ENTERPRISES registered with the Board of Investments (BOI) may continue importing capital equipment, spare parts and accessories at zero duty for three more years after President Duterte signed Executive Order (EO) 85.
In signing EO 85, the President approved the recommendation of the National Economic and Development Authority (Neda) to continue the grant of the incentive after the effectivity of EO 57, which allowed its implementation for one year, ended on July 6.
“Considering that importation of capital equipment remains as one of the major cost burdens of business enterprises in their start-up and expansion, there is a need to again extend the grant of zero percent duty on capital equipment, spare parts and accessories, currently being enjoyed by BOI-registered enterprises,” read the EO signed on July 19, but released to the media on July 24.
The incentive is expected to enhance the attractiveness of the Philippines as an investment destination and improve industry competitiveness, in line with the Philippine Development Plan 2017-2022.
The zero-percent duty shall be applied to importation by BOI-registered new and expanding enterprises of capital equipment, spare parts and accessories, upon issuance by the BOI of a Certificate of Authority, provided that these equipment and materials comply with certain conditions.
The EO indicated that the equipment and spare parts should not be manufactured domestically in sufficient quantity, of comparable quality, and at reasonable prices; and that these should be reasonably needed and will be used exclusively by the enterprise in its registered activity.
The BOI-registered enterprise is also prohibited from selling, transfering or disposing of these capital equipment, machinery, spare parts and accessories without prior BOI approval, within five years from the date of importation.
Erring enterprises will pay twice the amount of the duty forgone or P500,000 whichever is higher, without prejudice to other applicable penalties under EO 226 or The Omnibus Investments Code of 1987.
The BOI, in coordination with the Tariff Commission, shall promulgate the Implementing Rules and Regulations on the implementation of EO 85.
Under the Customs Modernization and Tariff Act (CMTA), the President has the power to increase, reduce or remove existing rates of import duty, upon the recommendation of Neda.
The EO shall take effect immediately after its complete publication in a newspaper of general circulation and shall be valid for a period of three years or until a law amending EO 226 is enacted, whichever comes earlier.
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