment of a system capable of storing and processing
the required data, the Bureau shall require taxpayers engaged in the export of
goods and services, taxpayers engaged in e-commerce, and taxpayers under
the jurisdiction of the Large Taxpayers Service to issue electronic invoices,
subject to rules and regulations to be issued by the Secretary of Finance upon
recommendation of the Commissioner following a public hearing held for this
purpose: Provided, That taxpayers not covered by the mandate of this provision
may voluntarily issue electronic invoices: Provided, further, That the Secretary
of Finance, upon the recommendation of the Commissioner, may require
taxpayers to issue electronic invoices.
xxx xxx xxx."
SECTION 13. Section 237-A of the National Internal Revenue Code of 1997,
as amended, is hereby further amended, to read as follows:
"SEC. 237-A. Electronic Sales Reporting System. — Upon the
establishment of a system capable of storing and processing the required data,
the Bureau shall require taxpayers engaged in the export of goods and
services, and taxpayers under the jurisdiction of the Large Taxpayers Service
to electronically report their sales data to the Bureau through the use of
electronic point of sale systems, subject to rules and regulations to be issued
by the Secretary of Finance as recommended by the Commissioner of Internal

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 Revenue: Provided, That the machines, fiscal devices, and fiscal memory
devices shall be at the expense of the taxpayer: Provided, further, That the
Secretary of Finance, upon the recommendation of the Commissioner, may
require taxpayers to electronically report their sales data to the Bureau.
All taxpayers required to issue and those who voluntarily choose to issue
electronic invoices and electronically report their sales data to the Bureau shall
be granted, in addition to the allowable deduction provided under Section 34(A)
(1), the following allowable deductions:
(1) For micro and small taxpayers as defined under Section 21(B) of
this Code, an additional deduction from taxable income of one hundred percent
(100%) of the total cost for setting up an electronic sales reporting system.
(2) For medium and large taxpayers as defined under Section 21(B)
of this Code, an additional deduction from taxable income of fifty percent (50%)
of the total cost for setting up an electronic sales reporting system.
The foregoing allowable deduction shall be availed of only once. The
importation of such electronic sales reporting system shall also be exempt from
taxes.
xxx xxx xxx."
SECTION 14. Section 269 (j) of the National Internal Revenue Code of 1997,
as amended, is further amended to read as follows: TIADCc

"SEC. 269. Violations Committed by Government Enforcement

Officers. — Every official, agent, or employee of the BIR or any other agency of
the Government charged with the enforcement of the provisions of this Code,
who is guilty of any of the offenses herein below specified shall, upon
conviction for each act or omission, be punished by a fine of not less than Fifty
thousand pesos (P50,000) but not more than One hundred thousand pesos
(P100,000) and suffer imprisonment of not less than ten (10) years but not
more than fifteen (15) years and shall likewise suffer an additional penalty of
perpetual disqualification to hold public office, to vote, and to participate in any
public election:
xxx xxx xxx
(j) Deliberate failure to act on the application for refunds within the
prescribed period provided under Sections 112, 135-A, and 204 of this Act.
xxx xxx xxx."
SECTION 15. Section 292 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 292. Extent of Authority to Grant Tax Incentives. — The Fiscal
Incentives Review Board or the Investment Promotion Agency, shall grant the
appropriate tax incentives provided in this Title to RBEs only to the extent of
their approved registered project or activity under the Strategic Investment
Priority Plan (SIPP), taking into consideration the infusion of investment capital,
generation of direct local employment which takes into account Republic Act
No. 11962, otherwise known as the 'Trabaho Para sa Bayan Act,' and other
standard and project-specific performance metrics of the registered project or
activity that may be imposed by the Fiscal Incentives Review Board or the
concerned Investment Promotion Agency."
SECTION 16. Section 293 of the National Internal Revenue Code of 1997, as
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 amended, is hereby further amended to read as follows: cSEDTC

"SEC. 293. Definitions. — When used in this Title:

(A) Capital equipment refers to machinery, equipment, major
components thereof, tools, devices, applications or apparatus, which are
directly attributable to the registered project or activity of the registered
business enterprise;
(B) Certificate of authority to import refers to the document issued by
the Investment Promotion Agency as proof of entitlement to exemption from
value-added tax and/or duty-free importation which shall contain a list of capital
equipment, raw materials, spare parts, or accessories to be imported that are
directly attributable to the production of goods and services, including goods
used for administrative purposes;
(C) Certificate of registration refers to the document evidencing
registration with an Investment Promotion Agency and entitlement to tax
incentives: Provided, That each registered project or activity of a registered
business enterprise should be supported by a separate certificate of
registration;
(D) Directly attributable refers to goods and services that are
incidental to and reasonably necessary for the registered project or activity of
the registered business enterprise, including janitorial, security, financial,
consultancy, marketing and promotion services, and services rendered for
administrative operations such as human resources, legal, and accounting:
Provided, That the determination of what is 'directly attributable' to the
registered project or activity of the registered business enterprise shall be made
by the relevant Investment Promotion Agency;
(E) Direct local employment x x x
(F) Domestic input x x x
(G) Domestic market enterprise x x x
(H) Export enterprise x x x
(I) Freeport zones refer to isolated and policed areas adjacent to a
port of entry, which shall be operated and managed as a separate customs
territory for purposes of ensuring free flow or movement of goods between
registered business enterprises, except those expressly prohibited by law,
within, into, and exported out of the freeport zone where imported goods may
be unloaded for immediate transshipment or stored, repacked, sorted, mixed,
or otherwise manipulated subject to the provisions of Sections 294(D) and (E)
and 295(C) and (D): Provided, That a freeport shall have a permanent customs
control or customs office at its perimeter; AIDSTE

