Availment of Incentives Granted Under Presidential Decree No. 1167

January 10, 1978 REVENUE REGULATIONS NO. 01-78 SUBJECT : Availment of Incentives Granted Under Presidential Decree No. 1 167, Entitled "Developing And Regulating The Overseas Const ruction Industry, Providing Incentives Therefor, And For Other Purposes" TO : All Internal Revenue Officers and Others Concerned Pursuant to the provisions of Section 12(b) of P.D. 1167, in relation to Section 326 and Section 4 of the National Internal Revenue Code of 1977, as amended, these regulations are hereby promulgated. SECTION 1. Scope These regulations shall govern the availment of incentives granted under P.D. 1167, otherwise known as the "Overseas Construction Incentives Decree". SECTION 2. Definition of Terms . For purposes of these regulations, the following definition of terms are hereby adapted: (a) "Decree" shall mean Presidential Decree No. 1167 or otherwise known as the Overseas Construction Incentives Decree. (b) "Board" shall mean the Philippine Overseas Construction Board created under Presidential Decree No. 1167. (c) "Construction Contractor" shall have the same meaning as in Section 3(a) of the Decree. It shall include general engineering contractor, general building contractor, specialty contractor, construction management, engineering, and specialized consultancy group. cdt (d) "General engineering contractor" shall be as defined in Section 9(c) of Republic Act No. 4566, otherwise known as the Contractors' License Law. (e) "General building contractor" shall be as defined in Section 9(d) of Republic Act No. 4566, otherwise known as the Contractors' License Law. (f) "Specialty Contractor" shall be as defined in Section 9(e) of Republic Act No. 4566, otherwise known as the Contractors' License Law. (g) "Construction management contractor" shall refer to those engaged in construction planning, supervision, and control of a particular project to the end that will be accomplished within the prescribed period efficiently and economically. (h) "Engineering contractor" shall refer to one engaged in the various specialized fields of engineering, such as civil, electrical, mechanical, electronics, mining, chemical, sanitary, geodetic, marine, naval, industrial, and other fields of engineering. (i) "Specialized consultancy group" shall refer to those engaged in offering or rendering professional, technical, and other services such as architecture, surveying, construction related management, consultancy services, and project development. (j) "Filipino contractor" shall be defined as in Section 3(b) of the Decree. Compliance with the required Filipino ownership of a corporation or other juridical entity shall be determined on the basis of subscribed capital stock whether fully paid or not, but only such stock as are entitled to vote are considered for this purpose. For stocks to be deemed owned and held by Philippine citizens, mere legal title is not enough. Full beneficial ownership of the stocks, coupled with voting rights, in essential. Thus, stocks the voting rights of which have been assigned or transferred to aliens cannot be considered held by Philippine citizens. In the case of a partnership or other juridical entity, at least sixty percent (60%) of its equity is owned and held by Philippine citizens. (k) "Overseas project" shall have the same meaning as in Section 3(a) of the Decree. (l) "Overseas construction operations" shall have the same meaning as Section 3(d) of the Decree. It shall likewise include services or activities which are integral portions of the overseas project but which are undertaken in the Philippines by the overseas contractor and paid for in acceptable or freely convertible foreign currency. (m) "Internationally-bidded projects or foreign assisted projects" shall mean projects undertaken within the territorial boundary of the Philippines, and financed wholly or partly with funds obtained from foreign governments or their instrumentalities or from international financial institutions such as the Asian Development Bank or the World Bank. (n) "Direct labor wage" shall refer to the compensation for labor directly used in the construction or consultancy project and such other items as normally included therein in accordance with generally accepted accounting principles. Compensation shall mean salaries and wages, including payments such as bonuses and allowances granted to such laborers, including employee's benefits such as medical, insurance, clothing, board and lodging, which are identifiable as forming part of the laborer's or employees taxable earnings. (o) "Foreign loan" shall mean any credit facility or financial assistance other than equity investment obtained by a registered Filipino contractor from a source outside the Philippines either in foreign exchange or in other