Section 4Sec./Art. 4

Section 5(C) and (K) of Republic Act No. 9490 is hereby amended to read as follows:

"Section 5. Incentives to Registered Enterprises. - The APECO may administer the following incentives to the registered enterprises located therein to the extent of the activity/project:

"x x x

"(C) Imposition of a tax rate of five percent (5%) on Gross Income Earned (GIE). - Except for real property tax on land, no local and national taxes as prescribed under Republic Act No. 8424, also known as "The National Internal Revenue Code of 1997, as Amended" such as income tax, excise tax and franchise taxes, shall be imposed on registered enterprises operating within the Aurora Ecozone. In lieu thereof, five percent (5%) of the gross income earned shall be paid as follows:

"(a) Three percent (3%) to the national government;

"(b) One percent (1%) shall be remitted by the business establishments in equal shares to the respective treasurer's office of the province and the municipality where the enterprise is located; and

"(c) One percent (1%) shall be remitted by the registered enterprises to the APECO.

"All persons and service establishments in the Aurora Ecozone shall be subject to national and local taxes under the National Internal Revenue Code of 1997, as amended, and the Local Government Code.

"x x x

"(K) (1) Tax Treatment of Merchandise in the Aurora Ecozone. - (a) Except as otherwise provided in this Act, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description, except those prohibited by law, brought into the Aurora Ecozone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, manufactured, mixed with foreign or domestic merchandise whether directly or indirectly related in such activity, shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, any provision of law to the contrary notwithstanding.

"(b) Merchandise purchased by a registered enterprise, from the customs territory and subsequently brought into the export processing zone, shall be considered as export sales and exportation thereof shall be entitled to the benefits allowed by law for such transaction.

"(c) Domestic merchandise sent from the Aurora Ecozone to areas outside the said ecozone shall, whether or not combined with or made part of other articles likewise of local origin or manufactured in the Philippines while in the export processing zone, be subject to internal revenue laws of the Philippines as domestic goods sold, transferred or disposed of for local consumption.

"(d) Merchandise sent from the Aurora Ecozone to areas outside the said ecozone shall, whether or not combined with or made part of other articles while in the zone, be subject to rules and regulations governing imported merchandise. The duties and taxes shall be based on the value of said imported materials (except when the final product is exempt).

"(e) Domestic merchandise on which all internal revenue taxes have been paid, if subject thereto, and foreign merchandise previously imported on which has been paid, or which has been admitted free of duty and tax, may be taken into the Aurora Ecozone from the customs territory of the Philippines and be brought back thereto free of quotas, duty or tax.

"(f) Subject to such regulations respecting identity and safeguarding of the revenue as the Aurora Ecozone may deem necessary when the identity of an article entered into the export processing zone under the immediately preceding paragraph has been lost, such article when removed from the zone and taken to the customs territory shall be treated as foreign merchandise entering the country for the first time, under the provisions of the Tariff and Customs Code of the Philippines, as amended.

"(g) Articles produced or manufactured in the Aurora Ecozone and exported therefrom shall, on subsequent importation into the customs territory, be subject to the import laws applicable to like articles manufactured in a foreign country.

"(h) Unless the contrary is shown, merchandise taken out of the Aurora Ecozone shall be considered for tax purposes to have been sent to customs territory.

"(2) Tax Treatment of Merchandise in Free Trade/Freeport Zone. - The Aurora Ecozone shall be operated and managed as a separate customs territory ensuring free flow or movement of goods within, into and exported out of the free trade/freeport zone. Importations of raw materials and capital equipment are tax and duty free. However, exportations or removal of goods from the free trade/freeport zones to the other parts of the Philippine territory shall be subject to customs and internal revenue regulations.

"(3) Tax Treatment of Services in the Aurora Ecozone. - (a) Sale of service by an entity from the customs territory to a registered ecozone or free trade enterprise, or by a registered ecozone or freeport enterprise to another ecozone or freeport enterprise shall be treated as indirect export, and hence, entitled to the benefits allowed by law for such transaction.

"(b) Sale or service by a registered ecozone or freeport enterprise to the customs territory shall be subject to applicable internal revenue laws and regulations.

"x x x."