An Ordinance Providing Tax Incentives to All New Large Scale Enterprises (NLSEs) in the City of Parañaque

April 16, 2015 PARAAQUE CITY ORDINANCE NO. 007-15 AN ORDINANCE PROVIDING TAX INCENTIVES TO ALL NEW LARGE SCALE ENTERPRISES (NLSEs) IN THE CITY OF PARAAQUE WHEREAS , Article II, Section 20 of the Philippine Constitution recognizes the indispensable role of the private sector, encourages private enterprises and provides incentives to needed investments; WHEREAS , Section 458 (2) (iii) of Republic Act 7160 provides that subject to applicable law, the Sangguniang Panlungsod may enact ordinances that may grant tax exemptions, incentives or reliefs; WHEREAS ,the City has established its vision, policy framework, and action plan to steer the City towards inclusive economic development in the medium and long terms through the Revised Paraaque City Comprehensive Zoning Ordinance (Series 2013),Comprehensive Land Use Plan (CLUP),Comprehensive Development Plan (CDP),Tourism Development Plan (TDP),Shelter Plan, and Socio-Economic Development Plan; WHEREAS , City Ordinance 07-014 duly approved by the Sangguniang Panlungsod requires all new business establishments to hire at least forty percent of their employees from amongst the bonafide residents of the City of Paraaque; WHEREAS ,in these plans, the City recognizes the strategic importance of collaboration with the private sector in the pursuit of its goals, and recognizes that this partnership can best be cultivated by creating conditions conducive to the growth and competitiveness of this sector; WHEREAS ,given its resources and competitive advantages over other urban centers within the National Capital Region (NCR),the City of Paraaque presents greater opportunities for both foreign and domestic businesses to thrive within the context of a favorable investment climate, which in turn, will generate more jobs and enhance the delivery of basic social services for its people; WHEREAS ,data indicate that investors are more likely to locate their capital in destinations that offer an attractive combination of both fiscal and non-fiscal incentives in tandem with a strong business-friendly climate, which is best enhanced by means of good infrastructure, a fair judicial system, strong governance, attractive markets and an educated citizenry, among others; WHEREAS ,to maximize the potential for inclusive growth and development embodied in the City's various policies and planning documents, the City Government finds it necessary to craft a measure to rationalize incentives in order to attract investors into the City, particularly those identified as providing greater value-added benefits to the City and its people. NOW THEREFORE: BE IT ORDAINED, AS IT IS HEREBY ORDAINED by the City Council of Paraaque in regular session assembled that: BOOK I General Provisions SECTION 1. Title. This Ordinance shall be known as the "AN ORDINANCE PROVIDING TAX INCENTIVES TO ALL NEW LARGE SCALE ENTERPRISES (NLSEs) IN THE CITY OF PARAAQUE." ARTICLE I Declaration of Policy 1. It is the declared policy of the City to encourage the entry, expansion, diversification and modernization of business enterprises in various areas of the commercial, industrial and service sectors through the provision of appropriate incentives packages. 2. These incentives packages shall be geared towards: 2.1. Accelerating the achievement of the City's socio-economic development goals as contained in its Comprehensive Development Plan (CDP),Comprehensive Land Use Plan (CLUP),the Revised Paraaque City Comprehensive Zoning Ordinances, Tourism Development Plan (TDP),and all other development planning documents of the City Government. 2.2. Encouraging the inflow of domestic and foreign investments into Paraaque City in order to attain inclusive economic growth as characterized by the creation of more jobs and income generating opportunities, as well as an expansion of the City's revenue base. 2.3. Promoting collaborative efforts with the private sector, among themselves or with government, in support of the City's socio-economic development objectives by means of various tools and modalities such as, but not limited to, Public-Private Partnerships, Corporate Social Responsibility projects, Social Enterprises, and Cooperativism. 