General Policies and Specific Guidelines to Implement the 2008 Investment Priorities Plan

May 30, 2008

DTI NOTICE

Notice is hereby given that the Board, in its meeting of 30 May 2008, approved the following General Policies and Specific Guidelines to Implement the 2008 Investment Priorities Plan (IPP). HCDAac

PART II *

General Policies

I. GRANT OF INCENTIVES

The grant of incentives under the 2008 IPP is subject to Article 7, paragraph 3 of EO 226, to wit:

"ART. 7 Powers and Duties of the Board. — ...

(3) Process and approve applications for registration with the Board, imposing such terms and conditions as it may deem necessary to promote the objectives of this Code, including refund of incentives when appropriate, restricting availment of certain incentives not needed by the project in the determination of the Board ..."

The following activities are not entitled to Income Tax Holiday (ITH) except as provided herein:

1. New projects involving the same activity to be undertaken by the same company or another company with the same stockholders or interlocking shareholders to the extent of 50% ownership. This shall not apply to the following:

a. Direct and constructive exports;

b. Projects undertaken by Micro, Small and Medium Enterprises (MSMEs);

c. Socialized and low-cost mass housing;

d. Tourism projects in accordance with the Tourism Master Plan;

e. Shipbuilding;

f. Shipping serving the nautical highways and missionary routes; and

g. Air transport serving the missionary routes.

 Notwithstanding the preceding paragraph I.1, the following activities shall have diminishing rate of ITH as spelled out in the Specific Guidelines herein:

a. Vertical mass housing projects located in Metro Manila;

b. Power generation projects;

c. Shipping; and

d. Air Transport.

2. Expansion and Modernization projects except the following:

a. Direct and constructive exports;

b. MSMEs projects;

c. Socialized and low-cost mass housing;

d. Tourism projects in accordance with the Tourism Master Plan;

e. Printing, Publication or Content Development of Books or Textbooks; aAcHCT

f. Manufacture of long steel products (billets and reinforcing steel bars);and

g. Strategic activities.

3. Indirect exports of goods except constructive exports;

4. Industrial tree plantation;

5. Exploration, mining, quarrying, and processing of minerals except those projects that comply with the minimum investment requirement or degree of value adding as provided in the Specific Guidelines;

6. Storage, marketing and distribution of petroleum products 1 except when located in government identified logistics hubs;

7. Logistics services rendered to exporters;

8. Adoption of water pollution control technology, cleaner production and waste minimization;

9. Activities listed in the IPP but intended for the firm's own use;

10. Projects with sovereign guarantee or guaranteed rate of return; and

11. Privatized projects paying income taxes prior to or at the time of privatization except those pre-qualified before the effectivity of the 2008 IPP with ITH factored-in in the bids. IaEHSD

Projects covered under paragraphs I.1 to I.6 may be entitled to ITH if located in Less Developed Areas (LDAs) or in the thirty (30) poorest provinces.

II. EQUITY OWNERSHIP

Except as provided under the Constitution and the Foreign Investment Act (Republic Act 7042, as amended), there are no restrictions on the extent of foreign ownership of export-oriented and/or pioneer enterprise that will engage in the activities listed in the IPP.

III. EQUITY REQUIREMENT

In general, the minimum equity required to finance the project applied for registration with the BOI shall be equal to 25% of project cost.

IV. REGIONAL DISPERSAL OF INDUSTRIES

The dispersal of economic activities in the countryside is encouraged.

A. Projects locating in Less Developed Areas (LDAs) shall be entitled to incentives in addition to those provided under Article 39 of E.O. 226, as follows:

• Six (6)-year income tax holiday (ITH) regardless of status (pioneer or non-pioneer) or type of project (new or expansion);

• Additional deductions from taxable income equivalent to 100% of expenses incurred in the development of necessary and major infrastructure facilities. TCDHIc

LESS DEVELOPED AREAS

REGION	PROVINCE
CAR	Abra
	Apayao
	Ifugao
	Kalinga
	Mt. Province
II	Quirino
	Nueva Vizcaya
IV	Aurora
	Marinduque
V	Masbate
VI	Guimaras
VII	Siquijor
VIII	Biliran
	Eastern Samar
	Southern Leyte
ARMM	Basilan
	Maguindanao
	Sulu
	Tawi-Tawi

NOTE: The BOI may, on a case-to-case basis, consider areas within any province not listed as a Less Developed Area subject to the provision of Article 40 of EO 226. Complementary to the provision of the law granting maximum incentives to registered enterprises in LDAs, enterprises that locate in congested urban centers may be given limited incentives.

