Publishing the Amendments Effected by Presidential Decree No. 1469 to Sections 187 and 202 of the National Internal Revenue Code of 1977, as Amended, and Providing for the Registration of Export Producers and Traders with the Philippine Export Council

July 27, 1978 REVENUE MEMORANDUM CIRCULAR NO. 050-78 SUBJECT : Publishing the Amendments Effected by Presidential Decree No. 14 69 to Sections 187 and 202 of the National Internal Revenue Co de of 1977, as Amended, and Providing for the Registration of Export Producers and Traders with the Philippine Export Council TO : All Internal Revenue Officers and Others Concerned "MALACAANG Manila "PRESIDENTIAL DECREE NO. 1 46 9 "AMENDING SECTIONS 187 AND 202 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND PROVIDING FOR THE REGISTRATION OF EXPORT PRODUCERS AND TRADERS WITH THE PHILIPPINE EXPORT COUNCIL "WHEREAS, the development and promotion of Philippine export is essential to economic growth; "WHEREAS, there are many export producers which lack the facilities and expertise necessary for direct exports; "WHEREAS, it is necessary to encourage these producers to sell to export traders by extending to them the tax benefits available to direct exporters under the National Internal Revenue Code, as amended: "NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Republic of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree: "SECTION 1. Section 187 of the National Internal Revenue Code, as amended, is hereby amended by adding the following definition of words and phrases: '(y) 'Registered export producer' shall mean any person, corporation, partnership, or other entity, doing business in the Philippines, (1) registered with Philippine Export Council, (2) engaged in the manufacture, production or processing of articles or products for export in commercial quantity, and (3) directly exporting its products, or selling them (a) to a registered export trader that subsequently exports the said products, or (b) to another export producer who utilizes said products as direct materials or input in products subsequently manufactured or processed by them and thereafter exported or (c) to foreign tourists, when paid for in acceptable foreign currency and actually brought out of the Philippines by the buyers upon their departure. '(z) 'Registered export trader' shall mean any person, corporation, partnership or other entity doing business in the Philippines (1) registered with the Philippine Export Council and (2) who is engaged in the buying of Philippine-made products and subsequently exporting the same. '(aa) 'Export sales' shall mean the Philippine port F.O.B. value, determined from invoices, bills of lading, inward letters of credit, landing certificates, and other commercial documents, of export products exported directly by a registered export producer or registered export trader, or the net selling price of export products sold by a registered export producer to another export producer, or registered export trader who subsequently exports the same, or the net selling price of export products in acceptable foreign currencies sold by a registered export trader to foreign tourists and foreign travelers. Sales of export products to another export producer or to a registered export trader shall only be deemed export sales when actually exported by the latter.' "SEC. 2. Section 202 of the National Internal Revenue Code is hereby amended by adding sub-paragraph (f) in the enumeration of articles not subject to percentage tax on sales, as follows: "(f) Articles sold by 'registered export producers' to (1) other 'registered export producers', (2) 'registered export traders' or (3) foreign tourists or travelers, which are considered as 'export sales'. "SEC. 3. Conditions for Availment of Tax Benefit . Any export producer or export trader who wants to avail of the tax benefits extended to indirect exports under this Decree, must register as such with the Philippine Export Council. "SEC. 4. Requirements for Registration . (a) Any export producer applying for registration must show proof of the following: 1. He/it is actually engaged in the manufacture, processing or production of articles or products for export; and 2. His/its products meet the quality standards set by the Bureau of Standards for such products. (b) An export trader applying for registration must show proof of his/its export operations indicating (a) the products or potential products for exportation, (b) expected revenues and (c) selling and administrative costs. "SEC. 5. Issuance of Certificate of Registration : Grounds for Revocation . Upon qualification for registration, the applicant export producer or export trader shall be issued the corresponding certificate of registration by the Philippine Export Council. The certificate of registration shall be subject to revocation on any of the following grounds: 1. Any violation of the provisions of this Decree or the rules and regulations implementing the same; 2. Any violation of laws relating to taxation, currency, immigration and national economy or security; or 3. Failure to meet the quality standards set by the Bureau of Standards. "SEC. 6. The Secretary of Finance shall, upon the recommendation of the Commissioner of Internal Revenue in consultation with the Chairman President of the Philippine Export Council, promulgate the necessary rules and regulations for the effective implementation of the provisions of this Decree. "SEC. 7. This Decree shall take effect upon approval. DONE in the City of Manila this 11th day of June, in the year of Our Lord, nineteen hundred and seventy-eight." (SGD.) FERDINAND E. MARCOS President of the Philippines By the President: (SGD.) JACOBO C. CLAVE Presidential Executive Assistant FEATURES OF THE AMENDMENT Amendment to Section 187 : The amendment to this section consists of the addition of paragraphs: (y) which defines "Registered export producer", (z) which defines "Registered export traders", and (aa) which also defines "Export sales"; for purposes of availment of the incentives extended to indirect exports. Amendment to Section 202 : The amendment to this section consists of the addition of paragraph (f) which considers the sales by registered export producers to (1) other registered export producers, (2) registered export traders or (3) foreign tourists or travellers, as export sales and, therefore, exempt from the sales tax. The decree requires that any export producer or export trader who wants to avail of the tax benefits granted to indirect exports must register as such with the Philippine Export Council. The export producer registering with the aforesaid government agency must show that: 1. He/it is actually engaged in the manufacture, processing or production of articles or products for export; and 2. His/its products meet the quality standards set by the Bureau of Standards for such products. An export trader applying for registration must also show proof of his/its export operations indicating (a) the products or potential products for exportation, (b) expected revenues and (c) selling and administrative costs. When the Philippine Export Council determines that the applicant is qualified for registration, it shall issue the corresponding certificate of registration to the applicant. The certificate of registration shall be revoked on any of the following grounds: 1. Any violation of the provisions of the Decree or the rules or regulations implementing the same; 2. Any violation of laws relating to taxation, currency, immigration and national economy or security; or 3. Failure to meet the quality standards set by the Bureau of Standards. Effectivity : Presidential Decree No. 1469 took effect on June 11, 1978. All Internal Revenue Officers and Others Concerned with the enforcement of internal revenue laws are hereby enjoined to be guided accordingly and to give this decree as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8