2.4. Prioritizing enterprises that contribute to enhancing the core strengths of the City as well as those identified as imperative to the realization of its development agenda. ARTICLE III n Definition of Terms a.) "PC-EDIB" refers to the Paraaque City Economic Development Investment Board. b.) "Expansion" shall include modernization and rehabilitation and shall mean an increase in the existing volume or value of production or the upgrading of the quality of the registered product or the utilization of inefficient or idle equipment under such guidelines as the PC-EDIB may adopt. c.) "Foreign Investment" shall mean an equity investment made by a non-Philippine national in the form of foreign exchange and/or other assets actually transferred to the Philippines and duly registered with the Bangko Sentral ng Pilipinas (BSP),which shall assess and appraise the value of such assets other than foreign exchange. d.) "Foreign Loans" shall mean any credit facility of financial assistance other than equity investment denominated and payable in foreign currency or where the creditor has the option to demand payment in foreign exchange and registered with the Bangko Sentral ng Pilipinas (BSP) and the Board of Investments (BOI). e.) "NEW LARGE SCALE ENTERPRISES" (NLSEs) defined as any new business activity or enterprise whether partnership or corporation in the City of Paraaque, excluding those which are accredited by PEZA, TIEZA and the Board of Investments (BOI); and which has not been issued a construction and/or business permit from the time this ordinance has been approved whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, must have value of at least five hundred million pesos (Php500,000,000.00). CAIHTE f.) "Modernization Project" refers to a project of a non-pioneer enterprise that involves improvements in systems, processes, equipment, and/or facilities resulting in any of the following: i. at least a 25% reduction in production cost/cost of the service; or ii. the upgrading of product/service quality or reclassification of the facility to a higher class in accordance with the accreditation standards applicable to the industry concerned. g.) "Net Value-added" refers to the value of the final product/service less the value of inputs. The project's net value-added should be at least 25% except for projects dependent on imported raw materials/supplies. h.) "Philippine National" shall mean a citizen of the Philippines, or a domestic partnership or association wholly owned by citizens of the Philippine; or a corporation organized under the laws of the Philippines of which at least sixty percent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines. i.) "Rank and File Employee" refers to any person in the employ of an employer. Such employee performs tasks that are routinary or clerical in nature, with no power to make any independent judgment in the interest of the employer. The term rank and file employee includes regular, casual seasonal, probationary, project/non-project, fixed-term, or filed personnel. j.) "Registered Enterprise" shall mean any individual, partnership, cooperative, corporation or other entity incorporated and/or organized, duly registered with the Securities and Exchange Commission (SEC) and/or Department of Trade and Industry as the case may be, with a legitimate license to operate business. The conduct of business to be approved by the PC-EDIB shall conform to existing national laws and local ordinances. ARTICLE IV Paraaque City Economic Development and Investment Board SECTION 1. Creation and Organization. The Paraaque City Economic Development and Investment Board, herein referred to as the PC-EDIB, shall be composed of the following: Chairperson - Mayor Vice-Chairperson - Vice-Mayor Members - Chairperson, City Council Committee on Trade, Commerce and Industry Chairperson, City Council Committee on Ways and Means City Administrator Chief, Business Permits and Licensing Office (BPLO) Head, Public Employment Service Office (PESO) City Treasurer City Planning and Development Officer City Legal Officer Executive Assistant to the Mayor All Members of the PC-EDIB shall receive per diem for every meeting actually attended subject to existing budgeting, accounting and auditing laws, rules and regulations on compensation, honoraria and allowances. Provided, that when an authorized representative attends a meeting, the representative shall be entitled to receive per diem . SECTION 2. Powers and Duties of PC-EDIB. The PC-EDIB shall be responsible for the implementation of this Ordinance. To achieve this end, it is tasked to promote, regulate and monitor investments in Paraaque City. It shall develop policies to enhance the business climate, attract investors and support existing businesses. It shall conduct at least one meeting every quarter of the year. In addition to its regular meetings, the Chairperson of the PC-EDIB, or upon the request of the majority of the PC-EDIB member, may convene a special meeting, provided there is proper written notice, and provided further that the matters taken up in such special meetings shall cover no other matters than those provided for in the Notice of Special Meeting and its corresponding agenda. A majority of the members of the PC-EDIB shall constitute a quorum. The affirmative vote of the majority