(Repealed by Batas Pamabansa Blg.391)
PRESIDENTIAL DECREE NO. 1789
A DECREE TO REVISE, AMEND AND CODIFY THE INVESTMENT, AGRICULTURAL AND EXPORT INCENTIVES ACTS TO BE KNOWN AS THE OMNIBUS INVESTMENTS CODE
WHEREAS, Republic Act Numbered 5186, as amended, otherwise known as Investment Incentives Act, Republic Act Numbered 6135, as amended, otherwise known as Export Incentives Act, and Presidential Decree Numbered 1159, otherwise known as Agricultural Investments Incentives Decree, grant substantially the same incentives to investors and enterprises registered with the Board of Investments;
WHEREAS, Republic Act Numbered 5455, otherwise known as Foreign Business Regulation Act, regulates the entry of foreign investments into the country and as such complements the aforementioned investment incentives laws;
WHEREAS, there are in the aforementioned laws provisions which require clarification, revision or simplification as a result of various presidential decrees, letters of instructions and executive orders on the same subject;
WHEREAS, it is imperative to adopt a consolidated investments code to integrate the said amendments and to clarify and harmonize their provisions not only for the proper guidance...
Details
Amends
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Amended by
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Presidential Decrees
A Decree To Revise, Amend And Codify The Investment, Agricultural And Export Incentives Acts To Be Known As The Omnibus Investments Code
Presidential Decree No. 1789
Summary of the Omnibus Investments Code
Definitions and Basic Guidelines (Rule 1)
- Defines key terms used in the Code, such as "foreign loan", "foreign investment", "domestic enterprise", "foreign enterprise", "investment", "doing business", "Philippine national", "licensed to do business", "registered export trader", "registered service exporter", "export products", "export sales", "packaging", "assembly", "new and untried process or system of production", "availability or unavailability of domestic raw materials", "commercial scale", "date of registration", "start of operations", "spare parts", "direct labor wage cost", "traditional export products", and "local raw materials".
Qualifications for Applicants (Rule 2)
- Every applicant must possess all qualifications and none of the disqualifications prescribed in the Code.
- Specific requirements include:
- Compliance with ownership requirements if the area of investment is nationalized by the Constitution or law.
- Compliance with requirements for directors' citizenship if required by law.
- The area of investment must be within the applicant's corporate powers and not prohibited by law.
- The applicant must prove its qualifications for registration.
Application for Registration (Rule 3)
- Applications can be filed anytime, but for domestic market or traditional export products, applications will only be received if the activity is listed in the current Investment Priorities Plan, unless the applicant is already registered and applying for expansion.
- Applications must be made on prescribed forms, sworn before a notary public, and accompanied by supporting documents.
- Supporting documents required for different types of applicants are specified.
Board Action (Rule 4)
- Existing operating enterprises applying for registration are subject to project site facilities inspection.
- The Board must render its decision within 60 days after submission of all requirements.
- The applicant has 30 days to accept the proposed terms and conditions and comply with pre-registration requirements.
Certificate of Registration (Rule 5)
- Conditions precedent for issuance of the certificate include payment of registration fee, acceptance of terms and conditions, sworn statements, and compliance with pre-registration requirements.
- Upon fulfillment of conditions, the certificate will be issued.
- Relevant government agencies will be notified within 10 days of registration.
Incentives to Investors in a Registered Producer Enterprise (Rule 6)
- Incentives under Article 43 of the Code are available to all investors in registered producer enterprises, whether pioneer or non-pioneer, Philippine nationals or not, natural or juridical persons, domestic or foreign.
- Incentives can only be availed of for investments made after the date of registration.
- Rules for capital gains tax exemption under Article 43(2) are specified.
Additional Incentives to Philippine Nationals Investing in a Pioneer Enterprise (Rule 7)
- Incentives under Article 44 of the Code are available to Philippine nationals investing in a pioneer enterprise, whether controlled by Philippine nationals or not.
- Rules for tax allowance under Article 44(a) and capital gains tax exemption under Article 44(b) are specified.
