P-Noy extends zero tariff on capital equipment, spare parts imported by BOI

MANILA, Philippines - President Aquino has issued an executive order allowing zero tariff on capital equipment, spare parts and accessories imported by new and expanding enterprises at economic zones and free ports registered with the Board of Investments.

Executive Secretary Paquito Ochoa Jr. said the President signed EO 70 last March 29 on zero percent duty on certain articles spelled out in EO 528 issued in 2006, on recommendation of the National Economic and Development Authority.

“The effectivity of EO No. 528 is only for five years, from 2006 or until the enactment of a law amending EO No. 226, or the Omnibus Investments Code of 1987, which aims to facilitate investment in the country through a cohesive and consolidated investments incentives law. A law to amend EO No. 226 has yet to be enacted,” he said.

He said the zero percent duty would be extended for five years and would be in effect 30 days after the publication of the EO in a newspaper of general circulation or upon enactment of a law amending EO 226.

Ochoa explained the presidential directive would help ease the cost of importing capital equipment by investors for their start-up operations and project expansion in the Philippines.

“There is a need to continue providing this incentive because allowing zero percent duty importation will make our country more competitive in its efforts to lure investors amid the progressively competitive Asian market for foreign direct investments today,” he said.

Based on EO 70, the zero percent duty shall be granted to BOI-registered enterprises for imported articles or equipment classified under specific chapters of the Tariff and Customs Code of the Philippines upon the issuance of a certificate of authority by the BOI.

The presidential directive maintained that the zero percent duty should only be applied on articles or equipment that are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices, reasonably needed and would be used exclusively by the project in its registered activity.

It also prohibits the selling, transfer or disposal of the articles exempted from duty without prior approval of the BOI within five years from the date of its importation. 

Violators will be fined twice the amount of the duty foregone or P500,000 or whichever is higher, without prejudice to other applicable penalties under EO No. 226.