(J) High-value domestic market enterprises refer to registered

domestic market enterprises with an investment capital exceeding Fifteen billion
pesos (Php15,000,000,000) and are engaged in sectors considered import-
substituting, or with export sales in the immediately preceding year of at least
One hundred million US dollars (USD100,000,000) or its equivalent in an
acceptable foreign currency: Provided, That the threshold specified herein may
be increased by the Fiscal Incentives Review Board;
(K) Investment capital refers to the value of investment indicated in
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 Philippine currency, that shall be used to carry out a registered project or
activity such as pre-operating expenses, cost of land and land improvements,
buildings, leasehold improvements, working capital, machinery and equipment,
inventory, and other current and non-current assets;
(L) Investment Promotion Agencies refer to government entities
created by law, executive order, decree, or other issuances, in charge of
promoting investments, granting and administering tax and non-tax incentives,
and overseeing the operations of the different economic zones and freeports in
accordance with their respective special laws. These include the Board of
Investments (BOI), Bangsamoro Board of Investments (BBOI), Bangsamoro
Economic Zone Authority (BEZA), Philippine Economic Zone Authority (PEZA),
Bases Conversion and Development Authority (BCDA), Subic Bay Metropolitan
Authority (SBMA), Clark Development Corporation (CDC), John Hay
Management Corporation (JHMC), Poro Point Management Corporation
(PPMC), Cagayan Special Economic Zone Authority (CEZA), Zamboanga City
Special Economic Zone and Freeport Authority (ZCSEZA), PHIVIDEC Industrial
Authority (PIA), Aurora Pacific Economic Zone Authority (APECO), Authority of
the Freeport Area of Bataan (AFAB), Tourism Infrastructure and Enterprise
Zone Authority (TIEZA), Bulacan Special Economic Zone and Freeport
Authority (BEZA), and all other similar existing authorities or those that may be
created by law unless otherwise specifically exempted from the coverage of this
Code.
(M) Metropolitan areas x x x
(N) Net book value refers to historical cost less accumulated
depreciation, as reflected in the books of account or financial statements of the
registered business enterprise, and determined in accordance with accepted
accounting standards;
(O) Other government agencies administering tax incentives x x x
(P) Other registered entities x x x
(Q) Qualified capital expenditure x x x
(R) Registered business enterprise (RBE) x x x
(S) Research and development x x x
(T) Sophisticated x x x
(U) Sophistication x x x
(V) Source document x x x
(W) Special economic zone or ecozone refers to a selected area
which shall be operated and managed as a separate customs territory that is
highly developed or has the potential to be developed into an agro-industrial,
industrial, information technology, or tourist/recreational area, whose metes and
bounds are fixed or delimited by presidential proclamations and is within a
specific geographical area which includes industrial estates (IEs), export
processing zones (EPZs), ICT parks and centers, and free trade zones:
Provided, That for the ecozone to qualify as a separate customs territory, an
ecozone shall have a permanent customs control or customs office at its
perimeter: Provided, however, That areas where mining extraction is
undertaken shall not be declared as an ecozone: Provided, further, That vertical
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 economic zones, such as, but not limited to, buildings, selected floors within
buildings, and selected areas on a floor, need to comply with the minimum
contiguous land area as determined by the Fiscal Incentives Review Board;
(X) Technical obsolescence refers to the state of an asset when its
design or specification no longer fulfills the function for which it was originally
designed and/or the machinery, equipment, spare parts and/or materials have
diminished in value as caused by changes in technology and new inventions,
rendering it less desirable in the industry, including a decline in value due to the
availability of improved, more cost-effective alternatives, or due to the
availability of more advanced technology that allows for more efficiency such as
earlier replacement of information technology assets, as may be verified and
approved by the Investment Promotion Agency; and
(Y) Training x x x."
SECTION 17. Section 294 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows: SDAaTC

"SEC. 294. Incentives. — Subject to the conditions and period of

availment in Sections 295, 296, and 296-A, respectively, the following types of
tax incentives may be granted to registered projects or activities:
(A) Income Tax Holiday (ITH). — For all RBEs, exemption from
income tax on registered project or activity imposed under this Code;
(B) Special Corporate Income Tax (SCIT) Rate. — For export
enterprise, a tax rate equivalent to five percent (5%) based on the gross income
earned, in lieu of all national and local taxes and local fees and charges. AaCTcI

xxx xxx xxx

(C) Enhanced Deductions Regime (EDR). — For export enterprise
and domestic market enterprise, the following may be allowed as deductions:
(1) xxx
(2) xxx
(3) xxx
(4) xxx
(5) xxx
(6) One hundred percent (100%) additional deduction on power
expense incurred in the taxable year;
(7) Deduction for reinvestment allowance to manufacturing and
tourism industries. — When a manufacturing or tourism RBE reinvests its
undistributed profit or surplus in manufacturing or tourism projects or activities,
respectively, that are listed in the SIPP, no more than fifty percent (50%) of the
amount reinvested shall be allowed as a deduction from its taxable income
within a period of five (5) years from the time of such reinvestment;
(8) Fifty percent (50%) additional deduction on expenses relating to
exhibitions, trade missions, or trade fairs; and
(9) Enhanced Net Operating Loss Carry-Over (NOLCO). — The net
operating loss of the registered project or activity during the first three (3) years
from the start of commercial operation, which had not been previously offset as
deduction from gross income, may be carried over as deduction from gross
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 income within the next five (5) consecutive taxable years immediately following
the last year of the ITH entitlement period of the project.
(D) Duty exemption on importation of capital equipment, raw
materials, spare parts, or accessories, including goods used for administrative
purposes, of the registered project or activity;
(E) Value-Added Tax (VAT) exemption on importation and VAT zero-
rating on local purchases; and
(F) RBE Local Tax. — The concerned local government unit may,
through an ordinance issued by the concerned Sanggunian, impose an RBE
local tax at the rate of not more than two percent (2%) of an RBE's gross
income, as defined under Section 27(E)(4), during the ITH and EDR, as
provided under Sections 294(A) and (C) of this Code, respectively, which shall
be in lieu of all local taxes and local fees and charges imposed by the local
government unit under Republic Act No. 7160, otherwise known as the "Local
Government Code of 1991," as amended: Provided, That RBE local tax shall
not be imposed on RBEs under SCIT."
SECTION 18. Section 295 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 295. Conditions of Availment. — The availment of tax
incentives in the preceding section shall be governed by the following rules:
(A) Registered export enterprises may opt for one of the following:
(1) ITH, which shall be followed by SCIT or EDR; or
(2) SCIT, which shall be in lieu of all national and local taxes and
local fees and charges, and may be granted immediately at the start of
commercial operations; or
(3) EDR, which may be granted immediately at the start of
commercial operations.
The elected incentive package shall be irrevocable for the entire duration
of entitlement to such incentives under Sections 296 and 296-A of this Code:
Provided, That in no case shall the EDR be granted simultaneously with the
SCIT.
(B) Registered domestic market enterprises may opt for either:
(1) ITH, which shall be followed by EDR; or
(2) EDR, which may be granted immediately at the start of
commercial operations.
The elected incentive package shall be irrevocable for the entire duration
of entitlement to such incentives under Sections 296 and 296-A of this Code.
The following conditions for the availment of each enhanced deduction
shall be complied with: acEHCD

(1) xxx
(2) xxx
(3) xxx
(4) xxx
(5) xxx
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 (6) The additional deductions on power expense shall only apply to
power utilized for the registered project or activity.
(7) The deduction for reinvestment allowance to manufacturing and
tourism industries shall only be availed of until December 31, 2034.
(8) The additional deduction on expenses relating to trade fairs,
exhibitions, or trade missions shall include expenses incurred in promoting the
export of goods or the provision of services to foreign markets approved by the
concerned Investment Promotion Agency.
The Department of Finance, in coordination with the BIR, Fiscal
Incentives Review Board, and Investment Promotion Agencies, shall prescribe
the terms and conditions on the grant of EDR under Section 294(C) and this
Title.
(C) The duty exemption shall only apply to the importation of capital
equipment, raw materials, spare parts, or accessories directly attributable to the
registered project or activity of RBEs, including goods used for administrative
purposes: Provided, That the following conditions are complied with:
(1) The capital equipment, raw materials, spare parts, or
accessories are directly attributable to the registered project or activity of the
RBE, including goods used for administrative purposes, and are not produced
or manufactured domestically in sufficient quantity or of comparable quality and
at reasonable prices. Prior approval of the Investment Promotion Agency must
be secured for the part-time utilization of said capital equipment, raw materials,
spare parts, or accessories in a non-registered project or activity to maximize
usage thereof: Provided, That the RBE shall adopt a method to best allocate
the same at the time of application for a certificate of authority to import, or its
equivalent: Provided, further, That the proportionate taxes and duties are paid
on a specific capital equipment, raw materials, spare parts, or accessories in
proportion to the utilization for non-registered projects or activities. In the event
that the capital equipment, raw materials, spare parts, or accessories, shall be
used for non-registered project or activity of the RBE at any time within the first
five (5) years from the date of importation, the RBE shall first seek prior
approval of the concerned Investment Promotion Agency and pay the taxes
and customs duties that were not paid upon the importation; and
(2) The approval of the Investment Promotion Agency was obtained
by the RBE prior to the importation of such capital equipment, raw materials,
spare parts, or accessories. EcTCAD