- Rules for income tax exemption on sale of stock dividends under Article 44(c) are specified.
Incentives to Registered Producer Enterprises (Rule 8)
- Rules for incentives under Article 45 of the Code, such as deduction of organizational and pre-operating expenses, accelerated depreciation, net operating loss carry-over, and conditions for availment.
Importation of Capital Equipment (Rule 9)
- Rules for tax and tariff exemption on importation of machinery, equipment, and spare parts under Article 45(d) of the Code, including conditions for importation, advance authority, international bidding, reasonableness of prices, post-approval conditions, and prior approval for sale or disposition of equipment.
Purchase of Domestic Capital Equipment (Rule 10)
- Rules for tax credit on purchase of domestic capital equipment under Article 45(e) of the Code, including definitions of "domestic manufacturer", "value added", and "local content".
Tax Credit of Withholding Tax on Interest (Rule 11)
- Requirements for availment of tax credit for taxes withheld on interest payments on foreign loans under Article 45(f) of the Code.
Employment of Foreign Nationals (Rule 12)
- Rules for employment of foreign nationals under Articles 45(h) and 46(e) of the Code, including application requirements, length of employment, training program, and entry of spouses and unmarried minor children.
Expansion Reinvestment Allowance (Rule 13)
- Rules for tax deduction for expansion reinvestment under Articles 45(i) and 46(c) of the Code, including prior Board approval, definition of expansion, date of reinvestment, reduction of capital, and notice requirements.
Deduction for Labor Training (Rule 14)
- Rules for deduction of labor training expenses under Article 45(i) of the Code, including submission and approval of labor training program and progress reports.
Additional Incentives to Pioneer Enterprises (Rule 15)
- Additional incentives granted to pioneer enterprises under Article 46 of the Code, including tax exemption, importation of supplies and raw materials, importation of capital equipment, and post-operative tariff protection.
Incentives to Agricultural Producers (Rule 16)
- Rules for incentives to registered agricultural producers under Article 47 of the Code, including tax exemption on breeding stocks and genetic materials, deduction of research and development programs, deduction of freight and transportation expenses, and compliance with mandatory rice and corn production.
Additional Incentives to Registered Export Producers (Rule 17)
- Rules for additional incentives to registered export producers under Article 48 of the Code, including tax credit, reduced income tax, sales tax exemption, exemption from export tax, impost and fees, newness of brand name, tax exemption on imported capital equipment, and incentives for existing producers and firms registered primarily for the domestic market.
Incentives to Registered Export Traders (Rule 18)
- Rules for incentives to registered export traders under Article 49 of the Code, including export tax exemption, exemption from specific and sales taxes, tax credit, reduced income tax, financial assistance to export producers, additional incentives to export trading companies, and use of new brand name.
Incentives to Registered Service Exporters (Rule 19)
- Rules for incentives to registered service exporters under Articles 50 and 51 of the Code, including reduced income tax, reasonable costs and expenses, tax credit, and tax exemption on capital equipment.
Conditions for Availment of Incentives in General (Rule 20)
- Registered enterprises must comply with obligations under the Code, rules and regulations, and terms and conditions of registration, allow inspection by the Board, and submit documents evidencing availment of incentives.
- No incentives may be availed of by delinquent enterprises.
Public Participation Requirement (Rule 21)
- General rule requiring registered enterprises to offer 10% or more of their total subscribed capital stock for public sale within 10 years from registration, with exceptions for pioneer enterprises and others.
- Rules for substantial compliance with public participation objectives.
- Rules for shares to be offered, price and terms, and procedural requirements.
Preferred Non-Pioneer Areas Without Incentives (Rule 22)
- Non-Philippine nationals may engage in preferred non-pioneer areas without incentives if the measured capacity has not been filled within 3 years, provided they manufacture finished products primarily for export (at least 70% of total production).
- Enterprises already engaged in an area before it is declared preferred shall be allowed to continue.
Non-Registered Activities (Rule 23)
- Enterprises engaged in non-registered activities must install an adequate accounting system segregating registered and non-registered operations, or establish a separate entity for the registered activity.