B. Projects locating in the 30 poorest provinces as identified by the National Anti-Poverty Commission (NAPC) may be entitled to ITH.

30 POOREST PROVINCES

REGION	PROVINCE
CAR	Abra
	Apayao
	Kalinga
	Mt. Province
IV	Marinduque
	Occidental Mindoro
	Oriental Mindoro
	Palawan
	Romblon
V	Camarines Sur
	Masbate
	Sorsogon
VI	Antique
	Aklan
VII	Negros Oriental
VIII	Eastern Samar
	Northern Samar
IX	Zamboanga del Norte
X	Lanao del Norte
	Lanao del Sur
	Misamis Occidental
XI	Davao Oriental
XII	Saranggani
	Sultan Kudarat
ARMM	Maguindanao
	Sulu
	Tawi-Tawi
CARAGA	Agusan del Sur
	Surigao del Norte
	Surigao del Sur

V. EXEMPTION FROM THE LOCATIONAL RESTRICTION

1. Projects that will locate in government industrial estates declared as such by national law or by presidential proclamation prior to 01 January 1989 (unless subsequently privatized),as follows: CSTcEI

a. Dagat-Dagatan (P.D. 569 dated 30 October 1974)

b. Vitas Industrial Estate, Tondo (E.O. 1086 dated 31 January 1986, as amended/expanded through Presidential Proclamation No. 39 dated 09 September 1992 and Proclamation 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 900 dated 25 July 1979)

e. Navotas Fishing Port Complex (E.O. 772 dated 08 February 1982)

 NOTE:

 When these government industrial estates are privatized, existing locators shall continue to enjoy incentives for the period provided for in their BOI registration. Locators after privatization will not be entitled to registration for purposes of incentives, unless they meet the conditions in the following paragraphs V.2 to V.6.

2. Projects that will engage in service type activities.

3. Export-oriented projects

 In general, a project may be considered as export-oriented when at least fifty percent (50%) of production output/services rendered is for export, if Filipino-owned, and seventy percent (70%),if foreign-owned.

 Revenues generated from services rendered to foreign tourists may be considered as export sales.

4. Modernization projects

5. Projects of micro and small enterprises (MSEs)

6. Strategic Activities as defined under this IPP (see Part I, I.F "Strategic Activities")

VI. EXPORT OF PROCESSED/MANUFACTURED GOODS

To qualify for incentives, goods (excluding agricultural and mineral products that are covered by specific guidelines thereon) should have undergone manufacturing. Production of goods and products from recycled materials involving simple processing covering any or a combination of activities such as but not limited to cleaning, sorting, cutting, shredding, pulverizing, grinding, crushing, compacting, dissolving and filtration are not qualified for registration. aDCIHE

VII. EXPORT OF PRODUCTS IN SHORT DOMESTIC SUPPLY

1. The BOI may, if national interest requires, suspend the acceptance of application for registration of projects engaged in the export of products including industry inputs that are in short domestic supply.

2. The export commitment of a registered enterprise may be suspended if there is a need to satisfy national interest or in an emergency case/situation that would warrant serving first the need of the economy.

VIII. PROMOTION OF MICRO, SMALL AND MEDIUM-SIZED ENTERPRISES (MSMES)

In line with the Medium Term Philippine Development Plan (MTPDP),the BOI promotes the development of micro, small and medium-sized enterprises (MSMEs) on account of their contribution to employment generation, countryside development, and the cultivation of the Filipino entrepreneurial spirit.

