Prescribing Incentives For The Establishment of Multinational Regional Warehouses By Multinational Companies Supplying Spare Parts or Manufactured Components and Raw Materials to the Asia-P

MALACAÑANG
M a n i l a

PRESIDENTIAL DECREE No. 1419

PRESCRIBING INCENTIVES FOR THE ESTABLISHMENT OF MULTINATIONAL REGIONAL WAREHOUSES BY MULTINATIONAL COMPANIES SUPPLYING SPARE PARTS OR MANUFACTURED COMPONENTS AND RAW MATERIALS TO THE ASIA-PACIFIC AREA

WHEREAS, the objective of accelerating the development of the Philippines as the business and financial capital of Southeast Asia and thereby hastening the economic and social development of the country can be accomplished further by attracting multinational companies to base their regional warehouse in the Philippines;

WHEREAS, the said regional warehouse will not earn or derive any income from the host country and all their expenses are financed by their head offices or parent companies;

WHEREAS, the attainment of the aforesaid goal will mean the creation of a new source of dollar revenue for the government and the increase of foreign exchange receipts for export of Philippine products; a boost to air travel, new construction and real estate development, new job opportunities, increase in local tourism and potential investors;

WHEREAS, the establishment of regional warehouses in the...

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Summary of Presidential Decree No. 1419

Incentives for Establishing Multinational Regional Warehouses
- Allows multinational companies engaged in international trade and supplying spare parts, manufactured components, and raw materials to the Asia-Pacific region to establish regional warehouses in the Philippines after securing a license from the Secretary of Trade. (Section 1)

Requirements for Establishing Regional Warehouse:
- Certification from Philippine Commercial Attaché or Consul that the foreign firm supplies to the Asia-Pacific region. (Section 1(a))
- Certification from the foreign entity specifying: (Section 1(b))
    - Activities limited to storage, packing, labeling, and altering goods to customer specifications.
    - Will not derive income from Philippine sources or participate in local management.
    - Regional headquarters personnel will operate the warehouse.
- Pay license fee of ₱5,000 per year and storage fee based on value of stored goods. (Section 1(c))
- Application and examination of premises by Department of Trade and Bureau of Customs. (Section 1(d))

Tax Treatment of Imported Articles:
- Imported goods for storage and re-export are not subject to customs duty, internal revenue tax, export tax, or local taxes. (Section 2(a))
- Goods released to local market are subject to duties, taxes, and charges based on commercial invoice. Non-compliance leads to forfeiture. (Section 2(b))

Withdrawal of Articles from Warehouse:
- For re-export: Under customs supervision with certification of shipment and export details. (Section 3(a))
- For local distribution: Under customs supervision to fill orders from head office, subject to duties and taxes. (Section 3(b))

Storage Period and Extensions:
- Initial storage period of 5 years, extendable by 2 years upon payment of storage fee. (Section 4)
- Unauthorized withdrawal leads to forfeiture. (Section 4)

Benefits for Regional Headquarters and Personnel:
- Governed by Presidential Decree No. 218 and entitled to benefits provided therein. (Section 5)

Customs Jurisdiction and Supervision:
- Customs exercises jurisdiction over articles entering for regional warehouses. (Section 6)
- Customs supervises receiving, handling, entry, examination, classification, appraisal, and delivery of goods. (Section 6(a))
- Customs authorizes transfer of goods to warehouse for examination and appraisal. (Section 6(c))

Waiver of Consular Invoice:
- Certificate of export from Philippine Consular official required instead of consular invoice. (Section 7(a))
- For local distribution, head office's commercial invoice and applicable duties and taxes required. (Section 7(b))

Supervision and Storekeeping:
- Warehouse operator submits manager's name for approval by Customs. (Section 8(a))
- Customs personnel as warehouse storekeeper. (Section 8(a))
- Packing, labeling, and cutting to customer specifications under Customs supervision. (Section 8(b))

Rules and Regulations:
- Secretary of Trade and Secretary of Finance to issue implementing rules within 30 days. (Section 9)
- Commissioner of Customs to issue rules facilitating smooth inflow and outflow of goods. (Section 9)

Penalties:
- Violation of provisions leads to cancellation of license and penalties under Sections 2(b) and 4. (Section 10)

Exemptions and Definitions:
- Regional warehouses exempt from Republic Act No. 5455. (Section 11)
- Definitions of "spare parts or manufactured components", "raw materials", and "Code". (Section 12)

Repealing Clause and Effectivity:
- Inconsistent laws, decrees, orders, rules, or regulations are repealed, modified, or amended. (Section 13)
- Decree takes effect immediately. (Section 14)