An Investment Promotion Agency may authorize the importation of

capital equipment, raw materials, spare parts, or accessories pending issuance
of the certificate of registration, subject to the posting of a performance bond or
bank guarantee equivalent to duties and taxes waived on such importations and
other conditions as may be determined by the concerned Investment Promotion
Agency and the BOC.
No taxes and duties shall be imposed on subsequent sale, transfer, or
disposition of the capital equipment, raw materials, spare parts, or accessories,
which were granted tax and customs duty exemption hereunder within the first
five (5) years from date of importation. The approval of the Investment
Promotion Agency must be secured before the sale, transfer, or disposition of
the capital equipment, raw materials, spare parts, or accessories, which were
granted tax and customs duty exemption hereunder, and shall be allowed only
under any of the following circumstances:
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 (a) If made to another enterprise availing of customs duty exemption
on imported capital equipment, raw materials, spare parts, or accessories;
(b) Exportation of capital equipment, raw materials, spare parts,
accessories, source documents, or goods required for pollution abatement and
control; or
(c) If donated to the Government of the Philippines or to any of its
agencies or political subdivisions, including fully-owned government
corporations, TESDA, state universities and colleges (SUCs), or DepEd and
CHED-accredited schools: Provided, That the donation shall be exempt from
import duties and taxes, including donor's tax.
In case of subsequent sale, transfer, or disposition of tax and duty-free
capital equipment, raw materials, spare parts, or accessories, within the first
five (5) years from date of importation and upon approval by the Investment
Promotion Agency, there shall be taxes and duties assessed based on the net
book value of the capital equipment, raw materials, spare parts, or accessories
if:
(a) Made to another enterprise not availing of duty exemption on
imported capital equipment, raw materials, spare parts, or accessories; or
(b) There is proven technical obsolescence of the capital equipment,
raw materials, spare parts, or accessories.
Provided, That if the RBE sells, transfers, or disposes the
aforementioned imported items without prior approval, the RBE and the
vendee, transferee, or assignee shall be solidarily liable to pay twice the
amount of the duty exemption that should have been paid during its
importation: Provided, further, That the sale, transfer, or disposition of the
capital equipment, raw materials, spare parts, or accessories made after five (5)
years from date of importation shall require that prior notice be given by the
RBE to the Investment Promotion Agency: Provided, furthermore, That even if
the sale, transfer, or disposition of the capital equipment, raw materials, spare
parts, or accessories was made after five (5) years from date of importation with
notice to the Investment Promotion Agency, the RBE is still liable to pay the
duties based on the net book value of the capital equipment, raw materials,
spare parts, or accessories if it has violated any of its registration terms and
conditions. SDHTEC

(D) The VAT exemption on importation and VAT zero-rating on local

purchases shall only apply to goods and services directly attributable to the
registered project or activity of a registered export enterprise, or a registered
high-value domestic market enterprise, including expenses incidental thereto.
The project or activity registered with the Investment Promotion Agency shall
be subject to the following conditions:
(1) Sale of goods or services by a VAT-registered seller to a
registered export enterprise, regardless of location, shall be subject to zero
percent (0%) VAT;
(2) Sale, transfer, or disposal of previously VAT-exempt imported
capital equipment, raw materials, spare parts, or accessories shall be subject to
the following rules:
I. If the purchaser is a registered export enterprise, regardless of
location, the transaction shall be subject to zero percent (0%) VAT; and
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 II. If the purchaser is a registered domestic market enterprise,
regardless of location, the transaction shall be subject to twelve percent (12%)
VAT based on the net book value of the capital equipment, raw materials,
spare parts, or accessories:
Provided, That local sales of goods and/or services by an RBE,
regardless of the income tax incentives regime and location, shall be subject to
twelve percent (12%) VAT, unless otherwise exempt or zero-rated under Titles
IV and XIII of this Code. For this purpose, 'local sales' shall cover sales of
goods and services to domestic market enterprises or non-RBEs, regardless of
whether the sale occurs within the freeport or economic zones: Provided,
further, That the liability to pay and remit the VAT to the government rests with
the buyer of the said goods or services.
Any registered export enterprise that fails to meet the seventy percent
(70%) export sales threshold in the immediately preceding year or high-value
domestic market enterprise that fails to meet the export sale or investment
capital requirement shall be disqualified from availing of duty exemption on
importation under Section 294(D), and VAT exemption on importation and VAT
zero-rating on local purchases under Section 294(E) in the immediately
succeeding year.
Notwithstanding the provisions in the preceding paragraphs, sales
receipts and other income derived from non-registered project or activity shall
be subject to appropriate taxes imposed under this Code. HSAcaE

(E) xxx
(F) xxx
Any law to the contrary notwithstanding, the importation of petroleum
products by any person, including RBEs, shall be subject to the payment of
applicable duties and taxes as provided under Republic Act No. 10863,
otherwise known as the 'Customs Modernization and Tariff Act,' and this Code,
respectively, upon importation into the Philippine customs territory and/or into
free zones as defined under Republic Act No. 10863: Provided, That the
importation of petroleum products used in international shipping or air transport
operations shall be covered by the provisions of Sections 109(U) and 135(A) of
this Code.
xxx xxx xxx
(G) Crude oil x x x
Provided, That applicable duties x x x
(H) The RBE local tax shall be imposed on an RBE which meets and
maintains the conditions for its registration, during the period of availment of the
ITH and the EDR.
The tax shall be directly remitted by the RBE to the Treasurer's office of
the municipality or city where the enterprise is located.
Where two (2) or more local government units cover the same
enterprise, the sharing between such local government units shall be as
follows:
(1) Fifty percent (50%) of revenues shall be shared equally among
the local government units; and
(2) Fifty percent (50%) of revenues shall be apportioned based on
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 the population of the local government units.
Fifty percent (50%) of the share of the municipality based on the
foregoing allocation shall be remitted to the province where the said
municipality is located: Provided, That cities shall retain one hundred percent
(100%) of their share.
Local government units may reduce or waive the rate of tax, or their
share thereof, in the case of two (2) or more local government units covering
the same enterprise.
RBEs, whose performance commitments include job generation, shall
maintain their employment levels to the extent practicable. In case of reduced
employment or when the performance commitment for job generation is not
met, the RBEs must submit to their respective Investment Promotion Agencies
and the Fiscal Incentives Review Board their justifications for and plans to
address the same in the succeeding year."
SECTION 19. A new Section 295-A shall be introduced in the National
Internal Revenue Code of 1997, as amended. The new Section 295-A shall read as
follows: AScHCD