of the PC-EDIB members present at a meeting validly held shall be deemed necessary to exercise its powers and perform its duties, which shall as follows: 1. Approve the Economic Development and Investment Plan (EDIP) and cause its updating every three (3) years, in accordance with the Comprehensive Land Use Plan and the Comprehensive Development Plan implementation, and with consideration of economic developments and investment priorities and trends in the Philippines, in the Asian region and in the rest of the world that have an impact on Paraaque City. 2. Draft and Approve an Investment Priorities Plan (IPP) within the guidelines of the Economic Development and Investment Plan (EDIP) and Paraaque City's Annual Investment Plan, and specify the manner in which it shall be updated, revised or amended. 3. Review, evaluate and approve or disapprove the applications for incentives packages of prospective local/foreign businessmen/entrepreneurs who would want to avail themselves of the incentives provided by this Ordinance. 4. Recommend, for the action of the City Mayor, agreements and/or contracts that can be entered into by the Paraaque City Government with other government agencies and/or private organizations for the purpose of improving the ease of doing business in the City of Paraaque through but not limited to systems integration and simplification, technical cooperation, data sharing, and other ways of expediting and/or simplifying transactions and procedures. 5. Conduct hearings if necessary, on issues concerning possible violations committed against any provisions of this Ordinance and likewise, invoke the proper sanctions/penalties (such as but not limited to reprimand, cancellation of business license, withholding of benefits or incentives) to all violators of any of the terms and conditions stipulated herein. 6. Periodically review, evaluate and update the operations of Business-One-Stop-Shop (BOSS),in order to ensure optimum efficiency as well as the integration of inter an intra office processes to ensure compliance with the principles and tenets of a business-friendly city. 7. Review annually the process for the assessment and payment of business taxes and recommend ways to improve them in the interest of speed, comfort, fairness and transparency, without sacrificing the welfare of the City and its people, taking into consideration feedback generated from the private sector. 8. Recommend to the City Council any amendment, revision and/or modification to the existing Ordinance Providing Tax Incentives to All New Large Scale Enterprises (NLSEs) in the City of Paraaque. ARTICLE II n Economic Development and Investment Plan (EDIP) SECTION 1. Economic Development and Investment Plan (EDIP). The PC-EDIB, after consultation with the private sector, the national government through the appropriate offices, such as but not limited to the National Economic and Development Authority, the Department of Trade and Industry (and the affiliate Board of Investments),and the Department of the Interior and Local Government (DILG),shall submit to the PC-EDIB an Economic Development and Investment Plan (EDIP),which shall delineate the economic directions and investment priorities of the City. The EDIP shall provide for the Role of the City Government as discussed in Article IV of this Ordinance, in relation to the needs and concerns of the qualified pioneer NLSEs, in order to achieve mutually beneficial arrangements between both parties in consonance with the objectives provided herein. Upon evaluation and approval of the Economic Development Investment Plan by the PC-EDIB, the same shall be forwarded by the Board to the Paraaque City Council for confirmation through a Resolution. The EDIP shall be in effect for three (3) years, unless otherwise amended or revised earlier by the PC-EDIB by a three-fourths (3/4) vote of all its members in a meeting duly called for the purpose. Any amendment or revision of the EDIP shall made only after a comprehensive review and analysis demonstrates that the proposed amendment or revision is reasonable and necessary in terms of current investment trends, both local and international. DETACa ARTICLE III Investment Priorities Plan (IPP) SECTION 1. Formulation of the IPP. The PC-EDIP shall annually formulate an Investment Priorities Plan (IPP) that will reflect the relative importance of investments within the guidelines of the Economic Development and Investment Plan and Paraaque City's Annual Investment Plan. SECTION 2. Contents of the IPP. The IPP shall contain the following: a. List of preferred and/or mandatory activities in the identified preferred areas of investment listed in the Economic Development Investment Plan; b. Guidelines for the approval of the applications of the NLSEs in preferred and/or