Article 16Supplement v1, p. 16

COMMERCIAL LAWS SUPPLEMENT

parent

companies

and

to

serving

as

a

storage

or

warehouse of goods purchased locally by the home office

of the multinational for export abroad. The regional

warehouse shall not directly engage in trade nor directly

solicit business, promote any sale, nor enter into any

contract for the sale or disposition of goods in the

Philippines: Provided, That a regional warehouse may be

allowed

to

withdraw

imported

goods

from

said

warehouse/s for delivery to an authorized distributor in

the

Philippines:

Provided,

however,

That

the

corresponding taxes, customs duties and charges under

the Tariff and Customs Code have been paid by the

headquarters of the said multinational upon arrival of

such goods: Provided, further, That the delivery of said

goods to the aforesaid distributor in the Philippines shall

be treated as a sale made by the headquarters rather

than that of its head office, and shall be reflected in a

separate book of accounts, any representation as to who

is the seller to the contrary notwithstanding: Provided,

furthermore,

That

the

aforementioned

sale

shall be

governed

by

the

provisions

on

value-added

tax

in

accordance with the National Internal Revenue Code, as

amended by Republic Act No. 8424: Provided, finally, That

the

income

from

the

aforementioned

sale

to

said

distributor shall be treated as income derived by the said

headquarters from sources within the Philippines and

shall be subject to the corporate income tax of a resident

foreign corporation under the National Internal Revenue

Code, as amended, the provision of any law to the

contrary notwithstanding.

(2)

The

personnel of a regional warehouse will not

participate in any manner in the management of any

subsidiary, affiliate or branch office it might have in the

Philippines other than the activities allowed under this

Act.

(3) The personnel of the regional or area headquarters or

regional operating headquarters shall be responsible for

the operation of the regional warehouse subject to the

provisions of this Code.

(4) The multinational company shall pay the Board of

Investments, the PEZA or concerned ecozone authorities,

as the case may be, and the appropriate Collector of

Customs concerned the corresponding license fees and

storage fees to be determined by said offices.

(5) An application for the establishment of a regional

warehouse located outside an ecozone shall be made in

writing to the Board of Investments, to the PEZA, or to

concerned ecozone authorities in the case of regional

warehouses located in ecozones. The application shall

describe the premises, the location and capacity of the

regional

warehouse and the purpose for which the

building is to be used.

The jurisdiction and responsibility of supervising the

regional warehouses located outside ecozones shall be

vested on the Bureau of Customs, and the Board of

Investments,

or

the

PEZA

or

concerned

ecozone

authorities for warehouses within ecozones.

The

Board

of

Investments,

the

PEZA

or concerned

ecozone authorities, in consultation with the Regional

Director of Customs of the district where the warehouse

will

be

situated

shall

cause

an examination of the

premises to be made and if found satisfactory, it may

authorize its establishment without complying with the

requirements of any other government body, subject to

the following conditions:

(1) That the articles to be stored in the warehouse are

spare parts, components, semi-finished products and raw

materials of the multinational company operator for

distribution and supply to its Asia-Pacific and other

foreign markets including packaging, coverings, brands,

labels and warehouse equipment as provided in Article

69(a) hereof;

(2) That the entry or importation, storage or reexport of

the goods destined for or to be stored in the regional

warehouse

will

not

involve

any

dollar

outlay

from

Philippine sources;

(3) That they are of such character as to be readily

identifiable for reexport; and in case of local distribution

they shall be subject to Article 68(1), Article 69 paragraph

(b) and the guidelines implementing Book IV of this

Code;

(4) That it shall file an ordinary warehousing bond in an

amount equal to one hundred percent (100%) of the

ascertained customs duties on the articles imported

without prejudice to its filing a general warehousing

bond in lieu of the ordinary warehousing bond;

(5) The percentage of annual allowable withdrawal from

warehouses located outside ecozones for domestic use

shall

be

subject

to

the

approval

of

the

Board

of

Investments,

or

of the PEZA or concerned ecozone

authorities with respect to warehouses located within the

ecozones of their jurisdiction: Provided, however, That in

the case of existing warehouses, in no case shall their

withdrawals exceed thirty percent (30%) of the value of

goods they have brought in for any given year and the

payment of the corresponding taxes and duties shall have

been made upon the arrival of such goods imported:

Provided, further, That the PEZA or concerned ecozone

authorities

may

allow

withdrawal

exceeding

thirty

percent (30%) of the value of goods under such terms and

conditions the PEZA or concerned ecozone authorities

may impose. (as amended by RA No 8756)

ARTICLE 69. Tax Treatment of Imported Articles in the

Regional Warehouse . —

a)

Tax

Incentives

for

Qualified

Goods

Destined

for

Reexportation to the Asia-Pacific and Other Foreign

Markets. — Except as otherwise provided in this Code,

imported

spare

parts,

components,

semi-finished

products, raw materials and other items including any

packages, coverings, brands and labels and warehouse

equipment

as

may

be

allowed

by

the

Board

of

Investments, the PEZA or concerned ecozone authorities,

as the case may be, for use exclusively on the goods

stored, except those prohibited by law, brought into the

regional warehouse from abroad to be kept, stored and/or

deposited

or

used

therein

and

reexported

directly

therefrom under the supervision of the Collector of

Customs concerned for distribution to its Asia-Pacific and

other foreign markets in accordance with the guidelines

implementing Book IV of this Code including to a bonded

manufacturing

warehouse

in

the

Philippines

and

eventually reexported shall not be subject to customs

duty, internal revenue tax, export tax nor to local taxes,

the provisions of law to the contrary notwithstanding.

(b) Payment of Applicable Duties and Taxes on Qualified

Goods

Subject

to

Laws

and

Regulations

Covering

Imported Merchandise if Destined for the Local Market.

— Any spare parts, components, semi-finished products,

raw materials and other items sent, delivered, released or

taken from the regional warehouse to the local market in

accordance with the guidelines implementing Book IV of

this Code shall be subject to the payment of income

taxes, customs duties, taxes and other charges provided

for under Section 68 hereof and for which purpose, the

proper commercial invoice of the head offices or parent

companies shall be submitted to the Collector of Customs

concerned; and shall be subject to laws and regulations

governing imported merchandise: Provided, That in case

any of the foregoing items are sold, bartered, hired or

used for purposes other than they were intended for

without

prior

compliance

with

the

guidelines

implementing Book IV of this Code and without prior

payment of the duty, tax or other charges which would

have been due and payable at the time of entry if the

articles had been entered without the benefit of this

Order, shall be subject to forfeiture and the importation

shall constitute a fraudulent practice against customs

revenue punishable under Section 3602, as amended, of

the Tariff and Customs Code of the Philippines: Provided,

further, That a sale pursuant to a judicial order shall not

be subject to the preceding proviso without prejudice to

the payment of duties, taxes and other charges.

(as amended by RA No 8756)

© Compiled by RGL

16 of 203