assets, and registered with the Central Bank and the Board. (p) "Gross overseas income", as used in Section 4, paragraph b of the decree, shall mean gross contract price less direct cost of goods and services and other expenses or deductions directly identifiable to the project. "Gross contract price" refers to income, revenues, or receipts derived from overseas construction and consultancy projects. However, "overseas gross income", as used in Section 4, paragraph c of the decree, shall mean the gross contract price of an overseas project without the benefit of any deduction. q) "Application Entry Book" shall mean the book where the names of applicants for registration and the corresponding filing dates and hour of their applications are consecutively entered. (r) "Certificate Registry Book" shall mean the book where the names of all registered Filipino contractors and their respective dates of registration are consecutively entered. (s) "Certificate of Registration" shall mean the certificate issued by the Board to a Filipino contractor upon his/its registration. The date appearing thereon, unless otherwise indicated shall be conclusively deemed the date of registration. (t) "Umbrella organization" shall mean a registered construction contractor or group of contractors that is committed to support financially, technically, and in any other manner called for, another registered entity, to prosecute to successful completion a project authorized by the Board. (u) "Principal" shall mean a construction contractor who is signatory to a contract with the project owner. cdt SECTION 3. Implementation of the Provisions of the Decree . The implementation of the intent and provisions of P.D. 1167 shall be governed by the Rules and Regulations promulgated by Philippine Overseas Construction Board, created under the Decree. However, pursuant to Section 12(b) of the same Decree, these Regulations shall govern the enforcement and the granting of the tax incentives provided therein. All the conditions, requirements and procedures for qualification, registration and authorizations under appropriate Rules and Regulations of the Board shall be taken into account by the Bureau of Internal Revenue in the implementation of the provisions of the Decree on the availment of incentives. SECTION 4. Availment of incentives . A. Overseas Projects . The incentives provided in Section 4 of the Decree shall be available only to registered Filipino construction contractors to the extent they are engaged in overseas construction operations. In general, only those contractors who are registered with the Board and who observe and abide by the provisions of the Decree and its implementing Rules and Regulations may avail of the said incentives. aisa dc (1) Option in Availment of Incentives . There are two methods of availment of incentives as provided for in Section 4 of the Decree. The construction contractor may, for each project, either avail of the incentives on tax credit and deductions from gross overseas income as provided in paragraphs (a), and (b) of Section 4 of the Decree or choose to pay one and one-half percent (1%) tax on overseas gross income as provided for in paragraph (c) of Section 4: Provided, That having opted to avail of one, the contractor shall not be allowed to shift to the other mode of availment without the concurrence of the Bureau of Internal Revenue. cdt 2) Tax Credits . The Bureau of Internal Revenue shall issue appropriate tax credit certificates only to overseas contractors authorized by the Board. A tax credit certificate shall be non-transferrable. It may be used by the registered overseas contractor only for as long as it enjoys the benefits and incentives provided for in this Decree, but may not be used so as to result in a refund. a. Tax credit for income tax paid to foreign government 1. The contractor shall submit to the Bureau of Internal Revenue an accomplished BIR-POCB Form No. 04-A (Annex I) and shall attach thereto a copy of tax return filed with the foreign country together with the official receipt of payment, duly certified by the Office in which the said return was filed, and authenticated by an appropriate officer of the Philippine Consulate thereat; 2. The contractor shall retain a copy of the certified copy of the above-mentioned tax return and receipt of payment at his principal office in the Philippines as a means of verification in the course of the examination of his tax returns by the Bureau of Internal Revenue. b. Tax credit for withholding tax on interest on foreign loans incurred for overseas projects The contractor shall amount submit to the Bureau of Internal Revenue an accomplished BIR-POCB Form No. 04-B (Annex II) and shall attach thereto sufficient evidence to show that: 1. The foreign loan was incurred directly and exclusively for