The incentive allowing the duty-free importation of capital equipment, spare parts, and accessories by companies registered with the Philippine Board of Investment (BOI) has been extended by another year.
President Rodrigo Duterte signed Executive Order (EO) No. 57 on June 22, which extended the more than 30-year-old incentive in a bid to “further enhance industry competitiveness in line with the Philippine Development Plan 2017-2022.”
The EO noted that importation of capital equipment remains one of the major cost burdens of business enterprises in their start-up and expansion, and that the grant of the fiscal incentive is important in promoting investments into the Philippines “considering the global competition for foreign direct investments.”
The zero percent duty applies, upon issuance by BOI of a certificate of authority, to importations by BOI-registered new and expanding enterprises of capital equipment, spare parts, and accessories classified under Chapters 40, 59, 68, 69, 70, 73, 76, 82, 83, 84, 85, 86, 87, 89, 90, and 96 of the Customs Modernization and Tariff Act (CMTA).
However, the grant applies only under two conditions: the capital equipment, spare parts, and accessories are not manufactured domestically in sufficient quantity, produced in comparable quality, or sold at reasonable prices; and they are reasonably needed and will be used exclusively by the enterprise for its registered activity.
The BOI-enterprise cannot sell, transfer, or dispose of the imported capital equipment, spare parts, and accessories without prior approval from BOI within five days from the date of importation, otherwise the BOI-enterprise will be solidarily liable to pay either twice the amount of the duty forgone or P500,000, whichever is higher, without prejudice to other applicable penalties under EO No. 226, or the Omnibus Investment Code of 1987.
BOI, in coordination with the Tariff Commission, will be promulgating the implementing rules and regulations of EO 57.
The new order is effective immediately after its complete publication in a newspaper of general circulation, and will be valid one year, or until a law amending EO 226 is enacted, whichever is earlier.