"SEC. 295-A. Registered Business Enterprises Taxpayer Service. —

A separate service within the BIR is hereby created to support the end-to-end
tax compliance of RBEs. The Commissioner shall prescribe the manner and
place of filing returns and payment of taxes by RBEs through the said service.
For ease of compliance with tax rules and regulations, simplified filing and
payment processes shall be implemented for RBEs."
SECTION 20. Section 296 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 296. Period of Availment of Incentives for Projects or
Activities Approved by the Investment Promotion Agencies. — The period of
availment of incentives granted by the Investment Promotion Agencies to RBEs
shall be as follows:
(A) For export enterprise under the SIPP, ITH of four (4) to seven (7)
years, depending on location and industry priorities as specified in this section,
followed by SCIT or EDR for ten (10) years, or SCIT or EDR for a maximum
period of fourteen (14) to seventeen (17) years, depending on location and
industry priorities: Provided, That the application for extension of availment of
incentives shall only be allowed for the same registered project or activity if
such project or activity employs at least ten thousand (10,000) direct local
employees and maintains the said number during its registration, even if the
registered project or activity no longer complies with the conditions and
qualifications set forth in the SIPP: Provided, further, That the extension of
availment of incentives shall not exceed five (5) years, subject to the
performance review by the Investment Promotion Agency. Notwithstanding any
provision to the contrary, no ITH shall be granted to registered export
enterprises that applied for extension of availment of incentives for the same
project or activity.
A qualified expansion project or activity registered under this Act may
qualify to avail of SCIT or EDR for eight (8) years, subject to the provisions of
Sections 294(B) and (C), qualifications set forth in the SIPP, and performance
review by the Investment Promotion Agency: Provided, That existing registered
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 projects or activities prior to the effectivity of Republic Act No. 11534 otherwise
known as the 'Corporate Recovery and Tax Incentives for Enterprises Act', may
qualify to register on or before December 31, 2024 and avail of the incentives
granted under Republic Act No. 11534 for the prescribed period, subject to the
criteria and conditions set forth in the SIPP. The qualified expansion project or
activity may also be entitled to duty exemption on importation, VAT exemption
on importation, and VAT zero-rating on local purchases subject to the
provisions of Sections 294(D) and (E), respectively. HESIcT

(B) For domestic market enterprise under the SIPP, ITH for four (4)
to seven (7) years followed by EDR for ten (10) years, or EDR for a maximum
period of fourteen (14) to seventeen (17) years, depending on location and
industry priorities: Provided, That the application for extension of availment of
incentives shall be allowed for the same registered project or activity only if
such project or activity employs at least ten thousand (10,000) direct local
employees and maintains the said number during its registration, even if the
registered project or activity no longer complies with the conditions and
qualifications set forth in the SIPP: Provided, further, That the extension of
availment of incentives shall not exceed five (5) years, subject to the
performance review by the Investment Promotion Agency. Notwithstanding any
provision to the contrary, no ITH shall be granted to domestic market
enterprises that have applied for extension of availment of incentives for the
same project or activity.
A qualified expansion project or activity registered under this Act may
qualify to avail of EDR for eight (8) years, subject to the provisions of Section
294(C), qualifications set forth in the SIPP and performance review by the
Investment Promotion Agency or the Fiscal Incentives Review Board, as the
case may be: Provided, That existing registered projects or activities prior to the
effectivity of Republic Act No. 11534 may qualify to register on or before
December 31, 2024 and avail of the incentives granted under Republic Act No.
11534 for the prescribed period, subject to the criteria and conditions set forth in
the SIPP.
The period of availment of the foregoing income tax-based incentives
shall commence from the actual start of commercial operations with the RBE
availing of the tax incentives within three (3) years from the date of registration,
unless otherwise provided in the SIPP and its corresponding guidelines.
xxx xxx xxx
(3) Tier III activities shall include (i) research and development
resulting in demonstrably significant value-added, higher productivity, improved
efficiency, breakthroughs in science and health, and high-paying jobs; (ii)
generation of new knowledge and intellectual property registered and/or
licensed in the Philippines; (iii) commercialization of patents, industrial designs,
copyrights and utility models owned or co-owned by an RBE; (iv) highly
technical manufacturing; or (v) are critical to the structural transformation of the
economy and require substantial catch-up efforts, including but not limited to
cyber-security, artificial intelligence, and data-center facilities.
The period of availment of incentives based on the combination of both
location and industry priorities, as determined in the SIPP, shall be as follows:
AcICHD

For exporters:

Location/ Tier I Tier II Tier III

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 Industry Tiers

National Capital 4 ITH + 10 5 ITH + 10 6 ITH + 10

Region EDR/SCIT, or EDR/SCIT, or EDR/SCIT, or
14 EDR/SCIT 15 EDR/SCIT 16 EDR/SCIT

Metropolitan 5 ITH + 10 6 ITH + 10 7 ITH + 10

areas or areas EDR/SCIT, or EDR/SCIT, or EDR/SCIT, or
contiguous and 15 EDR/SCIT 16 EDR/SCIT 17 EDR/SCIT
adjacent to the
National Capital
Region

All other areas 6 ITH + 10 7 ITH + 10 7 ITH + 10

EDR/SCIT, or EDR/SCIT, or EDR/SCIT, or
16 EDR/SCIT 17 EDR/SCIT 17 EDR/SCIT

For domestic market activities:

Location/
Tier I Tier II Tier III
Industry Tiers

National Capital Region 4 ITH + 10 5 ITH + 10 6 ITH +

EDR, or EDR, or 10 EDR,
14 EDR 15 EDR or 16
EDR

Metropolitan areas or areas 5 ITH + 10 6 ITH + 10 7 ITH +

contiguous and adjacent to the EDR, or EDR, or 10 EDR,
National Capital Region 15 EDR 16 EDR or 17
EDR

All other areas 6 ITH + 10 7 ITH + 10 7 ITH +

EDR, or EDR, or 10 EDR,
16 EDR 17 EDR or 17
EDR

In addition to the incentives provided in the tiers above, projects or

activities of registered business enterprises located in areas recovering from
armed conflict or a major disaster, as determined by the Office of the President,
shall be entitled to two (2) additional years of income tax-based incentives. caITAC

Projects or activities registered prior to the effectivity of this Act, or under

the incentive system provided herein that shall, in the duration of their
incentives, completely relocate from the National Capital Region, shall be
entitled to three (3) additional years of income tax-based incentives: Provided,
That the additional incentive shall commence at the completion of the
relocation of operations.
RBEs may continue to avail of the VAT zero-rating on local purchases
and VAT exemption on importation under Section 294(E), and duty exemption
on importation under Section 294(D), for the entire registration period as an
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 RBE, reckoned from the date of registration, if the RBEs continue to meet the
terms and conditions of registration by their respective Investment Promotion
Agencies and if the RBEs maintain at least seventy percent (70%) of total
annual production or output as export sales for the immediately preceding year.
Registered domestic market enterprises may avail of duty exemption on
importation from the date of registration until the expiration of the income tax-
based incentives granted in this section.
After the expiration of the entitlement to VAT zero-rating on local
purchases and VAT exemption on importation under this Title, registered export
enterprises may avail of the VAT zero-rating on local purchases and VAT
exemption on importation under Sections 106, 108, and 109 of this Code:
Provided, That they comply with the requirements set forth therein."
SECTION 21. A new Section 296-A shall be introduced in the National
Internal Revenue Code of 1997, as amended. The new Section 296-A shall read as
follows: TAIaHE