IX. ASSISTANCE TO MICRO, SMALL AND MEDIUM-SIZED PROJECTS

(In addition to the incentives under E.O. 226)

1. Assistance in the preparation of simplified project application for BOI registration;

2. Availability of an exchange and assistance facility that identifies MSME support companies of a registered enterprise; IAETDc

3. Technical assistance through BOI's regular programs and other supporting industries promotion program;

4. Assistance in sourcing financing support;

5. Assistance to overseas contract workers who will engage in MSME activities; and,

6. For incentives availment, application and issuance fee of PhP500 for micro and PhP1,000 for small enterprises.

 In addition, the following assistance are provided for micro and small enterprises:

a) One-day processing of application for registration.

b) Micro enterprises are exempted from payment of application and registration fees. Small enterprises shall only pay 25% of the applicable application and registration fees.

c) Exemption from the 25% equity requirement.

d) Posting of the Notice of Filing of Application in provincial, city, municipal or barangay hall in lieu of publication in newspaper of general circulation. HAIDcE

e) Simplified reportorial requirements.

f) Simplified application for incentives availment.

X. RE-REGISTRATION OF CANCELLED PROJECTS

In general, the following activities are not qualified for re-registration:

1. Registered projects that stopped operations and were subsequently cancelled.

2. Registered projects that were not implemented and were subsequently cancelled.

The foregoing policies do not apply to the following:

1. Projects that were previously registered with the Board and were cancelled prior to the effectivity of this IPP, provided that the activity is listed in this IPP and the enterprise has no outstanding obligations with the DTI/BOI.

2. Projects acquired through Special Purpose Vehicle (SPV).

Note:

The ITH shall be limited to the remaining period of entitlement.

XI. PROJECT TYPE AND STATUS

1. New Projects

Other than the normal definition of a new project, i.e., one to be undertaken by a newly formed/incorporated enterprise, the following are deemed new projects:

a) Project to be established by an existing enterprise with existing business operation(s) entirely distinct and different from the proposed project in terms of either final product or service, production process, equipment or raw materials;

b) Project to be established by an existing enterprise along the same line of business as any of its existing operations, provided it meets the following: EcSCAD

i) The new project will involve the establishment of another line that may be put up in a site either outside or contiguous to its existing premises or compound "Another Line" refers to new facilities used in the production of the registered product/service. This line may use a facility common to an existing line such as warehouse, finishing, quality control, or laboratory.

 "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.

ii) There is new investment in fixed assets and working capital.

 Entitlement to ITH shall be subject to the limitations set forth under Part II, I. "Grant of Incentives".

c) Projects with assets acquired from PMO/GFIs/GOCCs:

 This covers projects involving assets purchased/leased from the Privatization and Management Office (PMO),government financial institutions (GFIs) and government-owned or controlled corporations (GOCCs),or entities wherein the government has ownership or interest.

 Entitlement to ITH shall be subject to the limitations set forth under Part II, I. "Grant of Incentives".Projects with ITH incorporated in the bid price may be entitled to ITH. Pioneer status may be granted to:

i) Projects utilizing purchased assets with new investment of at least the Philippine Peso equivalent of US$100 million covering acquisition cost (contract price),pre-operating cost, rehabilitation cost, if any, and working capital; or

ii) Projects utilizing leased assets with new investment of at least the Philippine Peso equivalent of US$25 million covering upfront lease payment equivalent is to 1 year upon signing of contract, pre-operating cost, rehabilitation cost and working capital. aSIHcT

d) Projects of Micro and Small Enterprises operating for less than one (1) year

 These are projects of micro and small enterprises with total project cost of not more than PhP15 million (excluding cost of land) that have been in commercial operation for less than one year.

2. Expansion Projects

These are activities involving the same products of or services rendered by an existing firm, as follows:

a. Projects that will involve the installation of additional capacity-determinant equipment within the same existing plant or facility of the enterprise;

b. Projects that will involve the modernization and rehabilitation of an existing facility of activities listed in the IPP that will result to increase in existing capacity;

c. ICT projects located in the same building and using the same basic common facilities such as servers, backup generators, internet connections, etc.,shall be considered as expansion; and

d. Other service type activities that do not meet the qualification requirements for new projects under Part II (policy on new projects).

ITH of expansion projects shall be subject to base-figure equivalent to the firm's highest production volume or sales value in the last three (3) years prior to the filing of the application for registration of the project.

