RBOI Incentives

 

RBOI Incentives

1. Income Tax Holiday

2. Additional deduction for labor expenses

3. Duty-free or duty-reduced importation of capital equipment

4. Unrestricted use of consigned equipment

5. Tax & duty-free importation of spare parts and supplies

6. Tax & duty-free importation of breeding stocks and genetic materials

7. Tax credit on domestic breeding and genetic materials

8. Tax credit on raw materials & supplies

9. Additional deduction from major infrastructure works located in LDAs

10. Exemption from wharfage dues

11. Employment of foreign national

12. Zero-Rated Value Added Tax

 

 


 

Income Tax Holiday

  • Firms whose registered operation/s is located within NCR are not entitled to ITH, except in the ff. cases:

 

  1. Registered operation/s is located in a government industrial estate
  2. Projects that will engage in service type activities listed in Part 1 (I) of the IPP
  3. Export-oriented projects
  4. Modernization projects
  5. New and Expansion projects in support to export-oriented jewelry enterprises engaged in electroplating, gemstone appraisal certification, assaying and hallmarking.

 

  • Period of Entitlement

 

Eligible Enterprises

No. of Years

New & Pioneer

6

New & Non-pioneer

4

Expanding

3

Projects located in Less Developed Areas

6

Modernizing

3

  • Criteria for ITH Bonus Year (any of the ff):

 

- Ration of Cost of Capital Equipment of less than USD10,000

to1 Direct Labor

- Cost of Indigenous Raw Materials is at least 50% of Total

Cost of Raw Material

- Net FOREX of at least USD500,000 annually for the first 3

years of operation.

 

  • Most common causes of discrepancies in ITH computations:

 

- Miscellaneous income not entitled to ITH

- Wrong rate of income exemption

- Gap on application period of bonus year

- Erroneous reckoning period of ITH

 

  • Filing Application

 

 

 

- 1 month from the filing of the Annual Income Tax Return (ITR) with BIR

- For companies with tentative ITRs:

 

      • One (1) month from the filing of the final ITR; or
      • Within one (1) month after the lapse of the two (2) year period within which to file the final ITR

- Beyond 2-1/2 years, application not accepted

  • For less than 1 year ITH period, Audited

 

Segregated Income/Financial Statement Required
  • Penalties for late filing of application 
- For delays of 365 days or less:

 

                 Penalty = amount of ITH x 1% x (# of days

                 Delayed/365 days)

  - For delays of more than 365 days:

                Penalty = amount of ITH x % penalty

                (1.75% for ITH greater than P100m and

                1.5% for ITH equal to or less than P100m)

       

# of days delayed

31-180

181-300

Over 300

Minimum Penalty

P1,000.00

P5,000.00

P10,000.00

Minimum Penalty

                    P2,000,000.00

 

 

 


Additional Deduction for Labor Expense

 

  • 50% of Incremental Direct Labor Cost Deductible from Taxable Income for the first five (5) years from registration for New & Expanding Firms.
  • 100% of Incremental Direct Labor Cost Deductible from Taxable Income for the first five (5) years from registration for New & Expanding firms located in Less-Developed Areas (except mining & forestry-based activities).

 

v     They are reasonable needed and will be used exclusively by the enterprise in its  registered activity.

v     The rated capacity of the equipment is within the or up to 15% of registered capacity.

v     Posting of a performance bond

 

  • Filing of Application

-         before purchase order is made or before the opening of letters of credit for the importation of the capital equipment 

  • Processing Period - 10 working days

 

 


Unrestricted Use of Consigned Equipment Under Re-export Bond

 

 

  • Machinery, equipment and spare parts consigned to any RBOI – registered firm shall not be subject to restrictions to period of use
  • Entitlement to apply with this incentive will not exceed 10 years from the date of registration

 

  • Spare parts may be imported separate
  • Non-production equipment such as power generation sets, transformers, compressors & boilers etc., are included.
  • Guarantees for Re-exportation: 100% of the import duties & taxes waived.

 

Ø      Re-export Bond

o       Issued by accredited insurance companies

o       Valid for 6 mos. And renewable thereafter which should be filed 2 weeks before expiry date to avoid penalty

 

Ø      Domestic Standby Letter of Credit

o       Issued by accredited banks

 

o       Serve as a alternate to Re-export Bond

 

  • Filing of application

Prior to loading on board a carrier or upon arrival of the shipment and upon completion of import documents

  • Processing Period

Request

# of  working Days

Release & renewal of endorsement

4

Re-exportation for repair & calibration

3

Transfer and disposal of equipment

5

Re-exportation of equipment & cancellation of bond

4

 

 


Tax and Duty-free Importation of Spare Parts and Supplies

 

 

  • Exemption from customs duties and national internal revenue taxes for importation of required supplies and spare parts for consigned equipment with a bonded manufacturing warehouse for a period not exceeding 10 years from the date of registration

  • Condition for Availment

 

Ø     Exclusive use of spare parts and supplies for the machinery and equipment and production of qualified RBOI-ARMM enterprise

Ø     Supplies reasonably needed in the manufacture of export product which may or may not form part of the product

Ø     Supplies/Spare parts not locally available at reasonable price, sufficient quantity and comparable quality

