Duterte signs EO on BOI perks

MANILA, Philippines -  Companies registered with the Board of Investments (BOI) will continue enjoying duty-free importation of capital equipment following the signing of President Duterte of Executive Order (EO) 22.

The extension of the zero percent duty importation is seen to further enhance industry competitiveness in line with the Philippine Development Plan 2017 to 2022.

“Considering that importation of capital equipment is one of the major cost burdens of business enterprises in their start-up operations and expansion, there is a need to extend the zero duty on importation on capital equipment, spare parts, and accessories currently being enjoyed by BOI-registered enterprises,” the EO stated.

The EO acknowledged the grant of duty-free importation of capital equipment remains to be an important fiscal incentive in promoting investments into the Philippines considering the global competition for foreign direct investments.

The zero percent duty would be applied to importations by BOI-registered new and expanding enterprises of capital equipment, spare parts, and accessories that are not manufactured domestically in sufficient quantity, of comparable quality, and at reasonable prices.

These equipment, spare parts, and accessories should also be reasonably needed and would be used exclusively by the company in its registered activity.

EO 70 issued by former president Benigno Aquino III in 2012 provided for a zero percent duty on certain articles imported by BOI-registered firms for a period of five years.

The extension through EO 22 signed by Duterte was lauded by the local business community, saying that “all steps taken to entice more investors into locating in the country are a welcome development.”

Duterte, meanwhile, also signed recently EO 21 which modified the nomenclature and rates of import duty on certain information technology products under Section 1611 of the Customs Modernization and Tariff Act in order to implement the country’s tariff commitments under the World Trade Organization-Information Technology Agreement (WTO-ITA).

The Philippines signed the ITA in 1997 and was ratified by the Senate a year after.

The ITA provided for the elimination/binding of Most Favored Nation (MFN) tariffs on certain IT products beginning July 1997 and ending on January 2000, with extended staging of tariff reductions for developing countries up to 2005.

In a WTO meeting in Geneva in 2015, ITA participants agreed to expand the original ITA product landscape to include new generation IT products. In the same year, the Philippine ITA expansion schedule where bound tariffs will be eliminated starting July 2017, with flexibility on some products until July 2023.

“The articles specifically listed…shall be subject to MFN rates of import duty in accordance with the schedule indicated opposite each article. The rates of import duty on tariff headings and subheadings which are not enumerated…shall remain in force and effect,” the EO said.

“Upon the effectivity of this order, all articles which are specifically listed in the aforementioned annex and are entered into, or withdrawn from warehouses in the Philippines for consumption, shall be levied MFN rates of duty as therein prescribed,” it added.