Amendments to the General Policies and Specific Guidelines to Implement the 2017 Investment Priorities Plan

November 19, 2018

BOI MEMORANDUM CIRCULAR NO. 2018-009

 

WHEREAS, BOI Memorandum Circular No. 2017-004 entitled "General Policies and Specific Guidelines to Implement the 2017 Investment Priorities Plan" was approved by the Board and published on 18 June 2017;

WHEREAS, Article 30 of E.O. No. 226 provides that subject to publication requirements and the criteria for investment priority determination, the Board of Investments may, at any time, add additional areas in the plan, alter any of the terms of the declaration of an investment area or the designation of measured capacities, or terminate the status of preference;

WHEREAS, the Board conducted a review of M.C. No. 2017-004 to consider recent developments in the industry and adopt reasonable and justifiable positions of the private sector and related government agencies;

NOW THEREFORE, in order to effectively carry out the intent and purposes of E.O. No. 226, the Board, in its meeting of 19 September 2018 and 24 October 2018, by virtue of Board Resolution No. 28-23 and 32-02, Series of 2018, respectively, with a quorum duly present, approved the amendments to the 2017 IPP, as follows:

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B. GENERAL POLICIES

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IV. GEOGRAPHICAL CONSIDERATION IN INDUSTRY DEVELOPMENT POLICY

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B. Locational Restriction in National Capital Region (NCR)

Consistent with the objective of regional dispersal of industries, and the congestion in NCR, the BOI shall limit incentives to projects therein. Said projects are not entitled to fiscal incentives. Exemption from the above locational restriction may be given to the following or unless specified in the Specific Guidelines:

1. Projects in government industrial estates 1 declared by national law or presidential proclamation prior to 01 January 1989 (unless subsequently privatized);

2. Projects that will engage in service type activities; 2

3. Expansion of export-oriented projects effected within the firm's existing premises; 2 and

4. Modernization projects. ATICcS

VIII. CORPORATE SOCIAL RESPONSIBILITY (CSR)

 — Policy Deleted —

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e) Consumer Durables — refer to manufactured products that have relatively long useful life and do not have to be purchased frequently. They are durable goods acquired by households for final repeated or continuous consumption over a period of a year or more. 3 Some examples include television sets, refrigerators, air conditioners, washing machines, cars, bicycles, etc. Refer to the latest Philippine Classification of Individual Consumption Expenditure According to Purpose (PCOICOP) published by the Philippine Statistics Authority for a list of durable goods.

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z) New Project — refers to a project/activity listed in the IPP that has not started commercial operation undertaken by:

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(2) An existing enterprise that shall engage in:

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ii. the same activity provided it meets all of the following:

(a) Will establish a new complete line.

 "New Complete Line" refers to new facilities used in the production of the registered product/service. This line may use a common facility such as but not limited to warehouse or laboratory and others as may be determined by the Board.

 "New Facility" refers to the space or area, physical structure and equipment provided for a particular purpose or segment of the production process/service activity.

(b) Will have new investment in fixed assets and working capital.

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gg) Start of Commercial Operations — x x x. In the case of export traders and service exporters, the term shall mean the date when the initial export shipment in commercial quantity has been made or initial performance of service as borne out by the appropriate supporting documents. For the avoidance of doubt, export traders are not qualified for registration under this IPP, and thus, this SCO definition is not applicable to export traders.

D. SPECIFIC GUIDELINES

I. PREFERRED ACTIVITIES

1. All Qualified Manufacturing Activities including Agro-Processing

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 In addition, they must satisfy any of the following criteria to be qualified for registration:

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5. Will adhere to Halal or Kosher standards for food manufacturing, as certified by any certifying body. 4 For Halal, the certifying body must be accredited by any appropriate international accreditation body until such time that PAB's Halal Accreditation System is implemented. Processing centers for the Halal industry to be located in the ARMM shall be registered with the RBOI-ARMM.

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 Qualified and registered enterprises for the manufacture of housing components must submit a valid Accreditation issued by the Accreditation of Innovative Technologies for Housing (AITECH) prior to each availment of ITH.

 Prior to start of commercial operations, the registered enterprise must submit a copy of the License to Operate, Product Registration, or endorsement, whichever is applicable, issued by an appropriate government agency; or Certification on the product's safety from duly recognized and reputable local or international organization prior to the availment of ITH.

3. Strategic Services

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b. Creative Industries/Knowledge-Based Services

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This also covers digital or technological start-ups/activities. Startups refer to newly emerged, fast-growing, scalable business entity that aims to meet a marketplace need by developing or offering an innovative product, process or service and should have at least one (1) founder who is working full time.

