Implementing Sections 2 and 3 of Presidential Decree No. 439 dated April 22, 1974

October 7, 1974 REVENUE REGULATIONS NO. 07-74 SUBJECT : Implementing Sections 2 and 3 of Presidential Decree No. 439 dated April 22, 1974 TO : All internal revenue officers and other concerned Pursuant to Sections 2 and 3 of Presidential Decree No. 439, the following regulations giving certain tax holiday benefits to overseas Filipino and foreigners coming to settle permanently in the Philippines are hereby promulgated for the guidance of all concerned and shall be known as Revenue Regulations No. 7-74. SECTION 1. Scope . These regulations shall govern the tax holiday benefits given to overseas Filipinos and foreigners settling permanently in the Philippines in their purchase of locally manufactured vehicles household appliances, professional instruments and other tools of trade, occupation or employment, as provided for in Section 2 of Presidential Decree No. 439 which is quoted hereunder: "Sec. 2. Provisions of Sections 184, 184-A; 185; 185-A; 185-B; 186; 186-A and 186-B of the Internal Revenue Code, as amended, to the contrary notwithstanding, Overseas Filipinos as herein defined who are coming to settle permanently in the Philippines may purchase locally manufactured vehicles, household appliances, professional instruments and other tools of trade, occupation or employment, free of internal revenue taxes; Provided: a. Such items are purchased from authorized dealers and are brand new; b. In the case of vehicles, that the same are registered under the Progressive Car Manufacturing Program; c. In the case of household appliances, professional instruments and other tools of trade, occupation or employment, that the same are locally manufactured and/or assembled; d. That the purchase are made locally and in United States currency; e. That the purchases are made within a period of six (6) months from the date of arrival." SECTION 2. Nature of Tax Exemption . Tax Exemption is given on the purchase of only one piece/unit/set of locally manufactured vehicles, household appliances, professional instruments and other tools of trade, occupation or employment. The term "household appliances" shall include, but not limited to: air conditioner, radio, stereo, television set, refrigerators, cooking appliances, electric fans. The tax exemption is given only on all such purchases made within a period of six (6) months from the date of arrival in the Philippines which arrival shall not be later than February 29, 1976. SECTION 3. Who can avail . Persons qualified to avail the said privilege under the said Presidential Decree. a. Holders of foreign passports arriving in the Philippines with Philippine visa issued pursuant to Section 13 of the Philippine Immigration Act of 1940, as amended, i.e., foreigners coming to settle for the first time in the Philippines; b. Overseas Filipinos and/or their families and dependents who were permanent residents or immigrants of other countries. SECTION 4. Proofs required for availment . An Overseas Filipino who wants to avail of the tax exemption shall present the following proofs: cdt a. Passport wherein it is stamped LOI 163. b. Identification Card issued by the Bureau of Immigration indicating proof of change of permanent address. SECTION 5. Goods that may be purchased . The goods that may be purchased are: a. Brand-new locally manufactured household appliances as listed in Annex "A" hereof; b. Brand-new vehicles registered under the Progressive Car Manufacturing Program as listed in Annex "B" hereof; c. Brand-new locally manufactured professional instruments, tools of trade, occupation or employment. The articles to be purchased shall be limited to the extent compatible with the normal needs and commensurate to the financial capability of the purchaser; Provided, that only one motor vehicle may be allowed under the exemption. SECTION 6. Period of Purchase . All such purchases must be made within a period of six (6) months from the date of arrival in the Philippines, which arrival shall not be later than February 29, 1976. SECTION 7. Mode of Payment . Payments for purchases must be made in cash and in: a. US Dollar/travellers checks; b. Proceeds of dollars remitted from abroad to Central Bank authorized agent banks as shown by receipts issued by the authorized agent bank concerned; c. Proceeds of dollars withdrawn from foreign currency deposits maintained in the Philippines