"SEC. 296-A. Period of Availment of Incentives for Projects or

Activities Approved by the Fiscal Incentives Review Board. — The period of
availment of incentives granted by the Fiscal Incentives Review Board to RBEs
shall be as follows:
(A) For an export enterprise under the SIPP, ITH of four (4) to seven
(7) years, depending on location and industry priorities as specified in this
section, followed by SCIT or EDR for twenty (20) years, or SCIT or EDR for a
maximum period of twenty-four (24) to twenty-seven (27) years, depending on
location and industry priorities: Provided, That the application for extension of
availment of incentives shall only be allowed for the same registered project or
activity if such project or activity employs at least ten thousand (10,000) direct
local employees and maintains the said number during its registration, even if
the registered project or activity no longer complies with the conditions and
qualifications set forth in the SIPP: Provided, further, That the extension of
availment of incentives shall not exceed ten (10) years, subject to the
performance review by the Fiscal Incentives Review Board. Notwithstanding
any provision to the contrary, no ITH shall be granted to registered export
enterprises that have applied for extension of availment of incentives for the
same project or activity.
A qualified expansion project or activity registered under this Act may
qualify to avail of SCIT or EDR for thirteen (13) years, subject to the provisions
of Sections 294(B) and (C), qualifications set forth in the SIPP and performance
review by the Fiscal Incentives Review Board: Provided, That existing
registered projects or activities prior to the effectivity of this Act may qualify to
register and avail of the incentives granted under this Act for the prescribed
period, subject to the criteria and conditions set forth in the SIPP. The qualified
expansion project or activity may also be entitled to VAT exemption on
importation and VAT zero-rating on local purchases under Section 294(E) and
duty exemption on importation under Section 294(D).
(B) For domestic market enterprise under the SIPP, ITH of four (4) to
seven (7) years, followed by EDR for twenty (20) years, or EDR for a maximum
period of twenty-four (24) to twenty-seven (27) years, depending on location
and industry priorities: Provided, That the application for extension of availment
of incentives shall be allowed for the same registered project or activity only if
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 employment level for such project or activity employs at least ten thousand
(10,000) direct local employees and maintains the said number during its
registration, even if the registered project or activity no longer complies with the
conditions and qualifications set forth in the SIPP: Provided, further, That the
extension of availment of incentives shall not exceed ten (10) years, subject to
the performance review by the Fiscal Incentives Review Board. Notwithstanding
any provision to the contrary, no ITH shall be granted to domestic market
enterprises that have applied for extension of availment of incentives for the
same project or activity.
A qualified expansion project or activity registered under this Act may
qualify to avail of EDR for thirteen (13) years, subject to the provisions of
Section 294(C), qualifications set forth in the SIPP, and performance review by
the Investment Promotion Agency or Fiscal Incentives Review Board, as the
case may be: Provided, That existing registered projects or activities prior to the
effectivity of this Act may qualify to register and avail of the incentives granted
under this Act for the prescribed period, subject to the criteria and conditions
set forth in the SIPP. The qualified expansion project or activity may also be
entitled to VAT exemption on importation and VAT zero-rating on local
purchases under Section 294(E) and duty exemption on importation under
Section 294(D).
The period of availment of the foregoing income tax-based incentives
shall commence from the actual start of commercial operations with the RBE
availing of the tax incentives within three (3) years from the date of registration,
unless otherwise provided in the SIPP and its corresponding guidelines. ICHDca

The period of availment of incentives based on the combination of both

location and industry priorities, as determined in the SIPP, shall be as follows:
For exporters:

LOCATION/
INDUSTRY TIER I TIER II TIER III
TIERS

National 4 ITH + 20 5 ITH + 20 6 ITH + 20

Capital Region SCIT/EDR, or SCIT/EDR,or 25 SCIT/EDR,or 26
24 SCIT/EDR SCIT/EDR SCIT/EDR

Metropolitan 5 ITH + 20 6 ITH + 20 7 ITH + 20

areas or areas SCIT/EDR, or SCIT/EDR, or SCIT/EDR, or
contiguous and 25 SCIT/EDR 26 SCIT/EDR 27 SCIT/EDR
adjacent to the
National
Capital Region

All other areas 6 ITH + 20 7 ITH + 20 7 ITH + 20

SCIT/EDR, or SCIT/EDR, or SCIT/EDR, or
26 SCIT/EDR 27 SCIT/EDR 27 SCIT/EDR

For domestic market activities:

LOCATION/
TIER I TIER II TIER III
INDUSTRY TIERS
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 National Capital Region 4 ITH + 20 5 ITH + 20 6 ITH +
EDR, or EDR, or 20 EDR,
24 EDR 25 EDR or 26
EDR

Metropolitan areas or areas 5 ITH + 20 6 ITH + 20 7 ITH +

contiguous and adjacent to the EDR, or EDR, or 20 EDR,
National Capital Region 25 EDR 26 EDR or 27
EDR

All other areas 6 ITH + 20 7 ITH + 20 7 ITH +

EDR, or EDR, or 20 EDR,
26 EDR 27 EDR or 27
EDR

RBEs may continue to avail of the VAT zero-rating on local purchases

and VAT exemption on importation under Section 294(E), and duty exemption
on importation under Section 294(D), for the entire registration period as an
RBE, reckoned from the date of registration, if the RBEs continue to meet the
terms and conditions of their registration with their respective Investment
Promotion Agencies and if the following requirements are met for the
immediately preceding year:
(1) Registered export enterprises maintain at least seventy percent
(70%) of total annual production or output as export sales;
(2) High-value domestic market enterprises satisfy the investment
capital or export requirement under Section 293(J) of this Code. Qualified high-
value domestic market enterprises may avail of the said incentives from the
date of registration until the expiration of the income tax-based incentives
granted in this section. cDHAES

Registered domestic market enterprises may avail of duty exemption

from the date of registration until the expiration of the income tax-based
incentives granted in this section.
After the expiration of the entitlement to VAT zero-rating on local
purchases and VAT exemption on importation under this Title, registered export
enterprises may avail of the VAT zero-rating on local purchases and VAT
exemption on importation under Sections 106, 108, and 109 of this Code:
Provided, That they comply with the requirements set forth therein.
In addition to the incentives provided in the tiers above, projects or
activities of registered business enterprises located in areas recovering from
armed conflict or a major disaster, as determined by the Office of the President,
shall be entitled to two (2) additional years of income tax-based incentives.
Projects or activities registered prior to the effectivity of this Act or under
the incentive system provided herein that completely relocate from the National
Capital Region, within the duration of their incentives, shall be entitled to three
(3) additional years of income tax-based incentives: Provided, That the
additional incentive shall commence upon the completion of the relocation of
operations."
SECTION 22. Section 297 of the National Internal Revenue Code of 1997, as
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 amended, is hereby further amended to read as follows: TCAScE