overseas, projects. A foreign loan obtained for both overseas and domestic projects may qualify for the incentive provided that the loan agreement clearly indicates the amount for the overseas project. The contractor shall maintain such books and records that will clearly identify the portion of the foreign loan that was earmarked exclusively for foreign projects, the interest due thereon, and the corresponding withholding tax paid therefor; 2. The foreign lender does not enjoy such credit in his country. This condition is deemed satisfied in any of the following cases: i) Where the country of the foreign lender has a law providing for tax credit by reason of disqualification due to the lender's legal personality. In this case, the Filipino contractor shall submit an official ruling from the appropriate agency of the lender's government that such lender is not entitled to the tax credit, which ruling shall be duly authenticated by an appropriate Philippine Consular Officer in such country. ii) Where the country of the foreign lender has no income tax law or does not impose any income tax on income from foreign sources and, therefore, has no tax credit on income payment. In this case, the Filipino contractor shall submit a certification of such fact by the local embassy or consulate of the lender's country, or by an appropriate authority in the lender's country duly authenticated by the nearest Philippine embassy or consulate. 3. And, the contractor has assumed the liability for the payment of the tax due from the foreign lender. The contractor shall submit a sworn statement in this regard. c. Tax credit equivalent to the sales or compensating taxes paid on domestically manufactured or produced materials purchased, manufactured or produced by the overseas contractor which are actually exported by him to be used in his overseas projects: Provided, That 1. The contractor shall submit to the Bureau of Internal Revenue an accomplished BIR-POCB Form No. 04-C (Annex III) and shall attach to its copies of the sales invoices or documents of the manufacturer or the producer; such documents or invoices shall clearly indicate the sales or compensating tax as a separate item; and 2. To be eligible for the tax credit, the contractor shall file the application for said credit within ninety (90) days from the actual exportation of the product or material, together with copies of shipping or other documents evidencing actual exportation. (3) Deductions from Gross Overseas Income. a. Accelerated depreciation For purposes of accelerated depreciation under Section 4(b) (1) of the Decree, the term "fixed assets" refers to assets subject to depreciation under the provisions of the National Internal Revenue Code. This incentive may be availed of with respect to the fixed assets directly used in overseas projects that are acquired by the contractor after the date of issuance of authority for the project by the Board. Said incentive may also be claimed with respect to fixed assets acquired before the date of issuance of authority, provided that the acceleration shall apply only to the undepreciated cost (net book value) of such asset. In this regard, the contractor shall submit to the Bureau of Internal Revenue an accomplished BIR-POCB Form No. 04-D (Annex IV) to which are attached the following: 1. A copy for the contractor's notification of the Bureau of Internal Revenue at the beginning of the depreciation period stating which option allowed under Section 4(b) (1) of the Decree will be used by him; and cdt a. A sworn statement containing the description, date of acquisition, cost, estimated useful life, of the fixed asset the depreciation of which is being accelerated. b. Additional deduction of labor training expenses For purposes of this deduction under Section 4(b) (2) of the Decree: 1. Within the first quarter of the taxable year, the contractor shall submit to the Bureau of Internal Revenue its labor training program duly approved by the Department of Labor. 2. The contractor shall submit to the Bureau of Internal Revenue an accomplished BIR-POCB Form No. 04-E (Annex V) to which is attached a sworn statement indicating that the deduction being applied for does not exceed 10% of the direct labor wage or of actual labor training expenses whichever is lower. c. Net operating loss carry-over For purposes of Section 4(b) (3) of the Decree, only such losses as have been incurred on overseas projects and overseas construction operations may be carried over as deduction from taxable income derived from overseas projects. The net operating loss carry-over shall be computed net of incentives granted under the Decree. In other words, the incentives granted under the Decree shall not be taken into account in computing the net operating loss carry-over. The net operating loss shall be computed in accordance