Basis of Allowance Deduction (Rule 24)
- Tax deductions granted under the Code shall be deductible only from income derived from the registered operation, except for reduced income tax for export traders and producers, and deduction of expenses for overseas trade offices.
Duration of Incentives (Rule 25)
- Incentives shall continue indefinitely as long as the enterprise remains registered and commits no violation, unless otherwise provided.
Withdrawal from Business or Suspension of Operations (Rule 26)
- Rules for withdrawal from business or suspension of operations in the preferred area, including notice to the Board, cancellation of registration, cessation of incentives, and potential refund of incentives.
Submission of Reports and Other Documents (Rule 27)
- List of reports and documents that registered enterprises must submit to the Board, including amendments, changes in directors and officers, alien employees, training programs, address changes, investment abroad, tax returns, financial statements, production and sales reports, and statement of incentives availed.
Permitted Investments (Rule 28)
- Enterprises in which permitted investments are made by non-Philippine nationals must report the investment to the Board for record purposes.
Permissible Investments (Rule 29)
- Permissible investments are investments by non-Philippine nationals in an enterprise not registered under Book One, where the resulting total equity participation exceeds 30%.
- Rules for requesting authorization and advance authority for permissible investments.
Doing Business in the Philippines (Rule 30)
- Aliens, foreign companies, and domestic enterprises owned or controlled by non-Philippine nationals must secure written authorization from the Board before doing business or engaging in economic activity in the Philippines, with exceptions for existing enterprises.
- Rules for expansion of business activities and requirements for applications by alien individuals, foreign companies, and domestic companies.
- Rules for proof of reciprocity, preference of credit, and liaison offices.
- Action against irregular and illegal certificates of authority.
Scope of These Rules (Rule 31)
- The rules apply to enterprises registered under previous laws, unless their application would prejudice acquired rights.
- Pending the effectivity of these rules, previous implementing rules and regulations shall apply unless inconsistent with the Code.
Violations of the Provisions of the Code (Rule 32)
- Grounds for cancellation of registration, suspension of incentives, and automatic cancellation due to delay in project implementation.
- The Board shall adopt rules of procedure for hearings and investigations involving violations.
Reckoning of Dates (Rule 33)
- Rules for computing periods prescribed in the Code and rules.
Notices (Rule 34)
- Notices from the Board shall be addressed to the applicant or registered enterprise at its principal place of business or authorized representative.
Schedule of Fees (Rule 35)
- Fees for publication, filing of application, and issuance of certificate of registration, with potential waiver for small businesses and indigent applicants.
Effectivity (Rule 36)
- These rules shall take effect 30 days after publication in two newspapers of general circulation.
Definitions and Basic Guidelines (Rule 1)
- Defines key terms used in the Code, such as "foreign loan", "foreign investment", "domestic enterprise", "foreign enterprise", "investment", "doing business", "Philippine national", "licensed to do business", "registered export trader", "registered service exporter", "export products", "export sales", "packaging", "assembly", "new and untried process or system of production", "availability or unavailability of domestic raw materials", "commercial scale", "date of registration", "start of operations", "spare parts", "direct labor wage cost", "traditional export products", and "local raw materials".
Qualifications for Applicants (Rule 2)
- Every applicant must possess all qualifications and none of the disqualifications prescribed in the Code.
- Specific requirements include:
- Compliance with ownership requirements if the area of investment is nationalized by the Constitution or law.
- Compliance with requirements for directors' citizenship if required by law.
- The area of investment must be within the applicant's corporate powers and not prohibited by law.
- The applicant must prove its qualifications for registration.
Application for Registration (Rule 3)
- Applications can be filed anytime, but for domestic market or traditional export products, applications will only be received if the activity is listed in the current Investment Priorities Plan, unless the applicant is already registered and applying for expansion.
- Applications must be made on prescribed forms, sworn before a notary public, and accompanied by supporting documents.
- Supporting documents required for different types of applicants are specified.