"SEC. 297. Expanded Functions of the Fiscal Incentives Review

Board. — The functions and powers of the Fiscal Incentives Review Board
created under Presidential Decree No. 776, as amended, shall be further
expanded as follows:
(A) To exercise policy-making, oversight, regulatory, and quasi-
judicial functions on the administration and grant of tax incentives by the
Investment Promotion Agencies and other government agencies administering
tax incentives. In particular, the Fiscal Incentives Review Board shall:
(1) Determine the target performance metrics as conditions to avail
of tax incentives;
(2) Review and audit the compliance of Investment Promotion
Agencies and other government agencies administering tax incentives, with
respect to the administration and grant of tax incentives and impose sanctions
such as, but not limited to, withdrawal, suspension, or cancellation of their
authority to grant tax incentives under this Title without prejudice to the conduct
of inquiry, investigation, and filing of appropriate criminal and administrative
cases against erring officials and employees in accordance with the procedures
prescribed under existing laws;
(3) Conduct regular monitoring and evaluation of investment and
non-investment tax incentives, such as using cost-benefit analysis to determine
their impact on the economy and whether agreed performance targets are met;
and prescribe data requirements, reporting standards, processes, and
procedures for the application of incentives for the calculation of costs and
benefits upon application;
(4) Check and verify, as necessary, the compliance of RBEs,
through the Investment Promotion Agencies, with the terms and conditions of
their availment, in particular the agreed target performance metrics, rules and
regulations of this Act, and other relevant laws or issuances;
(5) Provide Investment Promotion Agencies with capacity-building
activities to ensure that they are equipped to comply with reportorial
requirements; and
(6) Assess its organizational structure, focusing on the adequacy of
its human resources for regulatory and quasi-judicial functions. If necessary,
the Fiscal Incentives Review Board shall submit to the Department of Budget
and Management the proposed organizational changes to strengthen its human
resources in accordance with existing laws and regulations.
For this purpose, all Investment Promotion Agencies and other
government agencies administering tax incentives shall annually furnish the
Fiscal Incentives Review Board with all the issuances related to the grant and
administration of incentives.
(B) To approve or disapprove, the grant of tax incentives to the
extent of the registered project or activity listed in the SIPP upon the
recommendation of the Investment Promotion Agency: Provided, That the
application for tax incentives shall be duly accompanied by a cost-benefit
analysis: Provided, further, That the Investment Promotion Agencies shall use
the Fiscal Incentives Review Board-prescribed data requirements and
methodologies for the application of incentives in calculating the costs and
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 benefits upon application: Provided, further, That the Investment Promotion
Agencies shall grant the tax incentives to registered projects or activities listed
in the SIPP with investment capital of Fifteen billion pesos (P15,000,000,000)
and below: Provided, furthermore, That the Fiscal Incentives Review Board, in
consultation with the Investment Promotion Agencies, may increase the
threshold amount of Fifteen billion pesos (P15,000,000,000);
(C) To approve applications for tax subsidies to government-owned
or -controlled corporations, government instrumentalities, government
commissaries, and state universities and colleges.
For this purpose, the other government agencies shall ensure complete
submission of applications, documents, records, books, or other relevant data
or material; ASEcHI

(D) To formulate additional time-bound or place-specific projects or

activities for inclusion in the SIPP during periods of recovery from calamities
and post-conflict situations and where the Fiscal Incentives Review Board
determines that there is a need to attract many classes, firms, and other
investors that would accelerate the growth of a region's flagship industries, in
accordance with the Medium-Term Development Plan and Republic Act No.
11962, otherwise known as the 'Trabaho Para sa Bayan Act,' and recommend
incentives to the President;
(E) To cancel, suspend, or withdraw, after due process, the
enjoyment of fiscal incentives of concerned RBEs on its own initiative or upon
the recommendation of the Investment Promotion Agency for flagrant and
material violations of any of the conditions imposed in the grant of fiscal
incentives, including, but not limited to, the non-compliance with the agreed
performance commitments, and endorse RBEs whose incentives are cancelled,
suspended, or withdrawn to the concerned revenue agencies for the
assessment and collection of taxes and duties due commencing from the first
year of availment;
(F) xxx
(G) To require Investment Promotion Agencies and other
government agencies administering tax incentives to submit, regularly or when
requested, summaries of approved investment and incentives granted, and
firm- or entity-level tax incentives and benefits data as input to the Fiscal
Incentives Review Board's review and audit function, and evaluation of
performance of recipients of tax incentives. For this purpose, the Fiscal
Incentives Review Board shall maintain a masterlist of registered products and
services for export or domestic consumption that are entitled to incentives:
Provided, That to facilitate compliance with the foregoing, the DTI, in
coordination with relevant regulatory bodies, shall cause the registration and
reporting by RBEs of the types of services rendered whether domestically or to
foreign clients; types of products manufactured domestically, products imported
and sold locally, and products exported;
(H) To publish regularly, per firm, the data pertaining to the amount
of tax incentives, tax payments, and other related information, including benefits
data, subject to the provisions of Chapter V of this Title;
(I) xxx
(J) xxx
(K) To decide on issues, on its own initiative or upon the
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 recommendation of the Investment Promotion Agency, after due hearing,
concerning the approval, disapproval, cancellation, suspension, withdrawal, or
forfeiture of tax incentives or tax subsidy in accordance with this Act. The Fiscal
Incentives Review Board shall decide on the matter within ninety (90) days from
the date when the Fiscal Incentives Review Board declares the issues
submitted for resolution. A business enterprise adversely affected by the
decision of the Fiscal Incentives Review Board may, within thirty (30) days from
receipt of the adverse decision, appeal the same to the Court of Tax Appeals;
cTDaEH

(L) To promulgate such rules and regulations as may be necessary

to implement the intent and provisions of this Title. The Fiscal Incentives
Review Board may use any electronic means of publication in the Official
Gazette or its official website;
(M) xxx
(N) xxx
(O) To recommend policies to prevent abuse of fiscal incentives
availment and tax evasion under this Code and smuggling activities; and
(P) To exercise all other powers necessary or incidental to attain the
purposes of this Act and other laws vesting additional functions on the Fiscal
Incentives Review Board.
xxx xxx xxx."
SECTION 23. A new Section 297-A shall be introduced in the National
Internal Revenue Code of 1997, as amended. The new Section 297-A shall read as
follows: ITAaHc