mandatory activities; and c. Extent of entitlement to incentives of qualified pioneer or non-pioneer NLSEs engaged in the preferred and/or mandatory activities in the identified preferred areas of investment. SECTION 3. Adoption and Review of the IPP . The IPP shall be subject to the approval of the PC-EDIB through a majority vote, in a meeting duly called for the purpose. The IPP shall be in effect for one (1) year, unless otherwise amended or revised by the PC-EDIB, through a majority vote, in a meeting duly called for the purpose. ARTICLE IV Role of the Paraaque City Government SECTION 1. The City Government is committed to enhancing its business climate by way of the following support programs, among others: a. Adequate Infrastructure and Ease of Access. The City Government shall enact policies and programs that will facilitate access to investment sites, whether by way of road and sidewalk infrastructure or by way of traffic and transportation policies and programs. b. Development of Information and Communications Technology (ICT) Infrastructure. The City Government shall promote investments in ICT infrastructure and facilities. It shall also maximize the use of e-governance systems and mechanisms for promoting and facilitating interaction, access to information, and ease of private enterprise local government transactions in the City, with both local and international publics. c. Public Private Partnership (PPP) .This Ordinance recognizes the PPP as a potentially significant investment strategy for the City. The City may, by itself or in cooperation with the National Government, provide incentives to private sector proponents of PPP projects. Further, the City may explore other forms of PPP in such a way that qualified NLSEs may be given access to and allow investment in government owned properties by means of joint venture agreements for the establishment of factories and/or manufacturing industries in preferred area of investment to be determined in the Economic Development Investment Plan. To achieve this end, idle and forfeited lands of the City may be made available for investments. Finally, private properties available for investments may also be acquired and made available for public consumption only upon payment of just compensation. d. Ease of Doing Business. It is the duty of the City Government to promote an environment conducive to the entry and growth of enterprises in the City, by way of clarity and transparency in tax assessment procedures, provision of express lanes in new business registration and renewals, and express lanes for the issuance of construction permits; provision of series that can act speedily on requests for redress; provision of hotlines to address immediate concerns of NLSEs; and other measures to fully effect the thrust of creating a Business-Friendly City. e. Links to Human Resource Needs. The City Government shall provide links to qualified manpower sources, such as colleges, universities and training centers, as well as to the manpower recruitment and other services of the City Government's Public Employment Services Office (PESO) and Paraaque City College (PCC).To this effect, the PC-EDIB through the PESO and PCC shall establish systems to assist and endorse qualified employees from among the bona fide residents of Paraaque City for employment to the qualified NLSEs. f. Urban Renewal. It is the duty of the City Government to ensure a clean, green and pleasant environment to enhance its livability. To this end, it is the City's policy to redevelop blighted areas in cooperation with private capital and assist informal settlers with their shelter needs through a sustainable socialized housing program. g. Safety and Security. Taking into consideration the peculiar security needs global enterprises that undertake their operations during irregular work hours, it is the duty of the City Government to work more closely with the Philippine National Police to strengthen security and safety officers and staff as a force multiplier. h. Industrial and Labor Relations. The City Government should create ways to promote industrial peace and mutual growth and benefit among the qualified NLSEs. They should encourage and support all forms of employee participation in production. The rights of the employees to participate in policy-or decision-making on matters affecting their rights, duties, benefits or welfare shall also be recognized. i. Economic Support and Security. The City may find means to lessen the cost inputs including power and other utilities to attract more and quality investments. The PC-EDIB may be empowered to negotiate and enter into contracts with all utility providers to such effect. Creative alternatives to reduce the costs of inputs and utilities must also be facilitated. BOOK III n