Entitlement to ITH shall be subject to the limitations set forth under Part II, I. "Grant of Incentives".

3. Modernization Projects

a. These are projects identified in the IPP as qualified for modernization. For purposes of this IPP, rehabilitation is considered a form of modernization. cHEATI

b. In general, modernization programs shall be completed within two (2) years from date of registration.

c. In general, modernization projects will be eligible to pioneer or non-pioneer status as specifically provided for in the 2008 IPP coverage listing. To be eligible for pioneer status, the project must comply with Article 17 of E.O. 226 unless other conditions are provided in the specific guidelines covering the activity.

d. In general, modernization of manufacturing activities shall result to a yield rate of at least 95%.For rehabilitation, the minimum requirement shall be the restoration of the plant rated capacity.

e. The modernization program should identify the phases/stages of production sought to be modernized.

f. Projects registered under the modernization program may be entitled to three (3) years ITH and other incentives. Entitlement to ITH shall be subject to the limitations set forth under Part II, I. "Grant of Incentives".

g. The general policy on the brand new equipment also applies to modernization program. IEHSDA

h. The incremental income resulting from modernization shall be entitled to ITH subject to a base figure equivalent to the current operating capacity or sales of the firm at the time of filing of application for registration.

i. The computation of ITH for projects without increase in capacity is as follows:

• For single product/activity

	New Investment (in US$)
Rate of Exemption (ROE) =	––––––––––––––––––––––	x 100
	Total Investments (existing + new)
	relative to the concerned plant (in US$)

• For multiple products/activities or when ITH entitlement of other products/activities has lapsed:

	Sales of the Product subject of retooling
% Share to Total Sales =	–––––––––––––––––––––––	x 100
	Total Sales
	New Investment (in US$)
ROE =	––––––––––––––––––––––	x 100
	Total Investments (existing + new)
	Relative to the concerned plant (in US$)

 Where:

1. The ROE shall be fixed for the ITH entitlement period.

2. The exchange rate shall be the existing rate at the time of actual investment or time of availment of ITH whichever will result to lower rate of ITH.

3. For purposes of determining existing investments, the Total Fixed Assets relative to the concerned plant including the land on which the project is situated shall be based on the latest audited financial statements at the time of application for registration. DSTCIa

4. The % share in Total Sales shall be based on actual sales values for the year of availment.

4. Existing Export Projects

Existing producers that will export part of production may qualify for registration with limited incentives, i.e., Tax Credit and/or VAT zero rating of their exported products, under certain conditions.

XII. PIONEER STATUS

Notwithstanding Article 17 of E.O. 226, pioneer status shall not be automatically granted on the basis of new product or new technology.

XIII. PROJECTS WITH SOVEREIGN GUARANTEE OR GUARANTEED RATE OF RETURN

In general, projects with sovereign guarantee or guaranteed rate of return are not entitled to ITH. Unsolicited BOT projects and projects with take or pay provisions are not entitled to ITH. Projects with sovereign guarantee for risks other than commercial risk may be granted ITH subject to certification as such by the agency/institution providing the guarantee.

XIV. MULTI-PHASED PROJECTS WITH MULTIPLE LOCATIONS

In general, projects of an enterprise with multiple phases/location may be registered on a per revenue stream basis.

Entitlement to ITH shall be subject to the limitations set forth under Part II, I. "Grant of Incentives".

XV. CORPORATE SOCIAL RESPONSIBILITY PURSUANT TO SOCIAL OBJECTIVES OF E.O. 226

A. Registered enterprises on a non-pioneer status/incentives are encouraged to undertake Corporate Social Responsibility (CSR) activities, which may be chosen from the list of activities identified by National Anti-Poverty Council (NAPC). ATCEIc

B. Registered enterprises with pioneer status/incentives are enjoined to undertake CSR activities. The grant of the last two years of their ITH shall be subject to submission of proof thereof not later than the end of the 4th year of ITH entitlement.

XVI. PROJECTS CRITICAL TO THE ENVIRONMENT

New and expansion projects shall be required to secure an Environmental Compliance Certificate pursuant to P.D. No. 1586 (Philippine Environmental Impact Statement System) and other clearances under relevant environmental laws.

