Section 36May 19, 1975, Sec./Art. 36

Incentives. To encourage qualified persons to engage in industrial tree plantation and/or tree farming, the following incentives are granted:

(a) Payment of a nominal filing fee of fifty centavos (P0.50) per hectare;

(b) No rental shall be collected during the first five (5) years from the date of the lease; from the sixth year to the tenth year, the annual rental shall be fifty centavos (P0.50) per hectare; and thereafter, the annual rental shall be one peso (P1.00) per hectare: Provided, That lessees of areas long denuded as certified by the Director and approved by the Department Head, shall be exempted from the payment of rental for the full term of the lease which shall not exceed twenty-five (25) years; for the first five (5) years following the renewal of the lease, the annual rental shall be fifty centavos (P0.50) per hectare; and thereafter, the annual rental shall be one peso (P1.00) per hectare.

(c) The lessee shall pay forest charges on the timber and other forest products grown and cut or gathered in an industrial tree plantation or tree farm equivalent to six percent (6%) current market value thereof;

(d) Sale at cost of seedlings and free technical advice and assistance to persons who will develop their privately-owned lands into industrial tree plantation or tree farm;

(e) Exemption from the payment of the percentage tax levied in Title V of the National Internal Revenue Code when the timber and forest products are sold, bartered or exchanged by the lessee whether in their original state or not;

(f) The Board of Investments shall, notwithstanding its nationality requirement on projects involving natural resources, classify industrial tree plantations and tree farms as pioneer areas of investment under its annual priority plan, to be governed by the rules and regulations of said Board. A lessee of an industrial tree plantation or tree farm may either apply to the Board of Investments for the tax and other benefits thereunder, or avail of the following benefits:

1. Amounts expended by a lessee in the development and operation of an industrial tree plantation or tree farm prior to the time when the production state is reached, may, at the option of said lessee, be regarded as ordinary and necessary business expenses or as capital expenditures; and

2. Deduction from an investor's taxable income for the year, of an annual investment allowance equivalent to thirty-three and one-third per cent (33-1/3%) of his actual investment during the year in an enterprise engaged in industrial tree plantation or tree farm: Provided, That such investment shall not be withdrawn for a period of at least ten (10) years from the date of investment: Provided, further, That should the investment be withdrawn within such period, a tax equivalent to double the amount of the total income tax rebate resulting from the investment allowance shall be payable as a lump sum in addition to the income tax due from the taxpayer for the year the investment was withdrawn.

(g) Except when public interest demands the alteration or modification, the boundaries of an area covered by an industrial tree plantation or tree farm lease, once established on the ground, shall not be altered or modified; and

(h) A lessee shall not be subject to any obligation prescribed in, or arising out of, the provisions of the National Internal Revenue Code on withholding of tax at source upon interests paid on borrowings incurred for development and operation of the industrial tree plantation or tree farm.

The Department Head may provide other incentives in addition to those hereinabove granted to promote industrial tree plantation and tree farms in special areas such as, but not limited to, those where there are no roads or where roads are inadequate, or areas with rough topography and remote areas far from processing plants.

All amounts collected under this section shall accrue to a special deposit of the Bureau to be used for reforestation of critical watersheds or degraded areas and other development activities, over and above the general appropriation of the said Bureau.

D. FOREST PROTECTION