President Rodrigo Duterte on July 19 signed Executive Order (EO) No. 85, series of 2019, which extended for three years the application of zero-rate duty on importations of Board of Investments (BOI)-registered new and expanding enterprises.
The incentive, provided under EO 57 series of 2018, expired on July 6, 2019.
EO 85 applies to importations of capital equipment, spare parts and accessories classified under Chapters 40, 59, 68, 69, 70, 73, 76, 82, 83, 84, 85, 86, 87, 89, 90 and 96 of the Customs Modernization and Tariff Act (CMTA), upon BOI’s issuance of Certificate of Authority. This is provided the goods are not manufactured domestically in sufficient quality, are not of comparable quality, and are at reasonable prices; and provided that they are reasonably needed and will be used exclusively by the enterprise in its registered activity.
The EO notes the need to extend the zero-rate duty as capital equipment remains one of the major cost burdens of business enterprises in their start-up and expansion. It adds that the fiscal incentive “will enhance the attractiveness of the country as an investment destination and improve industry competitiveness, in line with the Philippine Development Plan 2017-2022.”
Along with the incentive, the BOI-registered enterprise cannot sell, transfer or dispose of the capital equipment, machinery, spare parts and accessories without prior approval from BOI within five years from the date of the importation.
Otherwise, the BOI-registered enterprise will be liable to pay twice the amount of the duty foregone or P500,000, whichever is higher, without prejudice to other applicable penalties under EO No. 226, or the Omnibus Investments Code of 1987.
BOI, in coordination with the Tariff Commission, shall promulgate the implementing rules and regulations of EO 85, which takes effect immediately upon publication in a newspaper of general circulation for a period of three years, or until a law amending EO 226 is enacted, whichever is earlier.
(For the full article, please visit https://www.portcalls.com/eo-extends-to-3-years-zero-duty-on-imports-of-capital-equipment-spare-parts/)