A Certificate of Non-Coverage (CNC) issued by the Environmental Management Bureau (EMB) shall be submitted for projects that are not critical to the environment.

XVII. FOOD PROCESSING PROJECTS

For purposes of ITH availment, all registered food processing projects shall submit an international quality standard certification from relevant certifying institutions.

XVIII. INTERNATIONAL CERTIFICATION

All enterprises that will register under 2008 IPP are encouraged to acquire international certification such as ISO 9000 certification, Quality Standards (QS) or other similar certifications to improve efficiency and global competitiveness.

Enterprises are encouraged to submit a timeframe of activities leading to the certification as a measure to monitor each enterprise's progress towards achieving accreditation status. ITADaE

XIX. EQUIPMENT

As a general rule, registered enterprises shall use brand new equipment and apply production processes that meet environmental standards.

XX. PROJECTS LOCATING IN THE AUTONOMOUS REGION OF MUSLIM MINDANAO

Projects locating in the Autonomous Region of Muslim Mindanao (ARMM) should register with the BOI-ARMM.

XXI. PROJECTS WITH REVENUES DERIVED FROM CARBON CREDITS PURSUANT TO THE KYOTO PROTOCOL

Revenues from the sale of carbon credits through a carbon emission reduction (CER) certificate generated from registered activity shall be considered as part of the income entitled to ITH. Projects with foreign exchange earnings generated from CER credits of at least more than 50% of their total revenues may be registered as an export project entitled to ITH.

XXII. OUTSOURCING OF PRODUCTION PROCESS OR SERVICES

Outsourcing of production process or services may be allowed provided that the core activity/integrated nature of operation is undertaken/maintained by the registered enterprise.

PART III

Specific Guidelines

I. PREFERRED ACTIVITIES

A. Agriculture/Agribusiness and Fishery

This covers production and processing of agricultural and fishery products (including their by-products and wastes),biofuels, feeds and organic fertilizers. The processing of agricultural products by the firm must be integrated with its own production/plantation or with contract growing arrangement. DEacIT

1. Commercial production may include primary processing.

 The following may qualify for pioneer status:

• Production and processing ventures for agricultural and fishery products;

• Production and processing of raw materials for biofuels;

• Cultivation, and processing of crops for extraction of natural ingredients; and

• Biotechnology.

2. Commercial processing of agricultural/fishery products including their by-products and waste:

a. This covers the conversion of agricultural, fishery products, their by-products and wastes to a form ready for further processing or final consumption.

b. The production of refined sugar, cooking oil and rice should comply with the applicable provisions of the Philippine Food Fortification Act of 2000 (R.A. 8976); production of iodized salt should comply with the applicable provision of the ASIN law (R.A. 8172).

c. Processing of agricultural products should involve domestically produced raw or semi-processed agri-products.

d. Processing of traditional crops (rice, corn, sugar, coconut),agricultural by-products and wastes may not involve integration with own production or contract-growing arrangement;

e. Processing of agricultural products involving imported agricultural products (raw or semi-processed) may be allowed registration, provided that the finished/final product is for export, or the project qualifies for pioneer status. aHCSTD

f. The requirement for integration with own production or contract growing arrangement may not apply to fishery products.

3. Biofuels

a. Production of biofuel crops.

b. Processing of biofuel crops must be integrated with its own production/plantation or with contract growing arrangement.

 Production of biofuel crops in non-agricultural lands may qualify for pioneer status. Production of biofuel crops in agricultural lands currently used for food crops production shall not qualify for registration.

4. Feed milling, excluding those for game animals, fowls and other species for pet/pleasure purposes.

5. Production of organic fertilizer.

All agricultural and fishery production and processing activities/projects covered under the food production program of the Department of Agriculture (DA) may qualify for pioneer status. Other agricultural and fishery projects that cost at least the Philippine Peso equivalent of US$20 million may qualify for pioneer status.

