Tax Exemption Regulation on New Industries

Machinery, spare parts, and raw materials of tax-exempt industries are exempt from taxes except for the special import tax and new taxes that may be imposed in the future.
Exemption is granted only if:
- The machinery, parts, and raw materials are actually needed and exclusively used in manufacturing articles covered by the tax exemption.
- Foreign exchange allocation and importation documents are in the name of the importing industry, with direct delivery by customs authorities.

The tax exemption excludes companies or persons engaged in processing oil, gasoline, lubricants, and similar fuels and by-products.
Industries previously declared under Republic Act No. 35 and still enjoying four-year tax exemption automatically continue under this law.
The total exemption period under both laws shall not exceed ten years.
Grantees of exemptions under R.A. No. 35 whose exemptions expired before this Act may apply within three months to renew for an additional six years if qualified.

Any grantee who misuses the privileges granted for purposes other than those intended faces:
- Imprisonment between five and ten years.
- A fine ranging from 8,000 to 200,000 pesos.
- Automatic forfeiture of the tax exemption.
Government officers/employees who connive, abet, or tolerate violations will face the same penalties plus perpetual disqualification from public office.
Persons who connive with grantees in such violations are liable as co-principals.
For juridical persons, officials who consented or failed to object are liable.

Purchasing goods or commodities in transit from the original import order placer renders the purchaser liable as the importer, subjecting them to all applicable import taxes.