RA 7369 Tax and Duty Exemption Guidelines

Registered new or expanding enterprises may import machinery, equipment, and spare parts tax and duty free until Dec 31, 1994 or 5 years from registration, whichever is earlier.
Conditions for exemption include:
- The equipment must not be available domestically in sufficient quantity, quality, and reasonable prices.
- Imported machinery must be exclusively used in manufacturing or operations of the registered enterprise.
- Certain non-production equipment also qualifies.
- Board approval must be secured before purchase or opening of letters of credit.
- The capacity of imported equipment must align with registered capacity.

Importation limited to spare parts accompanying specific authorized equipment and essential for functioning.
Cost of spare parts shall not exceed 10% of equipment cost.
Separate importation beyond normal quantities generally not exempt but may qualify under EO 226.
Board discretion to allow importation within one year of equipment arrival under justifiable causes.

Certificates of authority are valid for one year unless extended.
Extensions granted in meritorious cases if filed before expiration and over 50% of equipment value already imported.
Extensions also apply to certificates issued between Aug 12, 1991 and effectivity, with maximum 5-year validity from registration.

The Board may require publication of notices for purchase of machinery domestically available.
Domestic manufacturers have 15 days from publication to offer supply to the Board.

Importation must be under the applicant's name for direct customs delivery.
Import documents with detailed information must be submitted to the Department of Finance and Board.
Equipment must be installed and used at the declared site.
Foreign suppliers must mark equipment as "Imported Tax and Duty Free under EO 226, As Amended."

Performance bond equal to waived taxes and duties is required for registered exporters with no export track record.
Guarantees from stockholders may substitute bonds.
Bonds are forfeited if export commitments are unmet.

Enterprises must notify the Board upon equipment withdrawal from Customs.
Board must be informed of installation and commercial operation dates.
Additional imports require notification within 10 days of installation.
Equipment subject to Board inspection anytime to verify use in registered activities.

Board may require international price canvassing to ensure fair pricing.
For equipment costing over US$5 million, compliance with PD 1764 on competitive bidding is required.

Sale, transfer, or disposition within 5 years of acquisition requires prior Board approval.
Approval granted without refund of taxes if sale is to another registered enterprise, for obsolescence, or for replacement.
Sales without approval incur double penalties on vendor and transferee.
Sales after 5 years require no approval but must be notified within 10 days.

Until Dec 31, 1994 or 5 years from registration, registered enterprises get 100% tax credit on purchases from domestic manufacturers.
From Jan 1, 1995, domestic manufacturers get 100% tax credit on taxes and duties paid on raw materials.
Purchasers of such equipment from Jan 1, 1995, also get 100% tax credit on relevant taxes and duties.
Equipment must have at least 20% value added.
Board may increase minimum value added requirement.
Rules for sale and disposition also apply to domestic equipment.

Certificates under EO 226 stating expiration on Aug 12, 1992, are amended to extend incentives for 5 years or until Dec 31, 1994.
Special projects maintain original incentive period.

Tax credit certificates are issued through the Board's One-Stop-Shop Center.
Certificates are transferable according to memoranda between Department of Finance and Board of Investments.

EO 226 and implementing rules apply supplementarily unless inconsistent with the Act and these guidelines.

Guidelines take effect 15 days after publication in the Official Gazette and a widely circulated newspaper in the Philippines.