Article 7Supplement v1, p. 7

COMMERCIAL LAWS SUPPLEMENT

raw materials after deducting the needs of the domestic

market therefor.

ARTICLE 21. "Tax credit" shall mean any of the credits

against taxes and/or duties equal to those actually paid or

would have been paid to evidence which a tax credit

certificate shall be issued by the Secretary of Finance or

his representative, or the Board, if so delegated by the

Secretary of Finance. The tax credit certificates including

those issued by the Board pursuant to laws repealed by

this Code but without in any way diminishing the scope

of negotiability under their laws of issue are transferable

under such conditions as may be determined by the

Board after consultation with the Department of Finance.

The tax credit certificate shall be used to pay taxes, duties,

charges

and

fees

due to the National Government;

Provided , That the tax credits issued under this Code shall

not

form

part

of

the

gross

income

of

the

grantee/transferee

for

income

tax

purposes

under

Section 29 of the National Internal Revenue Code and are

therefore not taxable: Provided, further , That such tax

credits shall be valid only for a period of ten (10) years

from date of issuance.

ARTICLE 22. "Export products" shall mean manufactured

or processed products the total F.O.B. Philippine port

value of the exports of which did not exceed five million

dollars in the United States Currency in the calendar year

1968 and which meet the local content requirement, if

any, set by the Board, and standards of quality set by the

Bureau of Product Standards, or, in default of such

standards, by the Board or by such public or private

organization, chamber, group or body as the Board may

designate. The above definition notwithstanding, the

Investment Priorities Plan may include other products for

export subject to such conditions and limited incentives

as may be determined by the Board.

ARTICLE 23. "Export sales" shall mean the Philippine port

F.O.B. value, determined from invoices, bills of lading,

inward letters of credit, landing certificates, and other

commercial documents, of exports products exported

directly by a registered export producer or the net selling

price of export product sold by a registered export

producer to another export producer, or to an export

trader that subsequently exports the same: Provided ,

That sales of export products to another producer or to an

export trader shall only be deemed export sales when

actually exported by the latter, as evidenced by landing

certificates or similar commercial documents: Provided,

further , That without actual exportation the following

shall be considered constructively exported for purposes

of this provision: (1) sales to bonded manufacturing

warehouses of export-oriented manufacturers; (2) sales to

export processing zones; (3) sales to registered export

traders operating bonded trading warehouses supplying

raw materials used in the manufacture of export products

under guidelines to be set by the Board in consultation

with the Bureau of Internal Revenue and the Bureau of

Customs; (4) sales to foreign military bases, diplomatic

missions and other agencies and/or instrumentalities

granted

tax

immunities,

of

locally

manufactured,

assembled or repacked products whether paid for in

foreign currency or not: Provided, further , That export

sales of registered export trader may include commission

income: and Provided, finally , That exportation of goods

on consignment shall not be deemed export sales until

the export products consigned are in fact sold by the

consignee.

Sales of locally manufactured or assembled goods for

household and personal use to Filipinos abroad and other

non-residents of the Philippines as well as returning

Overseas Filipinos under the Internal Export Program of

the government and paid for in convertible foreign

currency

inwardly

remitted

through

the

Philippine

banking systems shall also be considered export sales.

ARTICLE 24. "Production cost" shall mean the total of the

cost of direct labor, raw materials, and manufacturing

overhead,

determined

in

accordance

with

generally

accepted accounting principles, which are incurred in

manufacturing or processing the products of a registered

enterprise.

ARTICLE 25. "Processing" shall mean converting of raw

materials

into

marketable

form

through

physical,

mechanical, chemical, electrical, biochemical, biological

or other means or by a special treatment or a series of

actions, such as slaughtering, milling, pasteurizing, drying

or dessicating, quick freezing, that results in a change in

the nature or state of the products. Merely packing or

packaging shall not constitute processing.

ARTICLE 26. "Investment Priorities Plan" shall mean the

over-all plan prepared by the Board which includes and

contains:

(a)

The

specific

activities

and generic categories of

economic

activity

wherein

investments

are

to

be

encouraged

and

the

corresponding

products

and

commodities to be grown, processed or manufactured

pursuant thereto for the domestic or export market;

(b) Specific public utilities which can qualify for incentives

under this Code and which shall be supported by studies

of existing and prospective regional demands for the

services of such public utilities in the light of the level and

structure

of

income,

production,

trade,

prices

and

relevant economic and technical factors of the regions as

well as the existing facilities to produce such services;

(c) Specific activities where the potential for utilization of

indigenous non-petroleum based fuels or sources of

energy can be best promoted; and

(d) Such other information, analyses, data, guidelines or

criteria as the Board may deem appropriate.

The specific and generic activities to be included in the

Investment Priorities Plan with their status as pioneer or

non-pioneer

shall

be

determined

by

the

Board

in

accordance with the criteria set forth in this Book.

CHAPTER II Investment Priorities Plan

ARTICLE 27. Investment Priorities Plan . — Not later than

the end of March of every year, the Board of Investments,

after

consultation

with

the

appropriate

government

agencies and the private sector, shall submit to the

President

an

Investment

Priorities

Plan:

Provided,

however ,

That the deadline for submission, may be

extended by the President.

ARTICLE 28. Criteria in Investment Priority Determination .

—

No

economic

activity

shall

be

included

in

the

Investment

Priorities

Plan unless it is shown to be

economically,

technically

and

financially

sound after

thorough investigation and analysis by the Board.

The determination of preferred areas of investment to be

listed in the Investment Priorities Plan shall be based on

long-run comparative advantage, taking into account the

value

of

social

objectives

and

employing

economic

criteria

along

with

market,

technical,

and

financial

analyses.

The Board shall take into account the following:

(a) Primarily, the economic soundness of the specific

activity as shown by its economic internal rate of return;

(b) The extent of contribution of an activity to a specific

development goal;

(c) Other indicators of comparative advantage;

(d) Measured capacity as defined in Article 20; and

(e) The market and technical aspects and considerations

of the activity proposed to be included.

In any of the declared preferred areas of investment, the

Board

may

designate

as

pioneer areas the specific

products and commodities that meet the requirements

of Article 17 of this Code and review yearly whether such

activity, as determined by the Board, shall continue as

pioneer, otherwise, it shall be considered as non-pioneer

and accordingly listed as such in the Investment Priorities

Plan or removed from the Investment Priorities Plan.

© Compiled by RGL

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