Board Action (Rule 4)
- Existing operating enterprises applying for registration are subject to project site facilities inspection.
- The Board must render its decision within 60 days after submission of all requirements.
- The applicant has 30 days to accept the proposed terms and conditions and comply with pre-registration requirements.
Certificate of Registration (Rule 5)
- Conditions precedent for issuance of the certificate include payment of registration fee, acceptance of terms and conditions, sworn statements, and compliance with pre-registration requirements.
- Upon fulfillment of conditions, the certificate will be issued.
- Relevant government agencies will be notified within 10 days of registration.
Incentives to Investors in a Registered Producer Enterprise (Rule 6)
- Incentives under Article 43 of the Code are available to all investors in registered producer enterprises, whether pioneer or non-pioneer, Philippine nationals or not, natural or juridical persons, domestic or foreign.
- Incentives can only be availed of for investments made after the date of registration.
- Rules for capital gains tax exemption under Article 43(2) are specified.
Additional Incentives to Philippine Nationals Investing in a Pioneer Enterprise (Rule 7)
- Incentives under Article 44 of the Code are available to Philippine nationals investing in a pioneer enterprise, whether controlled by Philippine nationals or not.
- Rules for tax allowance under Article 44(a) and capital gains tax exemption under Article 44(b) are specified.
- Rules for income tax exemption on sale of stock dividends under Article 44(c) are specified.
Incentives to Registered Producer Enterprises (Rule 8)
- Rules for incentives under Article 45 of the Code, such as deduction of organizational and pre-operating expenses, accelerated depreciation, net operating loss carry-over, and conditions for availment.
Importation of Capital Equipment (Rule 9)
- Rules for tax and tariff exemption on importation of machinery, equipment, and spare parts under Article 45(d) of the Code, including conditions for importation, advance authority, international bidding, reasonableness of prices, post-approval conditions, and prior approval for sale or disposition of equipment.
Purchase of Domestic Capital Equipment (Rule 10)
- Rules for tax credit on purchase of domestic capital equipment under Article 45(e) of the Code, including definitions of "domestic manufacturer", "value added", and "local content".
Tax Credit of Withholding Tax on Interest (Rule 11)
- Requirements for availment of tax credit for taxes withheld on interest payments on foreign loans under Article 45(f) of the Code.
Employment of Foreign Nationals (Rule 12)
- Rules for employment of foreign nationals under Articles 45(h) and 46(e) of the Code, including application requirements, length of employment, training program, and entry of spouses and unmarried minor children.
Expansion Reinvestment Allowance (Rule 13)
- Rules for tax deduction for expansion reinvestment under Articles 45(i) and 46(c) of the Code, including prior Board approval, definition of expansion, date of reinvestment, reduction of capital, and notice requirements.
Deduction for Labor Training (Rule 14)
- Rules for deduction of labor training expenses under Article 45(i) of the Code, including submission and approval of labor training program and progress reports.
Additional Incentives to Pioneer Enterprises (Rule 15)
- Additional incentives granted to pioneer enterprises under Article 46 of the Code, including tax exemption, importation of supplies and raw materials, importation of capital equipment, and post-operative tariff protection.
Incentives to Agricultural Producers (Rule 16)
- Rules for incentives to registered agricultural producers under Article 47 of the Code, including tax exemption on breeding stocks and genetic materials, deduction of research and development programs, deduction of freight and transportation expenses, and compliance with mandatory rice and corn production.
Additional Incentives to Registered Export Producers (Rule 17)
- Rules for additional incentives to registered export producers under Article 48 of the Code, including tax credit, reduced income tax, sales tax exemption, exemption from export tax, impost and fees, newness of brand name, tax exemption on imported capital equipment, and incentives for existing producers and firms registered primarily for the domestic market.
Incentives to Registered Export Traders (Rule 18)
- Rules for incentives to registered export traders under Article 49 of the Code, including export tax exemption, exemption from specific and sales taxes, tax credit, reduced income tax, financial assistance to export producers, additional incentives to export trading companies, and use of new brand name.