as shown by a certification from the Central Bank authorized agent bank concerned. SECTION 8. Procedure for availment of the tax exemption privilege . a. In the case of direct purchase from the manufacturer : (1) The purchaser shall submit a request in writing with the Commissioner of Internal Revenue, Attention: BUSINESS TAX DIVISION. The request shall contain the kind, quantity and manufacturer of the articles to be purchased. Upon receipt of the request, the Chief, Business Tax Division, shall require from the prospective purchaser submittal of the proofs mentioned in Section 4 hereof. If the purchaser is qualified to avail of the exemption, a purchase order shall be issued in favor of the purchaser and addressed to the manufacturer. (2) If the manufacturer and the purchaser have agreed to consummate the sales transaction, the former shall prepare an invoice showing the selling price, exclusive of sales tax, in Philippine and US Currency, and the amount of sales tax due thereon. These amounts must be indicated separately in the invoice. Said invoice shall also state distinctly the full name of the purchaser, his new residence in the Philippines, his date of arrival in the Philippines and Passport Number. (3) The manufacturer shall annotate in the passport of the purchaser the kind of article purchased, the amount paid expressed in US currency and the date of purchase. (4) The manufacturer shall file with the Bureau of Internal Revenue within twenty (20) days after the end of each month a statement showing the article or articles purchased from him or it during the preceding month and the total amount paid in US currency. Said statement shall also certify that the US currency derived from the sales has been duly deposited in a local commercial bank (indicate name of bank) or reported to the Central Bank. aisa dc b. In the case of purchase from an authorized dealer : (1) The dealer shall follow the above procedure contained in Nos. (1) to (4); (2) After the sale transaction, the dealer shall present to the manufacturer a copy of the sales invoices issued by him covering the tax-free purchase. If the manufacturer had already paid the sales tax on the articles so sold and such tax was passed on to the dealer, such manufacturer shall pay said tax to the dealer. Thereafter, the manufacturer shall claim tax credit of said tax from the Commissioner of Internal Revenue by complying with the provisions of Section 309 of the Tax Code. SECTION 9. Two-year holding period, prohibition . The purchaser shall hold the purchased article for his own personal use for a period of at least two (2) years from the date of purchase. The purchased article shall be subject to the corresponding tax; payable by the purchaser or transferee, under the following circumstances: a. Except if the transfer is by inheritance, the purchased article is sold, bartered, exchanged or transferred within the two-year period; or b. If the purchaser finally decides within the two-year period to abandon his permanent residence status in the Philippines and leaves for abroad. SECTION 10. Effectivity . These regulations shall take effect immediately, and supersedes Revenue Regulations No. 6-74 dated July 3, 1974. CESAR VIRATA Secretary of Finance Recommended by: MISAEL P. VERA Commissioner of Internal Revenue TAN 1601-593-5 ANNEX "A" HOUSEHOLD APPLIANCES 1. CONCEPTION INDUSTRIES, INC. a. Room air conditioners 2. GENERAL ELECTRIC APPLIANCES CO. a. Refrigerators b. Freezers and air conditioners c. Television sets 3. AIRCON, INC. a. Room air conditioners b. LPG Gas Stoves c. Television receiver d. Stereo sets 4. PHILIPPS ELECTRICAL LAMPS, INC. a. Radios b. Radio Gramophones c. Gramophones d. Television sets 5. REFRIGERATION INDUSTRIES, INC. a. Refrigerators 6. B. LIM & SONS MFG. INC. a. Refrigerators 7. DEL ROSARIO BROS. INDUSTRIES, INC. a. Television sets 8. MACLIN ELECTRONICS, INC. a. Phonographs b. Combination radio and phono sets c. Play tapes d. Tape recorders 9. RINNAI UNION GAS APPLIANCES, INC. a. Gas stoves 10. PHILIPPINE APPLIANCE CORPORATION a. Television receivers b. Combination radio-phono sets c. Electric, gas or oil-operated ranges & stoves 11. CONSOLIDATED ELECTRONICS INDUSTRIES, INC. a. Radio phonos b. Television receiving sets c. Tape recorders d. Combination of above 12. RADIOWEALTH, INC. a. Television sets b. Stereo sets ANNEX "B" BRAND-NEW VEHICLES LISTED UNDER THE PROGRESSIVE CAR MANUFACTURING PROGRAM CHRYSLER PHILS . 