TRAIN Law

Section 32. Section 107 of the NIRC, as amended, is hereby further amended to read as follows:

"Sec. 107. Value-added Tax on Importation of Goods. - "(A) In General. - There shall be levied, assessed
and collected on every importation of goods a value-added tax equivalent to twelve percent (12%) based
on the total value used by the Bureau of Customs in determining tariff and customs duties, plus customs
duties, excise taxes, if any, and other charges, such tax to be paid by the importer prior to the release of
such goods from customs custody: Provided, That where the customs duties are determined on the basis
of the quantity or volume of the goods, the value-added tax shall be based on the landed cost plus excise
taxes, if any.

PEZA Law
SEC. 26. Domestic Sales. – Goods manufactured by an ECOZONE enterprise shall be made available for
Immediate retail sales in the domestic market, subject to payment of corresponding taxes on the raw
materials and other regulations that may be adopted by the Board of the PEZA.

However, in order to protect the domestic industry, there shall be a negative list of Industries that will be
drawn up by the PEZA. Enterprises engaged in the industries included in the negative list shall not be
allowed to sell their products locally. Said negative list shall be regularly updated by the PEZA.

The PEZA, in coordination with the Department of Trade and Industry and the Bureau of Customs, shall
jointly issue the necessary implementing rules and guidelines for the effective Implementation of this
section.

TRAIN Law
Section 33. Section 108 of the NIRC, as amended, is hereby further amended to read as follows:

"Sec. 108. Value-added Tax on Sale of Services and Use or Lease of Properties. —

"(B) Transactions Subject to Zero Percent (0%) Rate. - The following services performed in the
Philippines by VAT registered persons shall be subject to zero percent (0%) rate:

"(1) Processing, manufacturing or repacking goods for other persons doing business
outside the Philippines which goods are subsequently exported, where the services are
paid for in acceptable foreign currency and accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP); (Foreign currency denominated
sales)

"(5) Services performed by subcontractors and/or contractors in processing, converting, or

manufacturing goods for an enterprise whose export sales exceed seventy percent (70%)
of total annual production; (Indirect Exporters and Agents)

"Provided, that subparagraphs (B)(1) and (B)(5) hereof shall be subject to the twelve percent (12%)
value-added tax and no longer be subject to zero percent (0%) VAT rate upon satisfaction of the
following conditions:

"(1) The successful establishment and implementation of an enhanced VAT refund system
that grants refunds of creditable input tax within ninety (90) days from the filing of the VAT
refund application with the Bureau: Provided, That, to determine the effectivity of item no.
1, all applications filed from January 1, 2018 shall be processed and must be decided within
ninety (90) days from the filing of the VAT refund application; and
 "(2) All pending VAT refund claims as of December 31, 2017 shall be fully paid in cash by
December 31, 2019.

EO 226

ARTICLE 39. Incentives to Registered Enterprises. - All registered enterprises shall be granted the following
incentives to the extent engaged in a preferred area of investment;

(j) Tax Credit for Taxes and Duties on Raw Materials. - Every registered enterprise shall enjoy a tax credit
equivalent to the National Internal Revenue taxes and Customs duties paid on the supplies, raw materials
and semi-manufactured products used in the manufacture, processing or production of its export products
and forming parts thereof: Provided, however, that the taxes on the supplies, raw materials and semi-
manufactured products domestically purchased are indicated as a separate item in the sales invoice.
Nothing herein shall be construed as to preclude the Board from setting a fixed percentage of export sales
as the approximate tax credit for taxes and duties of raw materials based on an average or standard usage
for such materials in the industry.

(k) Access to Bonded Manufacturing/Trading Warehouse System. - Registered export oriented enterprises
shall have access to the utilization of the bonded warehousing system in all areas required by the project
subject to such guidelines as may be issued by the Board upon prior consultation with the Bureau of
Customs.

IRR of RA No. 7916

Rule VIII. Tax Treatment of Merchandise in the

Restricted Areas of the Ecozones

SECTION 1. Exemptions - Merchandise brought to the restricted areas in the ECOZONES by

registered Export or Free Trade Enterprises, except prohibited merchandise, shall not be
subject to all customs and internal revenue laws and regulations of the Philippines nor to
local tax ordinances: Provided, That they are to be sold, stored, broken-up, replaced,
assembled, manipulated, manufactured and/or mixed with foreign or domestic merchandise
within the restricted areas in the ECOZONES.

IRR of EO 226

RULE VI INCENTIVES TO REGISTERED ENTERPRISES

SECTION 13. Exemption from Taxes and Duties on Imported Supplies and Spare Parts in a Bonded Manufacturing
Warehouse. — a. A registered enterprise operating a bonded manufacturing warehouse may import tax and duty-
free supplies and spare parts for machineries and equipment reasonably needed in its registered operation. b. All
importations of supplies and spare parts shall immediately be authorized by the Bureau of Customs to be transferred
to the bonded manufacturing warehouse subject to the following conditions: 1) Within 15 days from date of transfer
of the shipment to the bonded manufacturing warehouse, the registered enterprise shall file an application with the
Board for tax and duty exemption certificates for such spare parts and supplies. Firms who failed to file applications
within 15 days shall be liable to pay the basic and daily fines provided herein. 22 2) After due evaluation, the Board
shall issue a tax and duty exemption certificate to the registered enterprise. Such certificate shall cover spare parts
and supplies that are found to be reasonably needed by the applicant in its registered operation. 3) The Customs
duty and internal revenue tax shall be collected on all spare parts and supplies not covered by a tax and duty
exemption certificate.