Granting Certain Incentives to Domestic Manufacturers Bidding in Government Projects Financed Out of Foreign Loans

Case Overview and Summary

Summary of Executive Order No. 765

Granting Incentives to Domestic Manufacturers Bidding in Government Projects Financed by Foreign Loans

- Objective: To strengthen the competitive position of domestic manufacturers vis-à-vis foreign manufacturers and place them on equal footing. (Preamble)

- Incentive: Domestic manufacturers awarded bids to supply articles, materials, or supplies for government projects financed by foreign loans are entitled to a tax credit equivalent to the sales, compensating, and specific taxes and duties on imported supplies, raw materials, and semi-manufactured components used in the manufacture, processing, or production of the articles, materials, or supplies. (Section 1)
• The tax credit shall accrue to the manufacturer only after actual sales of said articles, materials, or supplies to the government agency implementing the project. (Section 1)

- Process: The government agency implementing the project shall recommend to the Ministry of Finance the issuance of the corresponding tax credit certificates based on documents and receipts submitted. (Section 2)
• The tax credit certificates shall be used for payment of taxes, duties, charges, and fees due to the national government. (Section 2)

- Implementation: The Ministry of Finance shall prepare the implementing rules on the issuance of the tax credits. (Section 3)

- Effectivity: This Executive Order shall take effect immediately. (Final Clause)