Question & AnswerQ&A (BOC MEMORANDUM CIRCULAR NO. 211-95)
The policy of the State is to evolve export development into a national effort, viewing exports as a focal strategy for sustainable agri-industrial development and achieving Philippine national industrialization towards the year 2000, with the private sector taking the lead.
An 'exporter' is any person, natural or juridical, licensed to do business in the Philippines, engaged directly or indirectly in the production, manufacture, or trade of products or services earning at least 50% of its normal operating revenues from the sale of its products or services abroad for foreign currency. Indirect exporters are exempt from the foreign currency sales requirement.
Incentives include exemption from PD 1853 (Advance Payment of Customs Duties), duty-free importation of machinery and equipment and accompanying spare parts (until December 31, 1997), tax credits for imported inputs and raw materials, tax credits for increases in export revenues, and tax credits for use or import-substitution of non-traditional products.
The exporter must obtain an annual accreditation from the Bureau of Export Trade Promotion or deputized agency confirming that they meet specific operational requirements, submit a sworn statement complying with Minimum Wage and SSS laws, and pay corresponding fees.
The EDC oversees the implementation of the Philippine Export Development Plan, coordinates policy reforms to support exports, reviews export performance, identifies bottlenecks, mandates governmental agencies to resolve constraints, imposes sanctions, recommends legislation, and grants accreditation to exporters' organizations.
The EDC is composed of the Secretary of the Department of Trade and Industry (Chairman), Directors and Secretaries of key government departments such as Finance, Agriculture, Labor, Foreign Affairs, Science and Technology, the Governor of BSP, nine private sector representatives (majority nominated by the accredited organization), and other invited officials.
Export sales mean the Philippine port FOB value of exported products or net selling price to another export-related entity, including sales to export oriented manufacturers through bonded warehouses, export processing zones, export traders, and certain government agencies. It also includes sales to Filipinos abroad paid in convertible currency through Philippine banks under the Internal Export Program.
Tax credits are granted based on incremental export revenue increases over the previous year: a 2.5% credit for the first 5%, 5% for the next 5%, 7.5% for the subsequent 5%, and 10% for increases over 15%. This credit is only for the year when the increase is achieved and requires external auditor certification and detailed export sales schedules.
Willful violators or grossly negligent individuals or entities may be expelled from office, have their officers removed and be barred from government positions for at least two years. The Council can also suspend or cancel exporter registration or suspend incentives for violations of the law, rules, or related labor, sanitary, or environmental laws.
Private sector representatives appointed by the President serve a term of two years and replacements for vacancies serve the remainder of the original term.