Amending Sections 3, 4, 5, 8 And 11 Of Presidential Decree No. 1167
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Amending Sections 3, 4, 5, 8 And 11 Of Presidential Decree No. 1167
Presidential Decree No. 1657
December 19, 1979
Case Overview and Summary
Summary of Presidential Decree No. 1657Definitions and Coverage:
- "Overseas Project" refers to construction or consultancy projects undertaken by a contractor or consultant outside the Philippines, including supporting works. (Section 1)
- "Gross Contract Price" refers to income, revenues, or receipts derived by a contractor from an overseas project. (Section 2)
Incentives for Filipino Overseas Contractors (Section 3):
- Option 1: Tax credits and deductions
- Tax credits:
1. Taxes paid to foreign governments on overseas project income, subject to limitations. (Section 4(a)1)
2. Tax credit for taxes withheld on interest payments on foreign loans for overseas projects, subject to conditions. (Section 4(a)2)
3. Tax credit equivalent to sales taxes paid on domestically manufactured materials exported for overseas projects. (Section 4(a)3)
- Deductions:
1. Accelerated depreciation of fixed assets used in overseas operations, subject to conditions. (Section 4(b)1)
2. Additional deduction of one-half of labor training expenses, up to 10% of direct labor wage. (Section 4(b)2)
3. Net operating loss carry over from overseas projects for 3 years, subject to conditions. (Section 4(b)3)
- Option 2: 1.5% tax on gross contract price less subcontracted portions. (Section 4(c))
- Option 3: For the first 5 years, deduct 50% of total export fees from taxable income, subject to remittance/repatriation conditions. (Section 4(d))
Internationally-bid Local Projects:
- Incentives in Section 4(a) and (b) are available to Filipino contractors participating as principals in internationally-bid and foreign-assisted projects, subject to rules and regulations. (Section 5)
Philippine Overseas Construction Board:
- A 5-member board appointed by the President to implement the policies of the Decree. (Section 6)
- Powers include:
1. Recommending incentive liberalization to the President in meritorious cases. (Section 6(m))
2. Recommending reduction, suspension, or elimination of incentives to the President in the interest of general welfare and development. (Section 6(n))
Effective Date and Transition:
- Incentives for overseas construction projects or export of construction services can only be availed through the Philippine Overseas Construction Board from the effective date. (Section 7)
- Inconsistent laws, decrees, rules, and regulations are repealed or modified accordingly. (Section 8)
- The Decree takes effect immediately. (Section 9)
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Executive Issuances
Presidential Decrees
overseas construction projects
Filipino contractors
tax incentives
tax credits
deductions
depreciation
labor training expenses
net operating loss
gross contract price
Philippine Overseas Construction Board
incentive liberalization
incentive reduction/suspension/elimination
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Amending Sections 3, 4, 5, 8 And 11 Of Presidential Decree No. 1167
Presidential Decree No. 1657
•December 19, 1979
MALACAÑANGM a n i l a
PRESIDENTIAL DECREE No. 1657
AMENDING SECTIONS 3, 4, 5, 8 AND 11 OF PRESIDENTIAL DECREE NO. 1167
WHEREAS, there are various incentives administered by a number of government agencies which incentives may be availed of by Filipino construction contractors undertaking overseas projects;
WHEREAS, it is highly desirable for efficient administration that all incentives available to overseas construction projects or export of construction services administered by a single government agency;
WHEREAS, experience in implementation so far has indicated the need for organizational adjustments and the importance of flexibility in altering or modifying some incentives to make them more responsive to changes occurring in the overseas markets and the domestic economy.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution do hereby order and decree the following:
Section 1. Section 3 subsection (c) of Presidential Decree No. 1167 is hereby amended to read as follows:
"c. "Overseas Project" shall mean a construction or consultancy project undertaken by a contractor...
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