Question & AnswerQ&A (Republic Act No. 6135)
The short title of Republic Act No. 6135 is the "Export Incentives Act of 1970."
The policy of the State is to actively encourage, promote, and diversify exports of services and manufactures utilizing domestic raw materials to the fullest extent possible, develop new markets for Philippine products, increase foreign exchange earnings, hasten economic development, and ensure benefits accrue to the Filipino people.
A registered export producer is any person, partnership, or entity organized under Philippine laws that is registered with the Board of Investments, engaged or proposing to engage in manufacturing or processing of export products, and exports these products directly or sells them to registered export traders or other export producers.
Export products are manufactured or processed products where not more than 80% of their F.O.B. Philippine port value is attributable to imported raw materials, whose total F.O.B. Philippine exports did not exceed five million US dollars in 1968, and which meet quality standards set by the Bureau of Standards or designated bodies.
They enjoy tax credits on taxes and duties for supplies and raw materials, reduced income tax for five years, tax exemption on imported capital equipment for five years under certain conditions, tax credits on domestic capital equipment purchases, and exemption from export tax if applicable.
The applicant must be a Filipino citizen or at least 60% owned and controlled by Filipinos, engaged or proposing to engage in qualifying export activities, not engage in activities reserved for Filipinos unless requirements are met, and must install adequate accounting systems to segregate export operations.
Violations may be punished by a fine of up to fifty thousand pesos, imprisonment of up to three years, or both, at the court's discretion. Government officials are subject to maximum penalties plus perpetual disqualification from public office. Juridical entities can have responsible officials penalized, aliens may be deported, and naturalized citizens may be denaturalized.
Registered export producers, traders, or service exporters operating within foreign trade zones are entitled to the same benefits and incentives under the Act, provided the exported products under a specific patent or trademark are not manufactured by existing licensees in the Philippines.
One percent of collections from the export tax is set aside as the Export Assistance Fund, administered by the Board of Investments to promote export diversification, improve production methods, raise quality, promote marketing, develop packaging and design, establish export training institutes, assist trade and cultural missions, and other related undertakings. Travel abroad expenses are excluded.
The Board of Investments may suspend or cancel incentives if there is a violation of the Act or labor laws, international actions threaten Philippine exports, or if a registered enterprise with a paid-up capital of at least 500,000 pesos earns profits over 33 1/3% of equity for two years without incentives.