"SEC. 297-A. Processing of Tax Incentive Applications. — The

Fiscal Incentives Review Board and Investment Promotion Agencies shall issue
a decision on applications for tax incentives within twenty (20) working days
from the receipt of all required documents, in accordance with Section 9 of
Republic Act No. 11032, otherwise known as the 'Ease of Doing Business and
Efficient Government Service Delivery Act of 2018.' An extension of the
processing period may be permitted only once, and shall in no case exceed an
additional twenty (20) working days."
SECTION 24. Section 300 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 300. Strategic Investment Priority Plan. — The BOI, in
consultation with the Fiscal Incentives Review Board, and the Investment
Promotion Agencies, other government agencies administering tax incentives,
and the private sector, shall formulate the SIPP to be submitted to the
President for approval, which may contain recommendations for types of non-
fiscal support needed to create high-skilled jobs to grow a local pool of
enterprises, particularly micro, small and medium enterprises (MSMEs), that
can supply to domestic and global value chains, to increase the sophistication
of products and services that are produced and/or sourced domestically, to
expand domestic supply and reduce dependence on imports, and to attract
significant foreign capital or investment. The SIPP may include areas of
investment that are specific to an area or region, taking into consideration the
project or activity that the Investment Promotion Agencies in those areas or
regions deem fit to promote, in order to foster regional growth and attract
investments: Provided, That the project or activity identified by the Investment
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 Promotion Agencies shall be consistent with the Philippine Development Plan
and Republic Act No. 11962, otherwise known as the 'Trabaho Para sa Bayan
Act.' The SIPP shall be valid for a period of three (3) years, subject to review
and amendment every three (3) years thereafter unless there would be a
supervening event that would necessitate its review: Provided, That the BOI
shall cause the publication of the rules and regulations implementing the SIPP,
including any amendments thereof, in the Official Gazette or newspaper of
general circulation, and on its official website, to be effective.
The SIPP shall contain the following:
(A) Priority projects or activities that are included in the Philippine
Development Plan or its equivalent, or other government programs, taking into
account any of the following:
xxx xxx xxx
(B) Scope and coverage of location and industry tiers in Section 296.
All sectors or industries that may be included in the SIPP shall undergo
an evaluation to determine the suitability and potential of the industry or the
sector in promoting long-term growth and sustainable development, and the
national interest. In no case shall a sector or industry be included in the SIPP
unless it is supported by a formal evaluation process or report.
xxx xxx xxx
In no case shall the Investment Promotion Agencies accept applications
unless the project or activity is listed in the SIPP. Projects or activities not listed
in the SIPP shall be automatically disapproved."
SECTION 25. Section 301 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 301. Power of the President to Grant Incentives. —
Notwithstanding the provisions of Sections 295, 296, and 296-A, the President
may, in the interest of national economic development, or upon the
recommendation of the Fiscal Incentives Review Board, modify the mix, period
or manner of availment of incentives provided under this Code or craft the
appropriate fiscal and non-fiscal support package for a highly desirable project
or a specific industrial activity based on defined development strategies for
creating high-value jobs, building new industries to diversify economic activities,
and attracting significant foreign and domestic capital or investment, and the
fiscal requirements of the activity or project, subject to maximum incentive
levels recommended by the Fiscal Incentives Review Board: Provided, That the
grant of ITH shall not exceed ten (10) years followed by SCIT of five percent
(5%) or EDR; or SCIT or EDR, which may be immediately granted at the start
of commercial operations: Provided, further, That the total period of income tax-
based incentive availment shall not exceed forty (40) years. cSaATC

The Fiscal Incentives Review Board shall determine whether the benefits
that the government may derive from such investment are clear and convincing
and far outweigh the cost of incentives that will be granted in determining
whether a project or activity is highly desirable.
The determination by the Fiscal Incentives Review Board shall guide the
President in calibrating either or both the magnitude of the incentives to be
granted and the agreed performance target corresponding to the grant.
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 The President may exercise the powers under this section: Provided,
That the following conditions are satisfied:
(1) The project has a comprehensive sustainable development plan
with clear inclusive business approaches, and high level of sophistication and
innovation; and
(2) Minimum investment capital of Fifty billion pesos
(P50,000,000,000) or its equivalent in US dollars, or a minimum direct local
employment generation of at least ten thousand (10,000) within three (3) years
from the issuance of the certificate of entitlement.
Provided, That the threshold shall be subject to a periodic review by the
Fiscal Incentives Review Board every three (3) years, taking into consideration
international standards or other economic indicators: Provided, further, That if
the project fails to substantially meet the projected impact on the economy and
agreed performance targets, the Fiscal Incentives Review Board shall
recommend to the President the cancellation of the tax incentive or fiscal and
non-fiscal support package or the modified period or manner of availment of
incentives, after due hearing and an adequate opportunity to substantially
comply with the agreed performance targets and outputs.
For this purpose, the President may grant non-fiscal support package
limited to the utilization of government resources such as use of land and
budgetary support provision under the annual General Appropriations Act.
This power of the President, in as far as it commands additional public
sector expenditures in support of investors, is suspended during fiscal years
when, an unmanageable fiscal deficit is declared by the President on the advice
of the Development Budget Coordination Committee with a consequence that
even core budgetary obligations, such as, but not limited to, mandatory
revenue allotments for local government units and budget for the National
Economic and Development Authority's core public investments program,
cannot be fully financed.
Notwithstanding the provisions in the preceding paragraphs, tax and
duty incentives granted through legislative franchises shall be exempted from
the foregoing powers of the President to review, withdraw, suspend, or cancel
tax incentives and subsidies."
SECTION 26. Section 308 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows: CHTAIc

"SEC. 308. Penalties for Noncompliance with Filing and Reportorial

Requirements. — Any RBE or other registered enterprise, which fails to comply
with filing and reportorial requirements with the appropriate Investment
Promotion Agencies or other government agencies administering tax incentives
and/or, which fails to show proof of filing of tax returns using the electronic
system for filing and payment of taxes of the BIR under Section 305 hereof,
shall be imposed the following penalties by the appropriate Investment
Promotion Agency or other government agency administering tax incentives:
(A) First (1st) Violation — Payment of a fine amounting to One
hundred thousand pesos (P100,000);
(B) Second (2nd) Violation — Payment of a fine amounting to Five
hundred thousand pesos (P500,000); and
(C) Third (3rd) Violation — Cancellation by the Investment Promotion
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 Agency of the registration of the RBE.
Provided, That if the failure to show such proof is not due to the fault of
the RBEs or other registered enterprises, the same shall not be a ground for
the suspension of the ITH and/or other tax incentives availment: Provided,
further, That collections from the penalties shall accrue to the general fund.
After due process, the concerned Investment Promotion Agency may
cancel the registration, suspend the enjoyment of incentive benefits of any
registered enterprise, and/or require refund of incentives enjoyed by such
enterprise, including interests and monetary penalties, for any willful and
material misrepresentation of information or submission of falsified or
misleading information or documents for the purpose of availing of more
incentives than what it is entitled to under this Code: Provided, further, That in
case of cancellation of the certificate of registration, the project or activity of the
RBE shall cease to be registered and the RBE shall be required to pay all
appropriate taxes and duties from the date the cancellation order becomes final
and executory.
Provided, That the Investment Promotion Agency, with the
recommendation of the Commissioner, may revoke or suspend incentives
granted by the Investment Promotion Agency, and/or order a business closure
of the RBE that violates Title VI (Excise Taxes on Certain Goods) and Title X
(Statutory Offenses and Penalties) of this Code and other related revenue
regulations, orders, or issuances of the government: Provided, further, That
such authority shall cover the acts of the RBE committed even in the first year
of availment of incentives. Notwithstanding the provisions of this section, the
DOF, the BIR, and the BOC shall retain their respective mandates, powers and
functions as provided for under this Act and related laws. cHDAIS

