Aquino Extends Zero Percent Duty

The tariff on capital equipment, spare parts and accessories for domestic manufacturers will remain at zero percent for the next five years in line with the government's bid to ease the cost of doing business in the country.

President Benigno S. Aquino III signed Executive Order No. 70 extending the zero percent duty on the equipment imported by Board of Investments (BoI)-registered enterprises located within the economic zones and freeports.

EO 70 was signed last March 29 following the expiry of the five-year effectivity of EO 528 that imposed zero duty on such equipment back in 2006. A law seeking to restore duty-free importation of capital equipment in the Omnibus Investments Code has also remains to be enacted.

"There is a need to extend zero percent duty on importation of capital equipment, spare parts and accessories currently being enjoyed by BOI-registered enterprises located within economic zones and freeports," the order read.

The President, empowered by law to increase, reduce or remove rates of import of duty, acknowledged that importation of capital equipment is one of the major cost burdens of business enterprises in their start-up operations.

"Allowing zero percent duty importation will make the Philippines more competitive in attracting investments in the face of an increasingly competitive Asian market for foreign direct investments," the order read.

In EO 70, the zero percent duty shall only be applied on equipment that not are manufactured locally in sufficient quantity, of comparable quality and at reasonable prices, and are reasonably needed and will 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, whichever is higher.

Executive Secretary Paquito Ochoa Jr. explained that the government seeks to 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,” Ochoa said.

By GENALYN D. KABILING

MB.COM.PH

Tweet

Read more...