with the procedures established by the Bureau of Internal Revenue. A net operating loss incurred on overseas projects in any year of operations may be carried over as a deduction from taxable income earned from overseas projects within the three (3) years immediately following the year of such loss. The entire amount of the loss shall be carried over to the first of the three taxable years following the loss, and any portion of such loss which exceeds the taxable income of such first year shall be deducted in like manner from the taxable income of the next remaining two years. The contractor shall submit to the Bureau of Internal Revenue an accomplished BIR-POCB No. 04-F (Annex VIII) for the purpose of this deduction. The Bureau of Internal Revenue shall not allow loss carry-overs of contractors whose operations have led to impairment of loans or guarantees extended by the Philippine Government or any of its instrumentalities. (4) On and one-half percent (1%) tax on overseas gross income In lieu of the income tax payable after the availment of the incentives provided for in paragraphs (a) and (b) of Section 4 of the Decree, a registered construction contractor undertaking overseas construction project(s) may choose to pay one and one-half percent (1%) tax on overseas gross income as provided for in paragraph c of Section 4 of the Decree. Provided, That after having indicated his option, the contractor shall not be allowed to shift to the other mode of incentive availment without the concurrence of the Bureau of Internal Revenue and the Board. A statement signifying his option on the availment of incentives provided for under paragraphs (a) and (b) or (c) of the Decree shall be submitted to the Board to form part of his application for authorization to undertake an overseas construction project. The overseas contractor shall submit to the Bureau of Internal Revenue an accomplished BIR-POCB Form No. 04-G (Annex VII) to which is attached a certified copy of his overseas project contract together with a copy of his statement signifying his incentive option previously submitted to the Board. For purposes of paragraph c of Section 4 of the Decree. "overseas gross income" shall mean the gross contract price of an overseas construction project without the benefit of any deduction. B. Internationally Bidded Projects . For purposes of Section 5 of the Decree, a registered construction contractor undertaking an internationally bidded or foreign-assisted local project, operating as a principal shall be entitled to the incentives granted in Section 4(a) and (b) of the Decree, provided that the said contractor has obtained prior approval of the Board to undertake the project. (1). A contractor desiring to avail of the incentives mentioned in Section 4(b) of these Regulations shall submit to the Bureau of Internal Revenue an accomplished BIR-POCB Form No. 04-H (Annex VIII) .and shall attach thereto the following: a. A copy of the Board approval for the contractor to undertake the internationally bidded or foreign-assisted local project. b. Applicable documents or inclosures indicated in Sections 2 and 3 of this Rule VI. SECTION 5. The contractor shall keep such records as will clearly identify his gross income and expenditures from the internationally bidded or foreign-assisted local project, the overseas gross income and expenditures from overseas projects, and the gross income and expenditures from non-registered activities. SECTION 6. Availment by Umbrella Organizations . The umbrella organization authorized by the Board to prosecute in whole or in part an authorized project may enjoy the incentives under the Decree: Provided , however , That the same will not result in the availment of double incentives by the registered contractor and the umbrella organization. For this purpose, the umbrella organization and the original contractor shall submit to the Bureau of Internal Revenue as supporting document for incentive availment a mutually agreed formula for sharing their incentives duly approved by the Board. This agreement shall be binding throughout the period of the project. SECTION 7. Contractors With On-Going Projects . A contractor who has an on-going overseas construction project or an internationally-bidded or foreign-assisted local project that was started on or after June 27, 1977 but before the effectivity of the Rules and Regulations promulgated by the Board shall be entitled to the incentives: Provided, That he complies with the requirements of Rules V and VI of said Rules and Regulations. SECTION 8. Transitory Provision . Existing registered enterprises under Republic Act 6135 which are otherwise qualified to register under this Decree may transfer its registration hereunder, subject to the approval of the Board: Provided , however , That a registered contractor