B. Infrastructure

This covers the development of physical infrastructure (roads, bridges and tollways), power generation [using renewable, and other energy sources adopting environmentally-friendly technologies except oil-fired power generating plants, Small Power Utilities Group (SPUG), and privatized plants], mass housing (socialized and low-cost), bulk water supply (limited to projects that will supply waterless barangays), mass rail transport, pipeline projects for oil and gas, and projects under the Build-Operate-Transfer (BOT) Law.

This also covers logistics (passenger and cargo ship and air transports, ports/terminals, airports, warehousing, post harvest facilities, and logistics-related IT-enabled services) in government identified logistics hubs, and IT or IT-enabled services rendered to government agencies and Local Government Units (LGUs).

1. Physical infrastructure refers to the development (including rehabilitation, upgrading, and expansion) and/or operation of, tollroads, highways, railways, roads, and bridges Upgrading of existing physical infrastructure may be registered as a NEW project provided that the cost of upgrading already approximates at least 90% of the cost of constructing a new physical infrastructure, as certified by appropriate agency.

 If the cost of upgrading the physical infrastructure is less than 90% of the cost of constructing a new physical infrastructure, the project may be registered as a modernization activity but not entitled to ITH. ETDHSa

 Physical infrastructure projects costing at least the Philippine Peso equivalent of US$100 million may qualify for pioneer status.

 Projects that will involve the development and operation of physical infrastructure to be undertaken by separate entities, both the developer and operator may qualify for registration. However, the developer may be entitled only to incentive on capital equipment directly needed for the operation of the physical infrastructure.

2. Power generation projects as specified in the Power Development Plan that may qualify for registration are:

a. Those utilizing indigenous and renewable energy sources such as biomass, waste to energy conversion, solar, wind, geothermal, hydro and tidal;

b. Other energy sources adopting environmentally-friendly technologies except oil-fired power generating plants;

c. Power generation projects under Small Power Utilities Group (SPUG);and

d. Those under the National Power Corporation (NPC) privatization plan subject to Note A.11.

 Only income from sale of electricity generated from the plant shall be entitled to ITH. The following may qualify for pioneer status:

• Power generation projects using renewable energy sources; or

• Power projects that cost at least the Philippine Peso equivalent of US$1 million per megawatt.

 New power generation projects, applied during the effectivity of this IPP, to be undertaken by the same BOI-registered firm or an entity with the same stockholders or interlocking stockholders to the extent of 50% ownership shall be entitled to the diminishing ITH rate of exemption as follows: aIHCSA

1. First project — 100%

2. Succeeding projects — 5% reduction for every succeeding project but the rate of ITH exemption shall not be less than 70%.

3. Low-Cost and Socialized Mass Housing

 Low cost housing refers to a housing program for low and middle income groups substantially constructed by the private sector as a business venture.

 Socialized housing refers to a housing program or project covering houses and lots undertaken by the government or private sector for underprivileged and homeless citizens.

 The following are the qualifications for registration:

a. General requirements:

i) Low cost or socialized mass housing project as determined through the prevailing Housing and Urban Development Coordinating Council (HUDCC) Resolution on price/loan ceilings.

• Low cost housing projects must comply with the Balanced Housing Development requirement as provided for under RA 7279 (Urban Development and Housing Act or UDHA) whereby developers of proposed subdivision projects is required to develop an area for socialized housing equivalent to at least 20% of the total subdivision area or total subdivision project cost within the same city or municipality, whenever feasible. ISTCHE

• Land development components for housing sites must contain provisions for road system, drainage system, water supply system, power system, sewage system in conformity with the minimum design standards for B.P. 220 and provisions for amenities and utilities.

• Minimum of twenty (20) livable dwelling units in a single site or building.

• Project shall conform with the design standards set forth in the Rules and Regulations to Implement B.P. 220 and other related laws.

• Only new and expanding mass housing projects shall be considered for BOI registration.

