Question & AnswerQ&A (Republic Act No. 4086)
The main objective of Republic Act No. 4086 is to promote the textile industry of the Philippines by exempting, under certain conditions, the importation of needed raw materials, chemicals, dyestuffs, and spare parts, as well as the manufacture and sale of products derived from them, from duties and taxes.
The conditions are: 1) The imported materials are not locally produced in sufficient quantities; 2) The importer is a Filipino citizen or a registered textile manufacturer with at least 60% Filipino ownership; 3) The importer is engaged in actual textile manufacturing with required machinery; 4) The importer is registered with the Board of Industries.
An importer must be a Filipino citizen or a partnership, corporation, or entity registered with the Securities and Exchange Commission as a textile manufacturer, with at least 60% ownership and control by Filipino citizens, and actively engaged in textile manufacturing.
The employment of alien technical or management experts requires prior authority from the President and does not affect the classification of the entity as controlled by Filipino citizens.
From approval to December 31, 1966: 100% exemption; January 1, 1967 to December 31, 1968: 75%; January 1 to December 31, 1969: 50%; January 1 to December 31, 1970: 25%; On or after January 1, 1971: full payment of taxes and duties.
No, Section 3 explicitly prohibits the sale, transfer, or conveyance of raw materials, chemicals, dyestuffs, or spare parts in their raw form.
They pay a special tax of 1% of their gross sales, which constitutes the Special Textile Research Fund for research and development in the textile industry.
It is used by the National Science Development Board for research, experimentation, and studies aimed at improving local raw material production and textile manufacturing processes and equipment.
No, Section 5 states that entities already enjoying tax exemptions under other laws cannot avail of the exemptions under this Act.
Penalties include cancellation of registration, payment of twice the amount of duties and taxes involved plus penalties and surcharges, imprisonment of 2 to 5 years, and fines of 10,000 to 20,000 pesos. Responsible persons in corporations may also be held criminally liable.