1. Minica Passenger Car (Standard and De Luxe) 2. Minica Light Commercial Van 3. Colt Lancer Passenger Car; 2 & 4-door with Manual or automatic transmission 4. Dodge Colt (Gallant) Passenger Car; 2 & 4-door with Manual or automatic transmission DELTA MOTORS 1. RT Corona Series 2. KE Corolla Series 3. RS Crown 4. RX Corona Mark II FORD PHILS . 1. Cortina 2. Escort GM PHILS . 1. Torana 1900 Model 82311; 2-Door S 2. Torana 1900 Model 82369; 4-Door S 3. Torana 1900 Model 82569; 4-Door SL 4. Torana 1900 Model 82311A; 2-Door S 5. Torana 1900 Model; 82369A; 4-Door S 6. Torana 1900 Model 82569A; 4-Door SL D M G 1. Bettle Series 2. Sakbayan Series 13. PTP ENTERPRISES, INC. a. Phonographs b. Radios c. Television sets d. Tape recorders 14. MICRO-GROUP MFG. COMPANY a. Receiver-Amplifier b. Record players c. Tape deck bar players 15. TRIMI MARKETING & MFG. CO. a. Gas stoves 16. MICO INDUSTRIES a. Tape recorders 17. PRECISION ELECTRONICS CORP. a. Phonographs b. Combination radio and phonograph sets c. Television sets d. Tape cassette deck e. Tape recorders 18. (YSMAEL STEEL MFG. CO.) D. M. G., INC. a. Electric refrigerators b. Gas refrigerators c. Vertical freezers d. Horizontal freezers e. Air conditioners f. Television sets g. Radio-phono stereo sets 19. ALEN ENGINEERING CORP. a. Self-contained air conditioning units 20. SIGMA-MARIWASA, INC. a. AM/FM Multiplex Stereo Tuner/Amplifier b. Tape recorders/players c. Tape players-cartridges and cassettes d. Video Tape recorders and monitors 21. P.I. MANUFACTURING, INC. a. Electric ranges b. Gas/Electric ranges c. Electric stoves d. Gas stoves e. Electric water heaters 22. NEWPORT ELECTRONICS ASSEMBLY a. Phonographs b. Combinations phonographs & radio sets 23. WORLDWIDE TRADING & DEVELOPMENT CORP. a. Stoves b. Ranges 24. HITACHI UNION, INC. a. Electric fans b. T.V. sets c. Stereo radio phono d. Rice cookers e. Bread toasters f. Flat irons g. Refrigerators h. Air conditioners 25. RADIOLA-toshiba phil., inc. a. Phonographs b. Combination radio & phono sets c. Television sets d. Tape recorders 26. AVEGON, INC. a. Radio phonographs 27. APPLIANCE SERVICE, INC. a. Gas cooking appliances 28. SUPER MANUFACTURING, INC. a. Television sets 29. STANDARD ELECTRIC MFG. CORP. a. Electric fans b. Toasters c. Rice cookers d. Gas stoves e. Wall clocks 30 SUPER-SONIC ELECTRONICS MFG. CORP. a. Transistor radios b. Radio phonos 31. CELESTIAL ELECTRONICS CORP. a. T.V. sets b. Hi-fi stereo radio phonos c. Stereo AM/FM Multiplex Phonograph sets 32. HERITAGE MARKETING CORP. a. Gas cookers b. Ranges 33. THE BORROMEO, INC. a. Gas stoves b. Gas ovens c. Gas ranges 34. TECHNO-GAS PHIL. MANUFACTURING CORP. a. Gas stoves b. Ranges c. Porcelain enamel products 35. DELTA MOTOR CORP. a. Refrigerators b. Air conditioners c. Televisions d. Radio phonographs sets 36. FI LIPINAS ELECTRONIC INDUSTRIAL CORP. a. Automatic water heater b. Electric stoves c. Water heater elements d. Electric flat irons e. Gas stoves f. Electric range units 37. RIZAL INDUSTRIAL CORP. a. Television sets b. Stereo radio c. Radio phonos d. Tape recorders 38. SANYO (PHIL.) INC. a. Television sets b. Gas stoves 39. LIBERTY ENGINEERING CORP. a. Refrigerators b. Freezers c. Air conditioning units 40. WONDER PROJECT DEVELOPMENT CORP. a. Stoves b. Ranges 41. INTERNATIONAL GAS RANGE CORP. a. Gas stoves 42. NATALIO N. YCO (UNITED AUDIO) a. Radio phonos 43. NORTH AMERICAN INDUSTRIES, INC. a. Table LPG stoves 44. GENERAL HEAT CORP. a. Gas cookers 45. NEUTRON INDUSTRIES, INC. a. Combination radio and phonograph sets 46. CONSOLIDATED MOTORS CORP. a. LPG stoves 47. SOLID INDUSTRIES, INC. a. Television sets b. Stereo sets c. Radio phono and combination d. Tape recorders 48. BHAGWAN HEATER MFG. a. Water heaters 49. SUPER-HERCULES MFG. a. Gas stoves 50. ASAHI ELECTRONICS CORP. a. Portable radio phonographs 1st Indorsement October 22, 1974 Respectfully returned to the Commissioner of Internal Revenue, Manila, the within Revenue Regulation No. 7-74, implementing Section 2 and 3 of Presidential Decree No. 439 dated April 22, 1974, as amended, entitled "Providing For Tax Holidays For Overseas Filipinos As Contemplated In Letters of Instruction Numbers 105 and 163", duly approved. However, Section 1 of the said regulation is hereby amended to insert between the words "Filipinos" and "Settling" the words and foreigners in order that said section will jibe with Section 3 of the same regulations. CESAR VIRATA Secretary