Millennium Challenge Account — Philippines (1)

July 4, 2011 FIRB RESOLUTION NO. 009-11 SUBJECT MATTER : Millennium Challenge Account Philippines (1) WHEREAS, the Millennium Challenge Corporation (MCC) has for its mission, the reduction of global poverty through the promotion of sustainable economic growth; WHEREAS, the MCC of the United States of America and the Government of the Republic of the Philippines (Government) had entered into a Compact Agreement on September 23, 2010 under which, the MCC will provide grant assistance amounting to the $434-million to help facilitate poverty reduction through economic growth in the Philippines; WHEREAS, the grant's objectives include a $54.3-million Revenue Administration Reform Project (RARP) to help raise tax revenues and reduce tax evasion and corruption through reforms at the Bureau of Internal Revenue (BIR), and modernization of the revenue collection system; WHEREAS, the grant also provides funding for the $120-million Kapit-Bisig Laban sa Kahirapan-Comprehensive and Integrated Delivery of Social Services (Kalahi-CIDSS) to improve community-level infrastructure and social services for the poor, and strengthen the capacity of local communities to address poverty; WHEREAS, a third component is the $214.44-million Secondary National Roads Development Project (SNRDP) to reduce transportation costs through the rehabilitation of an existing 222-kilometer road segment in the province of Samar; WHEREAS, the Millennium Challenge Account-Philippines (MCAP) is a non-stock government corporation registered with the Securities and Exchange Commission (SEC) pursuant to Executive Order (EO) No. 849; WHEREAS, the MCAP is designated as the entity to implement the Compact Program; WHEREAS, the MCAP has been engaging the services of individual and consultancy firms and procuring goods and construction materials; thus prompting it to request for tax subsidy relative to the taxes arising from said transactions; WHEREAS, Section 17 of EO No. 849 and Article 2, Section 2.8 of the Compact Program provide for the legal bases of MCAP's entitlement to tax subsidy; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to approve the application of the MCAP for tax subsidy in the amount of One Hundred Fifty One Million Three Hundred Fifty Eight Thousand Five Hundred Eighty Two Pesos only (Php151,358,582.00), with the following breakdown: ETIDaH Type of Tax Amount (in Pesos) 1. VAT 122,853,176.00 2. Income Tax 9,478,342.00 3. Excise Tax 19,027,063.00 TOTAL 151,358,582.00 ============ Provided, however, that the corresponding Certificate of Entitlement to Subsidy (CES) shall be issued only upon submission by the MCAP to the FIRB of its actual tax liability based on the assessment of the BIR. Provided, further, that such availment shall be in accordance with the terms and conditions of Section 13 of Republic Act (RA) No. 10147 or the 2011 General Appropriations Act, subject to the availability of funds therefor, pursuant to the terms and conditions of the Rules and Regulations to Implement the Subsidy Provision Under EO No. 93, BIR Revenue Regulations (RR) 12-2010 and Customs Memorandum Order (CMO) No. 44-2010. (SGD.) LAURA B. PASCUA Undersecretary Department of Budget and Management (SGD.) CRISTINO L. PANLILIO Undersecretary Department of Trade and Industry As long as the subsidy does not extend to the income tax of foreign consultants (SGD.) MARGARITA R. SONGCO Deputy Director-General National Economic and Development Authority (SGD.) MARISSA O. CABREROS Assistant Commissioner Bureau of Internal Revenue I vote to limit the entitlement to MCAP (excluding "any vendor") (SGD.) RAMON G. CUYCO Director Bureau of Customs (SGD.) DANTE V. SY Executive Director National Tax Research Center Head, FIRB Secretariat (SGD.) GIL S. BELTRAN Undersecretary of Finance Presiding Officer-FIRB