New Large Scale Enterprises SECTION 1. "New Large Scale Enterprises" (NLSEs). Defined as any new business activity or enterprise whether partnership or corporation in the City of Paraaque, excluding those which are accredited by PEZA, TIEZA and the Board of Investments (BOI); and which has not been issued a construction and/or business permit from the time this ordinance has been approved whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, must have value of at least five hundred million pesos (Php500,000.000.00). SECTION 2. Coordination . The PC-EDIB through its Chairman shall coordinate with the Micro, Small and Medium Enterprise Development (MSMED) Council, Board of Investments (BOI),Philippine Economic Zone Authority (PEZA) and other National Government Agencies by entering into a Memorandum of Agreement or Understanding (MOA or MOU),as may be necessary to ensure that the rights and benefits of NLSEs in the City are duly protected and available. ARTICLE I Qualifications of New Large Scale Enterprises (NLSEs) SECTION 1. Qualifications of New Large Scale Enterprises (NLSEs). New investors who intend to avail themselves of any of the incentives provided for in this Code must meet the following qualifications: a. The enterprise must have complied with all the requirements mandated under existing local and national laws and the Constitution; b. The enterprise must not have been found guilty with finality of any violation of the provisions of Philippine and the City Government's Labor Laws; c. The prospective investment must be engaged in activities consistent with the Economic Development Investment Plan and Satisfy the criteria contained in the Investment Priorities Plan; d. The new enterprise will provide for a labor and employment force where at least forty percent (40%) of total rank and file employees are bona fide residents of the City of Paraaque; e. The new enterprise, upon receipt of the incentives provided herein shall execute an undertaking to operate in Paraaque City where the business is located for a period of time agreed upon by the investors and the PC-EDIB, barring incidents of Force Majeure and/or Acts of God. aDSIHc BOOK IV Investment Incentives ARTICLE I Incentives for Qualified NLSEs SECTION 1. Non-Fiscal Incentives. In addition to services to be provided by the PC-EDIB under Book I, Article IV, Section 4 of this Code, qualified NLSEs shall be entitled to the following non-fiscal incentives: a. An account officer shall be assigned by the PC-EDIB to assist pioneer or new enterprises in Book I, Article 5, Section 4.c.i, provided that said enterprise has no previous operation in the City and that the qualifications set forth in Book III, Article I, Section 1 have been duly complied with; b. Transparency in the process of registering and qualifying for the grant of City Government incentives; c. No modifications by the City Government of regulatory or contractual requirements and arrangements or interference in the internal operations of the enterprises, after the granting of local government incentives to the enterprise, unless such modifications are the result of mutual agreement between the registered enterprise and the City Government; d. Access to comprehensive information on investing and doing business in Paraaque City, including all plans and policies of the City Government as they relate to economic growth and development; e. Facilitate employment of qualified foreign personnel, as may be required for the efficient operation of the enterprise or for technology transfer, provided that no Philippine national is qualified or available for the tasks or jobs they are to undertake; f. Expeditious certification, registration, licensing and permitting operations through the installation of systems and procedures that and disaster-related public assistance services; g. Promotion of public safety for the enterprise and its personnel through police, fire and disaster-related public assistance services; h. Resolution of all gray areas in the interpretation of benefits and incentives granted under this Code, in favor of the investor. SECTION 2. Fiscal Incentives . Qualified NLSEs shall be entitled to the following fiscal incentives: a. For purposes of computing the base of the business tax by the City Government, a special deduction on the Gross Income for Business taxes for three (3) years of operation shall be made in the following amounts: i. A fixed deduction from taxable gross income of One hundred million pesos (Php100,000,000.00) b. Exemption from payment of tax on transfer of real property ownership within three (3) years of operation, provided that the real properties acquired shall be automatically and actually, directly and exclusively used in the furtherance of the business of the qualified NLSEs. c. Tax