Section 6August 8, 1991, Sec./Art. 6

Incentives. – All enterprises certified by the BOI in accordance with the foregoing section of this Act shall be entitled to the following incentives:

(a) Power, Infrastructure and Auxiliary Facilities. – Each enterprise so certified shall be entitled to generate its own electricity, either directly or through co-generation, build-operate-and-transfer, and other contracts. Said enterprise may also provide infrastructures under BOT arrangement. Such infrastructures shall be allowed for negotiated contract;

(b) Financing. – Subject to guidelines set by the donors and the Government of the Philippines, the National Economic and Development Authority shall include in its list for Official Development Assistance (ODA) financing, projects undertaken by certified enterprises, whether for capital and technical assistance, training, procurement of machinery, equipment, commodities, and services, and for rehabilitation and expansion of existing facilities.

For purposes of this Act and to facilitate financing from Official Development Assistance, the establishment and operation of the iron and steel plant composed of iron-making, steel-making and continuous casting shall be classified as infrastructure activity.

In financing manufacturing activity as herein defined, private sector participation shall be encouraged, certified enterprises shall tap other means of financing such as the build-operate-transfer scheme, and privatization in the case of case of government corporations.

(c) Tax and Duty Exemption on Imported Equipment. – All importations by certified enterprises of equipment, machinery and accompanying spare parts shall be exempt from all customs duties payable upon the importation thereof, subject to the following conditions:

(1) Equipment and machinery of comparable quality are not manufactured domestically and available for delivery on a timely basis at equivalent costs;

(2) Equipment and machinery to be imported will be used by the certified enterprise exclusively in the manufacturing, rolling or processing of primary iron and steel products, or for the power-generation requirements of its facility: provided, that the equipment and machinery imported for the construction of blast furnaces must be those that will cause less pollution; and

(3) The approval of the BOI is obtained for the importation of the desired equipment, machinery and spare parts: provided, that if the certified enterprise shall within five (5) years form the date of acquisition, sell, transfer or dispose of the machinery, equipment, and spare parts imported hereunder without prior approval of the BOI, said certified enterprise and the vendee, transferee, or assignee shall be solidarily liable to pay twice the amount of tax exemption given it.

(d) Tax Credit on Domestic Capital Equipment. – A certified enterprise purchases machinery, equipment, and spare parts from a domestic manufacturer shall be entitled to a tax credit equivalent to the national internal revenue taxes and customs duties that would have been waived had the machinery, equipment and spare parts been imported from abroad pursuant to the foregoing subsection (c), provided that the prior approval of the BOI is obtained for the purchase of such equipment, machinery and spare parts.

(e) Other Loans – The certified enterprise shall be authorized to contract; subject to the prior approval of the Central Bank of the Philippines, such loans, credits and indebtedness, from time to time and in any convertible foreign currency or capital goods, from foreign private financial institutions or fund sources as may be necessary to undertake the manufacturing activity described in Section 5 (b) above. The Central Bank of the Philippines shall give priority to the applications made by certified enterprises to foreign currency loans; debt-assets and debt-equity conversion and such other transactions as may receive the approval of the Central Bank of the Philippines.

The Government shall likewise encourage private financial institutions, whether domestic or foreign, to extend loans for equity investments of Philippine nationals in a certified enterprise. The interest income from loans with maturity of five (5) years or more extend by financial institutions shall be exempt from all national internal revenue taxes.

(f) Rational Tariff Incentives and Protection Scheme – The National Economic and Development Authority shall recommend to the appropriate authority a rational tariff incentive and protection scheme that shall enhance viability of the iron and steel industry. Specifically, tariff rates on imported raw materials not indigenously sourced or are not available in sufficient amounts or at the required grade or quality such as iron ore, coking coal, scrap and manganese ore shall be reviewed taking into consideration the requirements of the iron and steel industry.