Any government official or employee who fails without justifiable reason

to provide or furnish the required tax incentives report or other data or
information as required under Sections 306 and 307 of this Act shall be
penalized, after due process, by a fine equivalent to the official's or employee's
basic salary for a period of one (1) month to six (6) months or by suspension
from government service for not more than one (1) year, or both, in addition to
any criminal and administrative penalties imposable under existing laws."
SECTION 27. Section 309 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows: EATCcI

"SEC. 309. Prohibition on Registered Activities. — Except as

allowed under this provision, a qualified registered project or activity under an
Investment Promotion Agency administering an economic zone or freeport shall
be exclusively conducted or operated within the geographical boundaries of the
zone or freeport being administered by the Investment Promotion Agency in
which the project or activity is registered: Provided, That an RBE may conduct
or operate more than one qualified registered project or activity within the same
zone or freeport under the same Investment Promotion Agency: Provided,
further, That any project or activity conducted or performed outside the
geographical boundaries of the zone or freeport shall not be entitled to the
incentives provided in this Act: Provided, furthermore, That RBEs may institute
a 'telecommuting' program as defined under Republic Act No. 11165, otherwise
known as the 'Telecommuting Act,' including work-from-home arrangements,
which shall not cover more than fifty percent (50%) of the total workforce, and
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 shall be subject to the rules and regulations formulated by the Investment
Promotion Agency. The RBEs shall continue to avail of all the incentives
provided under this Act and under their registration with any applicable
Investment Promotion Agency: Provided, finally, That double registration for
purposes of availing of other incentives under special laws shall not be
allowed."
SECTION 28. Section 310 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows:
"SEC. 310. Establishment of One-Stop Action Center and Initial
Point of Contact for Foreign Investment Leads. — All Investment Promotion
Agencies shall establish a one-stop shop or one-stop action center that will
facilitate and expedite, to the extent possible, the setting up and conduct of
registered projects or activities, including assistance in coordinating with the
local government units and other government agencies to comply with Republic
Act No. 11032, otherwise known as the 'Ease of Doing Business and Efficient
Government Service Delivery Act of 2018': Provided, however, That the
enterprises shall continue to avail of the one-stop shop facility notwithstanding
the expiration of their incentives under this Code.
Unless, otherwise provided under special laws, local government units
may delegate to the concerned Investment Promotion Agency, through
appropriate memoranda of agreement, the functions of accepting, processing,
and granting business permits and licenses.
The Investment Promotion Agency may also assist RBEs in obtaining
licenses and permits from national government agencies by accepting and
submitting documentary requirements for such licenses and permits, on behalf
of the RBEs to the appropriate national government agencies.
The Investment Promotion Agency may undertake activities necessary
to perform the function as the initial point of contact for foreign investment
leads. Such activities shall include assisting potential foreign investors in
establishing their business enterprises in the concerned Investment Promotion
Agency or in the economic zone best suited to their specific needs."
SECTION 29. Section 311 of the National Internal Revenue Code of 1997, as
amended, is hereby further amended to read as follows: ISHCcT

"SEC. 311. Investments Prior to the Effectivity of Republic Act No.

11534. — RBEs with incentives granted prior to the effectivity of Republic Act
No. 11534 shall be subject to incentives granted in their certificate of
registration or certificate of registration and tax exemption, and to the following
rules:
(A) x x x;
(B) RBEs, whose projects or activities were granted an ITH prior to
the effectivity of Republic Act No. 11534 and are entitled to the five percent
(5%) tax on gross income earned incentive after the ITH, shall be allowed to
avail of the five percent (5%) tax on gross income earned incentive based on
Subsection (C), including all corresponding exemptions from national taxes,
local taxes, and local fees and charges until December 31, 2034;
(C) RBEs currently availing of the five percent (5%) tax on gross
income earned granted prior to the effectivity of Republic Act No. 11534 shall
be allowed to continue availing of the said tax incentives at the rate of five
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 percent (5%), including all corresponding exemptions from national taxes, local
taxes, and local fees and charges until December 31, 2034; and
(D) RBEs availing of duty exemption on importation under Section
294(D), VAT exemption on importation, and VAT zero-rating on local purchases
under Section 294(E) prior to the effectivity of Republic Act No. 11534 shall be
allowed to continue availing of the said tax incentives until December 31, 2034:
Provided, That registered export enterprises shall continue to avail of the said
incentives thereafter, in accordance with Title IV of this Code, the provisions of
Republic Act No. 10863, otherwise known as the 'Customs Modernization and
Tariff Act,' as amended, and other applicable laws."
SECTION 30. Appropriations. — The Secretary of Finance shall immediately
include in the Department's program the operationalization of the electronic processing
of the VAT refund system, the funding of which shall be included in the annual General
Appropriations Act.
SECTION 31. Transitory Provisions. — The following provisions shall apply
prospectively to projects or activities granted with tax incentives under Republic Act No.
11534 upon the effectivity of this Act:
(1) The exemption from national and local taxes, including local fees and
charges for projects or activities availing of SCIT pursuant to Section 294
(B) of Title XIII;
(2) The availment of additional enhanced deductions provided under Section
294 (C) (6), (7), (8), and (9) of Title XIII;
(3) The imposition of twenty percent (20%) income tax rate specified in
Sections 27 and 28 of this Code upon the taxable income of RBEs availing
the enhanced deduction regime;
(4) The imposition of RBE local tax under Section 294 (F) of Title XIII, to
RBEs availing of ITH or EDR; and
(5) The conditions for the availment of the duty and VAT exemption on
importation and VAT zero-rating on local purchases under Sections 295
(C) and (D) of Title XIII.
No tax refund or credit shall be granted to RBEs covered by Section 19 of this
Act. DHITCc

SECTION 32. Implementing Rules and Regulations. — Within ninety (90)

days from the effectivity of this Act, the Secretary of Finance, upon the recommendation
of the Commissioner of Internal Revenue, shall promulgate the necessary rules and
regulations for its effective implementation: Provided, That for the provisions under Title
XIII of the National Internal Revenue Code of 1997, as amended, the Secretary of
Finance and the Secretary of Trade and Industry shall jointly promulgate the necessary
rules and regulations thereof within the same period, after due consultation with the
BIR, the BOC, the BOI, and other Investment Promotion Agencies, for its effective
implementation. Failure to promulgate the rules and regulations shall not prevent the
implementation of this Act upon its effectivity.
SECTION 33. Separability Clause. — If any provision of this Act is declared
unconstitutional, the remaining parts or provisions hereof not affected thereby shall
remain in full force and effect.

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 SECTION 34. Repealing Clause. — All laws, decrees, executive orders,
implementing rules and regulations, issuances, or any part thereof inconsistent with the
provisions of this Act are deemed repealed, amended, or modified accordingly.
SECTION 35. Effectivity. — This Act shall take effect after fifteen (15) days
following its publication in the Official Gazette or in a newspaper of general circulation.
Approved: November 8, 2024.

Published in the Manila Bulletin on November 13, 2024.

Published in the Official Gazette, Vol. 120, No. 47, p. 13656 on November 18, 2024.

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