Article 15Supplement v1, p. 15

COMMERCIAL LAWS SUPPLEMENT

operate

remains

valid

and

subsisting

and

that

the

regional

or

area

headquarters or regional operating

headquarters has withheld tax due on compensation and

the same has been paid to the Bureau of Internal

Revenue.

Non-immigrants who have been admitted under the

multiple entry special visa, as well as their respective

spouses and dependents, shall be exempt from: the

payment of all fees due under the immigration and alien

registration

laws;

securing

alien

certificates

of

registration;

and

obtaining

emigration

clearance

certificates, and all types of clearances required by any

government department or agency, except that upon

final departure from the Philippines the employer of the

said non-immigrants shall so advise in writing the Bureau

of Immigration at least five (5) working days prior to the

non-immigrant's departure, and the finally departing

non-immigrant employee shall be required to submit to

the said office a tax clearance from the Bureau of Internal

Revenue.

ARTICLE 61. Withholding Tax of 15% on Compensation

Income. — Aliens employed by the regional or area

headquarters and regional operating headquarters of

multinational companies shall be subject for each taxable

year upon their gross income received as salaries, wages,

annuities,

compensations,

remuneration

and

emoluments to a tax equal to fifteen percentum (15%) of

such gross income. The same tax treatment is applicable

to Filipinos employed and occupying the same positions

as those aliens employed by multinational companies:

Provided, That said Filipinos shall have the option to be

taxed at either 15% of gross income or at the regular tax

rate on their taxable income in accordance with the

National Internal Revenue Code, as amended by Republic

Act No. 8424.

ARTICLE 62. Tax and Duty Free Importation. — An alien

executive

of

the

regional or area headquarters and

regional

operating

headquarters

of

a

multinational

company shall enjoy tax and duty free importation of

personal and household effects as provided for under

Section

105(h)

of

the

Tariff

and

Customs

Code,

as

amended, and Section 109(I) of the National Internal

Revenue Code, as amended: Provided, That the personal

and household effects shall arrive in the Philippines

within ninety (90) days before or after conversion of the

alien executive's admission category to multiple entry visa

issued under this Act.

ARTICLE

63.

Travel

Tax

Exemption.

—

Personnel of

regional or area headquarters and regional operating

headquarters

of

multinational

companies

and

the

dependents of such foreign personnel if joining them

during the period of their assignment in the Philippines,

as

certified

by

the

Board

of

Investments,

shall

be

exempted from the payment of travel tax imposed under

Section 1 of Presidential Decree No. 1183, as amended.

(as amended by RA 8756)

CHAPTER IV Incentives To Regional Or Area Headquarters

And Regional Operating Headquarters

ARTICLE 64. Corporate Income Tax Incentive to Regional

or

Area

Headquarters

and

Regional

Operating

Headquarters.

—

Regional

or

area

headquarters

established

in

the

Philippines

by

multinational

companies and which headquarters do not earn or derive

income

from

the

Philippines

and

which

act

as

supervisory, communications and coordinating centers

for

their

affiliates,

subsidiaries,

or

branches

in

the

Asia-Pacific Region and other foreign markets shall not

be

subject

to

income

tax.

Regional

operating

headquarters shall be subject to a tax rate of ten percent

(10%) of their taxable income as provided for under the

National Internal Revenue Code, as amended by Republic

Act No. 8424: Provided, That any income derived from

Philippine sources by the ROHQ when remitted to the

parent company shall be subject to the tax on branch

profit remittances as provided for in Section 28(a)(5) of

the National Internal Revenue Code.

ARTICLE 65. Value-Added Tax. — The regional or area

headquarters

established

in

the

Philippines

by

multinational companies shall be exempted from the

value-added tax. In addition, the sale or lease of goods

and property and the rendition of services to regional or

area headquarters shall be subject to zero percent (0%)

VAT rate as provided for in the National Internal Revenue

Code, as amended.

Regional operating headquarters shall be subject to the

ten percent (10%) value-added tax as provided for under

the National Internal Revenue Code, as amended.

ARTICLE 66. Exemption From All Kinds of Local Taxes,

Fees, or Charges. — The regional or area headquarters

and regional operating headquarters of multinational

companies shall be exempt from all kinds of local taxes,

fees, or charges imposed by a local government unit

except real property tax on land improvements and

equipment.

ARTICLE 67. Tax and Duty Free Importation of Training

Materials and Equipment; Importation of Motor Vehicles.

— Regional or area headquarters and regional operating

headquarters shall enjoy tax and duty free importation of

equipment and materials for training and conferences

which are needed and used solely for their functions as

regional

or

area

headquarters or regional operating

headquarters and which are not locally available subject

to the prior approval of the Board of Investments.

The sale or disposition of equipment within two (2) years

after importation, entered tax and duty free, shall require

prior approval of the Board of Investments and prior

payment of applicable taxes and duties waived in favor of

RHQ/ROHQ.

Regional or area headquarters and regional operating

headquarters shall be entitled to the importation of new

motor

vehicles

subject

to

the

payment

of

the

corresponding taxes and duties.

(as amended by RA 8756)

BOOK IV Incentives To Multinational Companies

Establishing Regional Warehouses To Supply

Spare Parts, Components, Semi-finished Products

And Raw Materials To The Asia-pacific Region

And Other Foreign Markets

ARTICLE 68. Qualifications . — A multinational company

organized and existing under any laws other than those

of the Philippines which is engaged in international trade

and supplies spare parts, components, semi-finished

products and raw materials to its distributors or markets

in the Asia-Pacific area and other foreign areas and which

has established or will simultaneously establish a regional

or

area

headquarters

and/or

regional

operating

headquarters in the Philippines in accordance with the

provisions of Book III of this Code and the rules and

regulations implementing the same may also establish a

regional warehouse or warehouses in ecozones in the

Philippines, after securing a license therefor from the

Philippine Economic Zone Authority (PEZA). With respect

to regional warehouses located or will locate in ecozones

with special charters, such license shall be secured from

the concerned ecozone authorities. For existing regional

warehouses, said license shall be secured from the Board

of Investments unless they choose to relocate inside

ecozones: Provided, That:

(1) The activities of the regional warehouse shall be

limited to serving as a supply depot for the storage,

deposit, safekeeping of its spare parts, components,

semi-finished products and raw materials including the

packing, covering, putting up, marking, labelling and

cutting or altering to customer's specification, mounting

and/or packaging into kits or marketable lots thereof, to

fill up transactions and sales made by its head offices or

© Compiled by RGL

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