Qualifications for Availment of Fiscal Incentives.
SEC. 20. Qualifications for Availment of Fiscal
Incentives.—To qualify for registration as an agricultural producer and/or
enterprise entitled to avail of fiscal incentives, the applicant must (a) be
engaged or proposes to engage in agricultural production, processing and
marketing if substantially integrated with agricultural production, and/or other
related services or facilities necessary to support agricultural production
including transport, handling and storage of products and by-products arising
out of such production, declared specifically as a preferred area of investment;
and (b) be a citizen of the Philippines, in case the applicant is a natural
person or in case of a partnership, corporation or any association, it is
organized under Philippine laws and that at least sixty percent (60%) of its
capital is owned and controlled by citizens of the Philippines, and that at
least sixty percent (60%) of the members of the Board of Directors are citizens
of the Philip pines; Provided, That subject to the provisions of the
Constitution on the nationality requirement where exploitation of natural
resources is involved, and other applicable nationalization laws, the above
nationality requirement shall not apply to agricultural ventures classified as
First and Second Priority in the plan.
Agricultural producers who engage in intermediate and final processing of
agricultural products not otherwise covered by the Investment Priorities Plan of
the Board under existing laws may register such manufacturing activities under
this Decree if such activities are likewise covered by the Agricultural
Investment Priorities Plan.
Small scale farmers engaged in contract growing of agricultural products used
as inputs for registered activities may register as agricultural producers n
such commodity is listed in the Plan, subject to the guidelines that will be
promulgated by the Board in consultation with the Bureau of Internal Revenue,
Provided, That is no double availment (f comparable incentives for the
same product.
Filipino citizens and corporations or associations may enter into service
contract for financial, technical, management or other forms of assistance with
any foreign person or entity for the development of Philippine agriculture,
agricultural resources and food production.
Sub-Chapter
B.—FISCAL INCENTIVES TO INVESTORS
Tax Deductions for Investors in Agricultural Enterprises.
SEC. 21. Tax Deductions for Investors in Agricultural
Enterprises.—During the first seven (7) years from date of registration, an
investor in a new or expanding registered enterprise engaged in agricultural
production and/or services shall be allowed to deduct from his net taxable
income an amount equal to his actual investment paid in, but not exceeding
thirty percent (30%) of net taxable income for those engaged in agricultural
activities in the Agricultural Investment Priorities Plan listed as First
Priority; twenty-five percent (25%) of net taxable income for those listed as
Second Priority; and twenty percent (20%) for those listed as Third Priority:
Provided, That if the investments within three (3) years from date of
acquisition, the investor shall lose the benefit of this deduction and shall pay
the readjusted income tax within thirty (30) days from date of transfer or
redemption.
The tax deductions herein granted may be availed of by both fixed and
variable income earners notwithstanding any provision of law to the
contrary.
Tax Deductions for Reinvestment.
SEC. 22. Tax Deductions for Reinvestment. —An
existing firm which will engage in either new or expansion of an agricultural
project shall be entitled to the tax deductions provided in the
preceding section under the same limitations provided therein.
Sub-Chapter
C.—FISCAL INCENTIVES TO REGISTERED AGRICULTURAL
ENTERPRISES
Tax Credit on Gross Sales.
SEC. 23. Tax Credit on Gross Sales. —For a period
of five (5) years from date of commercial operation, a registered agricultural
enterprise shall be entitled to a tax credit equivalent to five percent (5%) of
gross sales for agricultural activities listed in the Agricultural Investment
Priorities Plan as First Priority; three and one half percent (3.5%) of gross
sales for those listed as Second Priority and two percent (2%) for those listed
as third Priority. In case of farmers' cooperatives, and corporations engaged in
contracts growing with small farmers the tax credit may be increased by an
additional one percent (1%). With respect to existing enterprises they may avail
of this incentive for a period of five years from date of registration under
this law but only to the extent of their incremental out put.
Net Operating Loss Carry Over.
SEC. 24. Net Operating Loss Carry Over. —A net
operating loss, inclusive of financial charges, of the registered agricultural
activity incurred in any of the first ten (10) years of operations may be
carried over as a deduction from taxable income of the enterprise for the six
(6) years immediately following the year of such loss. The entire amount of the
loss shall be carried over to the first of the six (6) taxable years following
the loss, and any portion of such loss which exceeds the taxable income of such
first year shall be deducted in like manner from the taxable income of the next
remaining five (5) years.
Tax Exemption on Imported Capital Equipment.
SEC. 25. Tax Exemption on Imported Capital
Equipment. —Within five (5) years from date of registration of the
enterprise, importations of machinery and equipment and accompanying spare parts
shall be exempt to the extent of one hundred percent (100%) of the tariff duties
and compensating taxes payable thereon: Provided, That said machinery,
equipment and spare parts are (1) not manufactured domestically in sufficient
quantity, of comparable quality and at reasonable prices; (2) reasonably needed
in the registered activity; and (3) approved by the Board.
Tax Credit on Domestic Capital Equipment.
SEC. 26. Tax Credit on Domestic Capital Equipment.
— A tax credit equivalent to the value of the compensating taxes and customs
duties that would have been waived on the machinery, equipment and spare parts
had these items been imported shall be given to the registered agricultural
enterprise which purchases machinery, equipment and spare parts from a domestic
manufacturer subject to the conditions mentioned m hec. 25 hereof.
Tax Exemption on Breeding Stocks and Genetic Materials.
SEC. 27. Tax Exemption on Breeding Stocks and Genetic
Materials.—The importation of breeding stocks and genetic materials within
five (5) years from date of registration or commercial operation of the
enterprise shall be exempt from all taxes and duties; Provided, That
such breeding stocks and genetic materials are (1) not locally available and/or
not obtainable locally in comparable quality and at reasonable prices; (2)
reasonably needed in the registered activity; and (3) approved by the Board.
Exemption from Contractors. Tax.
SEC. 28. Exemption from Contractors. Tax. —Small
and medium scale farmers engaged in contract growing duly registered with the
Board shall be exempt from the payment of contractors' tax on gross receipts of
their agricultural products delivered to manufacturing enterprises.
Tax Credit for Taxes and Duties on Raw Materials.
SEC. 29. Tax Credit for Taxes and Duties on Raw
Materials.—Every registered agricultural producer shall enjoy a tax credit
equivalent to the sales, compensating and specific taxes and duties paid on the
supplies, raw materials and semi-manufactured products used in the production of
its exported agricultural products and forming part thereof, exported directly
by the registered agricultural producer or sold to an export trader who
subsequently exports said product: Provided, however, That where the
cost of certain supplies and raw materials constitutes at least forty percent
(40%) of the cost of production of the registered exported agricultural product,
tax credit on sales, specific taxes and duties paid thereon may also be granted
even if they do not form part of the registered exported agricultural product:
and Provided, further, That the taxes on supplies, raw materials and
semi-manufactured products domestically purchased are indicated as a separate
item in the sales invoices.
Chapter—X.
OTHER INCENTIVES
Employment of Foreign Nationals.
SEC. 30. Employment of Foreign Nationals. —Subject
to the provisions of Section 22 of Commonwealth Act No. 613, as amended, an
agricultural producer may employ foreign nationals in supervisory, technical or
advisory positions for a period not exceeding five (5) years from its
registration, extendible for limited periods at the discretion of the Ministry
or Board.
Procedures for Agricultural Enterprises.
SEC. 31. Procedures for Agricultural
Enterprises.—The Board shall establish a simplied system of registration
for agricultural enterprises in order to facilitate access by such enterprises
to encentives herein provided.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