Incentive on Real Property provided that the qualified NLSEs shall make an advanced payment made in the following schedule following the corresponding percentage discount: i. Payment before December 15th of the year 20% Discount on RPT ii. Payment before December 31st of the year 15% Discount on RPT ARTICLE II Registration of NLSEs SECTION 1. A Registration Certificate shall be granted to all qualified NLSEs, whose applications for incentives packages have been approved by the PC-EDIB. ARTICLE III Implementing Rules and Regulations SECTION 1. Within ninety (90) days after the passage of this ordinance, the PC-EDIB shall adopt its Implementing Rules and Regulations (IRR). ARTICLE IV Responsibilities of Registered Enterprises SECTION 1. Reportorial Obligations. Registered enterprises shall submit reports to the PC-EDIB on the operations of the enterprise twice yearly, before the end of the second and fourth quarter of the calendar year respectively, and the annual audited financial report on operations. SECTION 2. Visitorial Requirements . The PC-EDIB, shall, in consultation and in coordination with the registered NLSEs, undertake visits to the enterprise and request to be briefed on the status of operations, to be assured of the NLSE's compliance with the grant of preferences and investment incentives, and to be alerted to any assistance or support that can be provided by the City Government. ARTICLE V Appropriations SECTION 1. Paraaque City Investments Incentives Fund or PC-EDIB Fund. The Maintenance and other Operation Expenses of the newly created Board for Calendar Year (CY) 2014 shall be taken from the balance of the budgetary allocation through the Supplemental Budget from the General Fund, or from any available funds of the City Treasury. The annual fund necessary for the maintenance and operation of the PC-EDIB shall be included in the yearly appropriations from the General Fund of the Paraaque City Government. ARTICLE VI Miscellaneous Provisions SECTION 1. Reimbursement/Return of the Fiscal Incentives. The NLSEs shall be required to reimburse or return the equivalent amount of the fiscal incentives duly received in any of the following instances: a. The NLSEs failure to comply or maintain the qualifications set forth under Book III, Article 1, Sections 1 or 2, except otherwise provided therein; or b. The NLSE is found guilty of misrepresentation or fraud for the purpose of availment of the incentives contained in this Ordinance. Provided further, the Board shall determine after due notice and hearing, whether or not a reimbursement of the fiscal incentives is in order and shall make a determination of the amount to be reimbursed or returned. This section is without prejudice to the powers and functions of the Board. SECTION 2. Transitory Provisions . Within thirty (30) days after the enactment of this Ordinance, the City Mayor shall convene the PC-EDIB. SECTION 3. Separability Clause. The provisions of this Ordinance are separable. If for any reason, any section of the Ordinance shall be declared to be unconstitutional or invalid, the validity of the other provisions shall not be affected and shall continue to be in full force and effect. SECTION 4. Repealing Clause. All local legislation and executive directives inconsistent or in conflict with this Ordinance are hereby repealed or modified accordingly. SECTION 5. Effectivity . This code shall take effect upon its approval. Enacted this 16th day of April 2015 at the City of Paraaque. CERTIFIED TRUE AND CORRECT: (SGD.) CHARLAW ANGELO L. RONQUILLO qaOIC-Office of the City Council Secretary SPONSORED BY: (SGD.) JOAN A. VILLAFUERTE City Councilor CO-SPONSORED BY: (SGD.) FLORENCIA N. AMURAO City Councilor (Sick Leave) JASON P. WEBB City Councilor (SGD.) GIOVANNI E. ESPLANA City Councilor (SGD.) JOHN RYAN G. YLLANA City Councilor (SGD.) VIKTOR ERIKO M. SOTTO City Councilor (SGD.) RAQUEL GABRIEL-VELASCO City Councilor (SGD.) MARITESS B. DE ASIS City Councilor (SGD.) VICENT KENNETH M. FAVIS City Councilor (SGD.) RICARDO L. BAES, JR. City Councilor (SGD.) MERLIE S. ANTIPUESTO City Councilor (SGD.) JACQUELINE BUSTAMANTE-MENDOZA City Councilor (SGD.) BRILLANTE V. INCIONG City Councilor (SGD.) RUFINO M. ALLANIGUE City Councilor (SGD.) ROSELLE NAVA-TAN City Councilor (Official Business) JEREMY S. MARQUEZ Liga President CONCURRED BY: (Official Business) VANESA "ALMA MORENO" LACSAMANA City Councilor ATTESTED BY: (SGD.) JOSE ENRICO T. GOLEZ City Vice Mayor/Presiding Officer APPROVED BY: (SGD.) EDWIN L. OLIVAREZ City Mayor n Note from the Publisher: Copied verbatim from the official copy Missing Article II. n Note from the Publisher: Copied verbatim from the official copy. Irregular Numerical Sequence. n Note from the Publisher: Copied verbatim from the official copy. Missing Book II.