Incentives to Registered Service Exporters (Rule 19)
- Rules for incentives to registered service exporters under Articles 50 and 51 of the Code, including reduced income tax, reasonable costs and expenses, tax credit, and tax exemption on capital equipment.
Conditions for Availment of Incentives in General (Rule 20)
- Registered enterprises must comply with obligations under the Code, rules and regulations, and terms and conditions of registration, allow inspection by the Board, and submit documents evidencing availment of incentives.
- No incentives may be availed of by delinquent enterprises.
Public Participation Requirement (Rule 21)
- General rule requiring registered enterprises to offer 10% or more of their total subscribed capital stock for public sale within 10 years from registration, with exceptions for pioneer enterprises and others.
- Rules for substantial compliance with public participation objectives.
- Rules for shares to be offered, price and terms, and procedural requirements.
Preferred Non-Pioneer Areas Without Incentives (Rule 22)
- Non-Philippine nationals may engage in preferred non-pioneer areas without incentives if the measured capacity has not been filled within 3 years, provided they manufacture finished products primarily for export (at least 70% of total production).
- Enterprises already engaged in an area before it is declared preferred shall be allowed to continue.
Non-Registered Activities (Rule 23)
- Enterprises engaged in non-registered activities must install an adequate accounting system segregating registered and non-registered operations, or establish a separate entity for the registered activity.
Basis of Allowance Deduction (Rule 24)
- Tax deductions granted under the Code shall be deductible only from income derived from the registered operation, except for reduced income tax for export traders and producers, and deduction of expenses for overseas trade offices.
Duration of Incentives (Rule 25)
- Incentives shall continue indefinitely as long as the enterprise remains registered and commits no violation, unless otherwise provided.
Withdrawal from Business or Suspension of Operations (Rule 26)
- Rules for withdrawal from business or suspension of operations in the preferred area, including notice to the Board, cancellation of registration, cessation of incentives, and potential refund of incentives.
Submission of Reports and Other Documents (Rule 27)
- List of reports and documents that registered enterprises must submit to the Board, including amendments, changes in directors and officers, alien employees, training programs, address changes, investment abroad, tax returns, financial statements, production and sales reports, and statement of incentives availed.
Permitted Investments (Rule 28)
- Enterprises in which permitted investments are made by non-Philippine nationals must report the investment to the Board for record purposes.
Permissible Investments (Rule 29)
- Permissible investments are investments by non-Philippine nationals in an enterprise not registered under Book One, where the resulting total equity participation exceeds 30%.
- Rules for requesting authorization and advance authority for permissible investments.
Doing Business in the Philippines (Rule 30)
- Aliens, foreign companies, and domestic enterprises owned or controlled by non-Philippine nationals must secure written authorization from the Board before doing business or engaging in economic activity in the Philippines, with exceptions for existing enterprises.
- Rules for expansion of business activities and requirements for applications by alien individuals, foreign companies, and domestic companies.
- Rules for proof of reciprocity, preference of credit, and liaison offices.
- Action against irregular and illegal certificates of authority.
Scope of These Rules (Rule 31)
- The rules apply to enterprises registered under previous laws, unless their application would prejudice acquired rights.
- Pending the effectivity of these rules, previous implementing rules and regulations shall apply unless inconsistent with the Code.
Violations of the Provisions of the Code (Rule 32)
- Grounds for cancellation of registration, suspension of incentives, and automatic cancellation due to delay in project implementation.
- The Board shall adopt rules of procedure for hearings and investigations involving violations.
Reckoning of Dates (Rule 33)
- Rules for computing periods prescribed in the Code and rules.
Notices (Rule 34)
- Notices from the Board shall be addressed to the applicant or registered enterprise at its principal place of business or authorized representative.
Schedule of Fees (Rule 35)
- Fees for publication, filing of application, and issuance of certificate of registration, with potential waiver for small businesses and indigent applicants.
Effectivity (Rule 36)
- These rules shall take effect 30 days after publication in two newspapers of general circulation.