under this Decree, which is entitled to benefits under other laws, shall not concurrently avail of the incentive benefits accruing to its registered activity under this Decree and under other laws. SECTION 9. All Rules and Regulations contrary to or inconsistent herewith shall be deemed revised, revoked or amended accordingly. SECTION 10. Effectivity . These regulations shall take effect as of the date of effectivity of P.D. 1167. CESAR VIRATA Secretary of Finance Recommending Approval: EFREN I. PLANA Actg. Commissioner of Internal Revenue ANNEX I BIR-POCB Form No. 04-A REPUBLIC OF THE PHILIPPINES PHILIPPINE OVERSEAS CONSTRUCTION BOARD APPLICATION FOR TAX CREDIT FOR INCOME TAX PAID TO FOREIGN GOVERNMENT FOR POCB USE ONLY Application No. ______ Date Filed __________ To avail of the incentive under Sec. 4(a) (1), the following documents shall be attached: 1. Foreign income tax return(s) filed 2. Official receipt(s) evidencing payment(s) made ________________ Applicant Republic of the Philippines) : s.s. City/Province SUBSCRIBED AND SWORN TO before me this ___ day of _____ 19 ___ in the City/Province of ____, affiant exhibited to me his Residence Certificate No. A _____ issued at ______ on ______ 19 ___ and applicant's Corporate Residence Certificate No. C _____ issued at _____ on _____ 19 ___. NOTARY PUBLIC Until December 31, 19___ Doc. No. _______ PTR No. _____ Page No. _______ Issued at _____ Book No. ______ Issued on _____ Series of 19 ____ ANNEX II POCB-BIR Form No. 04-B Page 1 APPLICATION FOR REGISTRATION OF FOREIGN LOANS AND TAX CREDIT FOR WITHHOLDING TAX ON INTEREST (Sec. 4(a) (2) PD# 1167) FOR POCB USE ONLY Application No. _____ Date Filed ___________ POCB-BIR Form No. 04-B Page 2 POCB-BIR Form No. 04-B Page 3 ANNEX III BIR-POCB FORM No. 04-C Page 1 REPUBLIC OF THE PHILIPPINES OVERSEAS CONSTRUCTION BOARD APPLICATION FOR TAX CREDIT ON RAX MATERIALS (Sec. 4(a) (3) PD #1167) FOR POCB USE ONLY Application No. ____ Date Filed _____ Prepared by: 1. ________ 2. ________ Certified by: 1. ________ 2. ________ IN WITNESS WHEREOF, I have hereunto set my hands this _____ day of ____ 19 ____, at ______, Philippines. _________________ President or Authorized Representative Republic of the Philippines) : S. S. ____________________) SUBSCRIBED AND SWORN TO before me this ______ day of _____, 19 ____, affiant exhibited to me his/her Residence Certificate No. A _______. issued at _____, on ______ 19 ____, including the Corporate Residence Certificate No. C ______ issued on _____, at ________, Philippines. NOTARY PUBLIC Until Dec. 31, 19______ PTR No. _________ Issued at _________ On ______________ Doc. No. _______ Page No. _______ Book No. _______ Series of 19 ______ ANNEX IV BIR-POCB Form No. 04-D REPUBLIC OF THE PHILIPPINES OVERSEAS CONSTRUCTION BOARD APPLICATION FOR ACCELERATED DEPRECIATION (Sec. 4(b) (1) PD# 1167) FOR POCB USE ONLY Application No. _______ Date Filed ___________ NAME TAN POCB REG. NO OFFICE ADDRESS DATE OF POCB REG. TEL. NO. BUSINESS ORGANIZATION: DATE OF NOTIFICATION BIR Sole Proprietorship (Attach copy) Corporation Partnership Other (Specify) MACHINERY AND EQUIPMENT A. ASSETS NEWLY ACQUIRED: (Annex A) 1. Date of acquisition 2. Descriptions 3. Estimated useful life 4. Purchase Price 5. Salvage Value 6. Rate and method applied 7. Accelerated depreciation B. FOR ASSETS EXISTING BEFORE THE REGISTRATION:(Annex B) 1. Date of acquisition 2. Descriptions 3. Estimated useful life 4. Purchase price 5. Salvage value 6. Rate and method applied (previous and present) 7. Accumulated depreciation 8. Net book value 9. Accelerated depreciation _______________ Applicant Republic of the Philippines) : s.s. City/Province) SUBSCRIBED AND SWORN TO before me this ____ day of _____ 19 ____ at _____, Philippines, affiant exhibited/me his/her Residence Certificate No. A _____ issued at _____ on _____ 19 _____ and Corporate Residence Certificate No. C _____ issued at _____ on _____. NOTARY PUBLIC Until Dec. 31, 19_____ Doc. No. ______ PTR No. ______ Page No. ______ Issued at ______ Book No. _____ On ___________ Series of 19 ____ ANNEX V BIR-POCB Form No. 04-E REPUBLIC OF THE PHILIPPINES OVERSEAS CONSTRUCTION BOARD APPLICATION OF ADDITIONAL DEDUCTION OF LABOR TRAINING EXPENSES (Sec. 4(b) (2) PD# 1167) FOR POCB USE ONLY Application No. _______ Date Filed ___________ NAME TAN POCB REG. NO. OFFICE ADDRESS DATE OF POCB REG. TEL. NO. BUSINESS ORGANIZATION: AMOUNT CLAIMED P__________ Sole Proprietorship Date PROGRAM APPROVED BY Corporation THE DEPT. OF LABOR Partnership Other (Specify) ATTACHMENTS: A. Copy of the labor training program duly approved by the Department of Labor. The following information shall be submitted with the above mentioned documents: 1. Date of application and approval 2. List of employees under the program stating the following: a. Name of employees b. TAN c. Designation