Ø     The RBOI-ARMM – registered firm must be a licensed operator of a Custom’s Bonded Manufacturing Warehouse (CBMW)

Ø     Exports 70% of production and with positive net foreign exchange earning for the past year

  • Filing of Application
- within 15 calendar days from date of transfer of the shipment of spare parts and supplies
  • Penalties for late filing application
- P200.00 basic fine + daily fine of P10.00 not to exceed P50,000.00
  • Processing Period

Number of Imported Entries

# of working days

1-10

5

11-20

7

Over 20

10

 

 


Tax and Duty-free Importation of Breeding Stocks and Genetic Materials

 

 

  • Exemption from payment of tariff and duties and taxes on importation of breeding stock and genetic materials within 10 years from date of registration.
  • Such importation shall cover breeding stock & genetic materials necessary for expansion or improvement of replacement of proven unproductive breeding stock and genetic materials.
  • Tax credit for local purchases.

 

 


Tax Credit on Raw Materials and Supplies

 

  • Amount is equivalent to actual taxes and duties paid for imported/local raw materials and supplies, must cover:

 

- purchase made within 1 year from actual direct exportation; or
  • Purchase made within 2 years from actual direct exportation
  • Filing of Application

 

- File with the Department of Finance Tax Credit Center within 1 year from date of esxportation in case of direct exports and 2 years in case of indirect exports.

 

 


 
  • 100% deduction from taxable income for necessary and major infrastructure work.
  • Available for enterprises with production, processing and manufacturing plants in less developed areas
  • 10 years carry-over deduction
 
 

 
 
  • Period of exemption is as stated  in the CR terms and conditions and/or IPP of registration
  • If no prescribed period, 10 years from date of registration
  • Presentation of Certificate of RBOI-ARMM Registration is enough proof of entitlement.
 
 

 
  • Special non-immigrant multiple entry visa given to foreign nationals
 

-     Supervisory, technical or advisory positions not to exceed five (5) years from date of registration of the firm

-     Positions of president, treasurer and general manager may be retained by foreign nationals beyond 5 years for 40% foreign-owned firms

  • Extendible to spouse and unmarried children under 21 years of age
  • As an option, investors may avail of the Special Investor's Resident Visa (SIRV)
  • Filing of Application

-     For newly hired: before assumption of duty

-     For extension: at least 1 mo. Before expiration date of existing employment authority

  • Processing Period

-     New: 3 working days

-     Renewal: 2 working days

 
 
 

 
  • 2 types of 0% VAT applications RBOI-ARMM endorses to BIR:

BIR RR 2-88: for purchases of raw materials and supplies used in the manufacture and w/c form part of the registered export product

BIR RMO 9-2000: for purchases of goods services or properties of firms exporting 100% of their products (motor vehicles are not covered, except specialized vehicles such as backhoe, forklift, etc.)

    • Conditions for Coverage: BIR RR No. 2-88

-     Both RBOI-ARMM-registered buyer and supplier are VAT registered

-     RBOI-ARMM-registered enterprise exports more than 70% of its production

  • Computation of Compliance to >70% export sales

 

                       Total Export Sales/Total Sales(Domestic + Export)  X 100>70%

-     Total Sales include those from both RBOI-ARMM-registered and non-registered activities

-     Sales value is used for heterogeneous products

-     Sales volume is used for homogeneous products

  •  Filing of Application

On or before

15 Jan

Retroactive –purchases starting 01 January will be considered (Zero-rated VAT Masterlist)

After 15 Jan to 10 Feb

Retroactive –purchases starting 01 January will be considered (Zero-rated VAT Masterlist)

After Feb 10 to 10 Mar

No longer retroactive – purchase that will be considered is frm the date of RBOI-ARMM Endorsement (Zero-rated VAT Masterlist)

After 10 Mar

No longer retroactive – purchase that will be considered is frm the date of RBOI-ARMM Endorsement (Individual Endorsement; P750/supplier)

  • Conditions for Coverage: BIR RMO 9-2000

-     Both RBOI-ARMM-registered buyer and supplier are VAT registered

-     RBOI-ARMM-registered enterprise must be a manufacturer/producer exporting 100% of its production whether directly, indirectly, constructively or combination of all

-     RBOI-ARMM-registered enterprises with activities other than manufacturing (e.g. service-type projects) shall not qualify

  • 100% Direct Exporter – RBOI-ARMM-registered manufacturer exporting directly 100% of all its products from Philippines to foreign countries

  • 100% Indirect Exporter – RBOI-ARMM-registered manufacturer whose products are sold 100% to a RBOI-ARMM-registered firm directly exporting 100% of its products

  • 100% Constructive Exporter – RBOI-ARMM-registered manufacturer whose products are sold 100% to bonded manufacturing warehouse, to export-oriented firms registered w/ PEZA, to military bases, diplomatic mission and other agencies granted tax immunities

  • Filing of application:

 

-     Calendar year accounting period: not later than 15 January

-     Fiscal year accounting period: w/in 15 days from the end of the fiscal year

 

(beyond the applicable period, the certificates on 0% VAT on purchases will be valid from the date of issuance and not from the start of the new fiscal/calendar year)