Tax Incentives and Tax Exemption Privileges Granted to Filipino Inventors Pursuant to Republic Act No. 7459, Otherwise Known as the Inventors and Invention Incentives Act of the Philippines

September 26, 1994 DILG MEMORANDUM CIRCULAR NO. 169-94 TO : All Provincial Governors, City Mayors, Municipal Mayors, DILG Regional Directors and Others Concerned SUBJECT : Tax Incentives and Tax Exemption Privileges Granted to Filipino Inventors Pursuant to Republic Act No. 7459, Otherwise Known as the Inventors and Invention Incentives Act of the Philippines Reports reaching our Department indicate that some local government units continue to impose and collect taxes, fees and charges from Filipino inventors in spite of the implementation of Republic Act No. 7459. For a common understanding, RA 7459 defines Invention and Inventor as follows: Invention refers to any patented machine, product, process including implements or tools and other related gadgets of invention, utility model and industrial design patents. Inventor refers to the patentee/s, heir/s or assignee/s of an Invention letters patent. Utility Model letters or Industrial Design letters patent. Under Section 2, Article I of RA 7459, it is a declared national policy to give priority to invention and its utilization on the country's productive systems and national life; and to this end provide incentives to inventors and protect their exclusive right to their invention, particularly when the invention is beneficial to the people and contributes to national development and progress. In view thereof, all agencies, cities and municipalities are hereby enjoined to strictly comply with the following provisions of RA 7459 as they affect local government units: "Section 5. Tax Incentives. Inventors, as certified by the Filipino Inventors Society and duly confirmed by the Screening Committee, shall be exempt from payment of license fees, permit fees and other business taxes in the development of their particular inventions. This is an exception to the taxing power of local governments. The certification shall state that the manufacture of the invention is made on a commercial scale. prcd Inventors shall be exempt from paying any fees involved in their application for registration of their inventions." (Emphasis supplied) "Section 6. Tax Exemption. To promote, encourage, develop and accelerate commercialization of technologies developed by local researches or adapted locally from foreign sources including inventions, any income derived from these technologies shall be exempted from all kinds of taxes during the first ten (10) years from the date of the first sales, subject to the rules and regulations of the Department of Finance: Provided, That this tax exemption privilege pertaining to invention shall be extended to the legal heir or assignee upon the death of the inventor. The technologies, their manufacture or sale, shall also be exempt from payment of license, permit fees, custom duties and charges on imports." Complementarily, the Bureau of Internal Revenue issued Revenue Regulations No. 19-93 and Section 3 thereof states: "A. As an exception to the taxing power of the local government units, Filipino Inventors shall, in the development of their particular inventions, be exempt from the payment of the following to the local government units concerned: (a) License fees (b) Permit fees (c) Fees involved in their application for registration of their inventions." All Regional Directors are hereby directed to disseminate this Memorandum Circular to all local government units within their jurisdiction and to monitor compliance thereto. Please be guided accordingly. RAFAEL M. ALUNAN III Secretary Department of Interior and Local Government