For start-ups, revenues qualified for ITH shall include, but not limited, to the following:

a. Ad-based revenue models — refer to the use of digital real-estate (i.e., websites, games, apps and other virtual spaces) as advertisement space. This could be charged in various modes: 1) placement-based, 2) based on views in general or individualized views based on profile, 3) click-through, 4) successful transaction, 5) affiliate links — commission-based (e.g., blogs). TIADCc

b. In-app purchase models — refer to revenues coming from charging additional fees for apps or content used within the basic app that may be owned by app maker or third-parties.

c. Perpetual license — refers to alone-time fee for the rights to use the software perpetually. One-time payment can be done with some payment terms. Client usually pays an annual maintenance fee to cover support and bug fixes and sometimes improvements, or pays additional fees for new features as they are released.

d. Platform-based fees or Marketplace Models — refer to revenues derived by being the provider of the digital infrastructure or software to allow others to provide digital or physical goods and services through the platform. Revenues can be subscription-based, per transaction, commission type. Digital Marketplace can fall under this (e.g., Shopify).

e. Premium/Freemium models — refer to business models where the basic service/access is free, but the user pays for additional features, extensions, functions, etc. for a one-time fee (e.g., Linkedin), or for a recurring subscription fee (e.g., Dropbox).

f. Services/support fees — refer to revenue models where the digital product is free but revenue comes from providing support services (i.e., implementation services, customization, support, etc.). Example — Linux operating system.

g. Transactional revenue — refer to fixed or variable fee for access, sale or use of digital or physical goods or services (reservations/booking, queuing, access to info, documents, sale of physical goods, etc.). Examples — NSO birth certificate, LTO COC Automation Fee, DTI/SEC Business Name Registration. This also covers sale of physical products through the use of online sites or platforms.

h. Use of digital assets — refers to revenues/sales derived from the use of digital assets/digital content that can be used in the application (e.g., buying stickers for Viber).

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4. Healthcare Services including Drug Rehabilitation Centers

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Prior to start of commercial operation, the registered enterprise must submit the License to Operate/Accreditation/Certification, whichever is applicable, issued by the DOH.

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5. Infrastructure and Logistics including LGU-PPPs

b. Air, land, and water transport

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(3) Water Transport

This covers domestic/inter-island shipping, i.e., pure cargo, passenger, and passenger-cargo vessel operations including towing services and RORO/ROPax/Ferry Terminal System operations, and overseas shipping.

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e. Training/Learning Facilities

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The following are the requirements for registration:

• The curriculum must be approved by either TESDA for training course or CHED for degree courses or other concerned government agencies/authority and/or endorsed by the relevant industry association; and

• The registered education/training/learning institutions must have laboratory/s equipment and tools for training.

Training/learning institutions supporting the aviation industry (e.g., pilot schools, maintenance aviation schools) must submit a copy of its aviation training organization certificate, and Certificate of airworthiness for its training aircrafts issued by CAAP prior to each ITH availment for the ITH period.

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III. PREFERRED ACTIVITIES

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3. Publication or Printing of Books/Textbooks (R.A. No. 8047)

 This covers content development intended for books and publication of books in print, digital format, and other emerging formats.

 The following may qualify as new:

• New book titles (original works, original text with annotations, with ISBN); and

• First format by which the new book title will be produced or published. The succeeding format (e.g., print to digital, or vice versa) by which the same title is published will be regarded as "Expansion"; and

• Revision and succeeding editions of existing titles with at least 25% new content.

 Re-prints of existing titles will not qualify for new registration.

 Publication projects locating in NCR may qualify for registration. AIDSTE

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This Circular shall take effect immediately upon publication in a newspaper of general circulation and three (3) copies thereof shall be filed with the Office of the National Administrative Register (ONAR), University of the Philippines (UP) Law Center, Diliman, Quezon City pursuant to Presidential Memorandum Circular No. 11 dated 09 October 1992.

DONE, in the City of Makati, this 19th day of November, in the year of the Lord, Two Thousand and Eighteen.

BY AUTHORITY OF THE BOARD

(SGD.) DR. CEFERINO S. RODOLFOUndersecretary and BOI Managing Head

Footnotes

1. Government Industrial Estates:

a) Dagat-dagatan (P.D. No. 569 dated 30 October 1974);

b) Vitas Industrial Estate, Tondo (E.O. No. 1086 dated 31 January 1986, as amended/expanded through Presidential Proclamation No. 39 dated 09 September 1992 and Proclamation No. 465 dated 01 August 1994) (Vitas Industrial Estate/Smokey Mountain);

c) Bagong Silang Industrial Estate, Caloocan City (Presidential Proclamation No. 843 dated 26 July 1971);

d) Food Terminal Inc., Taguig (LOI No. 900 dated 25 July 1979);

e) Navotas Fishing Port Complex (E.O. No. 772 dated 08 February 1982).

2. Contact centers and non-voice business processing activities that will be located in Metro Manila may no longer be qualified for incentives availment with the Board of Investments under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, as amended by year 2020.

3. (Sources of definition: https://www.collinsdictionary.com/dictionary/english/consumer-durable; OECD Glossary of Statistical Terms, https://stats.oecd.org/glossary/detail.asp?ID=425; www.dictionary.cambridge.org/dictionary/english/consumer-durables).

4. Appropriate International accreditation body for Halal may include, but not limited to, members of the International Halal Accreditation Forum (IHAF). For Kosher, internationally recognized certifying bodies may include Orthodox Union, Star K Kosher Certification, Kof-K and Organized Kashrut Labs, among others.

 

Published in the Philippine Daily Inquirer on November 24, 2018.