d. Monthly salary rates e. Tax Withheld 3. Duration of the training program 4. Schedule of labor training expenses other than salaries and wages: a. Date of payment b. Amount paid c. Recipients 5. Actual direct labor cost during the year ________________ Applicant Republic of the Philippines) City/Province) :s.s. SUBSCRIBED AND SWORN TO before me this _____ day of _____ 19 ____ at ____, Philippines, affiant exhibited to me his/her Residence Certificate No. A ______ issued at ______ on ________. NOTARY PUBLIC UNTIL Dec. 31, 19_____ Doc. No. _____ PTR No. _____________ Page No. ____ Issued at _____________ Book No. ___ On __________________ Series of 19 _____ ANNEX VI BIR-POCB Form No. 04-F REPUBLIC OF THE PHILIPPINES OVERSEAS CONSTRUCTION BOARD APPLICATION FOR NET OPERATING LOSS CARRY OVER (Sec. 4(b) (3) PD#1167) FOR POCB USE ONLY Application No. _______ Date Filed ____________ NAME TAN OCB REG. NO. OFFICE ADDRESS DATE OF OCB REG. TEL. NO. BUSINESS ORGANIZATION: Sole Proprietorship Corporation Partnership Other (Specify) A. (1) Amount Claimed (2) Year Incurred (3) Attachments: 1. Computation of net operating loss carry over. 2. Consolidated overseas profit and loss statement. 3. Result of overseas operations per project. 4. Result of domestic operations per project. 5. Monthly schedule of overhead expenses incurred locally but partly chargeable to overseas operations. _______________ Applicant Republic of the Philippines) City/Province) : s.s. SUBSCRIBED AND SWORN TO before me this _______ day of _______ 19 ____ at ______, Philippines, affiant exhibited to me his/her Residence Certificate No. A _______ issued at ____ on _______ and affiant's Corporate Residence Certificate No. C ______ issued at ________ on ________. NOTARY PUBLIC Until December 31, 19____ PTR No. ______________ Issued at ______________ On __________________ Doc. No. _____ Page No. _____ Book No. _____ Series of 19____ ANNEX VII BIR-POCB FORM NO. 04-G REPUBLIC OF THE PHILIPPINES OVERSEAS CONSTRUCTION BOARD 1% TAX ON OVERSEAS GROSS INCOME (Sec. 4(c), PD#1167) PLEASE ATTACH TO THE INCOME TAX RETURN FILED AS PART THEREOF FOR POCB USE ONLY Application No. _______ Date Filed ___________ NAME TAN OCB REG. NO OFFICE ADDRESS DATE OF OCB REG. TEL. NO. BUSINESS ORGANIZATION: AMOUNT P Sole Proprietorship Corporation Partnership Other (Specify) ATTACHMENTS: 1. Consolidated overseas profit and loss statement; 2. Result of overseas operations per project; 3. Copy/copies of the overseas project contract. COMPUTATIONS: Gross contract price . . . Tax Rate 1 ___ Tax Due . . . === ___________ Applicant Republic of the Philippines) City/Province) : s.s. Subscribed and sworn to before me this ______ day of _______ 19 _____ at ____, Philippines, affiant exhibited to me his/her Residence Certificate No. A ______ issued at _____ on and Corporate Residence Certificate No. C ______ issued at ____ on ______. NOTARY PUBLIC Until Dec. 31, 19___ PTR No. _________ Issued at _________ On _____________ Doc. No. _____ Page No. _____ Book No. _____ Series of 19_____ ANNEX VIII BIR-POCB Form No. 04-H PLEASE ATTACH TO INCOME TAX RETURN FILED AS PART THEREOF INCENTIVES AVAILED OF UNDER SECTION 5, PD No. 1167 (Registered Overseas Construction Contractor) (For internationally bidded or foreign assisted local projects) Year ended ______ NAME TAN DATE OF REG. ADDRESS REG. CERT. NO. Check below incentives availed of under P.D. No. 1167 in the return filed: A. TAX CREDIT [ ] Tax credit on foreign taxes paid by Filipino contractor on income derived from overseas projects. [Sec. 4(a) (1)] [ ] Tax credit for taxes withheld on interest payments on foreign loans. [Sec. 4(a) )2)] [ ] Tax credit for sales or compensating taxes on domestically manufactured or produced materials or products actually exported. B. ALLOWABLE DEDUCTIONS [ ] Accelerated depreciation. [Sec. 4(b) (1)] [ ] Additional deduction of labor training expenses. [Sec. 4(b) (2)] [ ] Net operating loss carry over. [Sec. 4(b) (3)] OFFICE OF THE PRESIDENT OF THE Philippines OVERSEAS CONSTRUCTION BOARD 19 December 1977 Honorable Cesar Virata Secretary, Department of Finance Central Bank Building Manila Through: Hon. Efren I. Plana Acting Commissioner Bureau of Internal Revenue S i r : Pursuant to the provisions of Presidential Decree No. 1167, the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, shall promulgate all necessary rules and regulations for the enforcement of the tax incentive provisions of the decree. The attached draft Rules and Regulations were prepared jointly by the Staff of the Overseas Construction Board and the Incentives Division of the Bureau of the Internal Revenue. On behalf of the Board, may we request the Department of Finance to promulgate the attached draft Rules and Regulations. Thank you. Very truly yours, RUBEN B. ANCHETA Chairman & Executive Director