• Only income derived from the registered expansion area/project shall be entitled to ITH.

b. Requirements for horizontal housing projects:

i) Mass housing projects must be located in areas zoned and classified for residential use/purposes in conformity with the approved Comprehensive Land Use Plan and Zoning of the concerned Local Government Unit (LGU).

ii) A project shall be considered as an expansion if it will locate adjacent or contiguous to an existing mass housing project owned by the same entity and shall share common facilities with the existing project. STaIHc

c. Requirements for vertical housing projects:

i) The cost of housing units of a medium rise housing (MRH) and highrise residential building shall not exceed the amount for socialized and low cost housing as set by HUDCC.

ii) At least 51% of the total floor area, excluding common facilities and parking areas, must be devoted to housing units.

iii) Projects that have already been completed and have incurred sales (booked sales) of housing packages shall, in general, not qualify for registration.

iv) Any of the following may be considered as an expansion project:

• Unfinished projects, the construction of which had stopped for at least one (1) year. Only the unsold units may qualify for registration;

• Conversion into low cost or socialized housing project of a building originally intended for commercial, office spaces, or exclusive condominiums; or

• Construction of additional floors or annexes intended for mass housing units.

v) Vertical housing projects are required to provide socialized housing equivalent to at least 20% of the total project cost.

vi) Entitlement to ITH shall be limited to revenues derived from housing units.

 There shall be no double availment of similar incentives for socialized housing projects that avail of incentives under RA 7279 or the Urban Development and Housing Act (UDHA).

 New vertical housing projects located in Metro Manila, applied during the effectivity of this IPP, to be undertaken by the same BOI-registered firm or an entity with the same stockholders or interlocking stockholders to the extent of 50% ownership shall be entitled to diminishing ITH rate of exemption as follows: HaIESC 

1. First project — 100%

2. Succeeding projects — 5% reduction for every succeeding project but the rate of ITH exemption shall not be less than 70%.

4. Bulk Water Supply

 This covers any kind of water supply sources except deepwells. The activity shall likewise ensure sustainable supply. Sustainable supply refers to a system which does not fail at any time unless there is force majeure or failure of the resource such as due to drought, excessive water table draw-down, streams drying up, etc.

 Bulk water supply activities shall be limited to supply of bulk water to "waterless" areas (defined as areas with less than 50% water supply coverage) as listed by the National Anti-Poverty Commission.

5. Mass Rail Transport system for passengers and cargoes, including light railway in line with the transport development plans and programs of the Department of Transportation and Communications (DOTC).

6. Pipeline Projects for Oil and Gas

 Application for registration on the establishment of infrastructure for transport of petroleum products and natural gas, petrochemical, and similar products, must include proof of filing of an application for Authority to Operate Pipeline System with the DOE.

7. Projects under the BOT Law

 Application for registration must include an endorsement from concerned government agency or corporation or LGU, a copy of supply contract, and other relevant supporting documents. AHaDSI

 In general, BOT projects with sovereign guarantee and/or government guaranteed rates of return are not entitled to ITH.

 BOT projects that cost at least PhP1.0 billion may be granted pioneer status for registration purposes only.

8. Logistics covers the following:

 This covers logistics (passenger and cargo ship and air transports, ports/terminals, airports, warehousing, post harvest facilities, and logistics-related IT-enabled services) in government identified logistics hubs, and IT-enabled services rendered to government agencies and Local Government Units (LGUs).

a. Passenger and Cargo Shipping

 This covers overseas, domestic, and RORO shipping, and terminal operations.

i) Domestic/inter-island shipping covers pure cargo vessel, passenger carrying vessel, and passenger-cargo vessel operations including Roll-On/Roll-Off Terminal System (RRTS) operations.

 The following are the qualifications for registration:

• Vessels must not be more than fifteen (15) years old.

• Tankers must be double-hulled and not more than ten (10) years old.

• High-speed passenger crafts must not be more than five (5) years old.

• Vessels other than hi-speed crafts and tankers must be at least 200 tons gross tonnage.

• RORO vessels must be at least 250 tons gross tonnage for those serving primary routes and at least 100 tons gross tonnage for those serving the secondary, tertiary and developmental routes.

• Lease or charter of foreign-owned vessel with option to purchase may be allowed.

• Pure lease or bareboat charter may be allowed provided that the lease contract is for a minimum of five (5) years subject to the provisions of EO 438, as amended; Provided further, that the lease may be renewed on a yearly basis.

 The following may qualify for pioneer status:

• RORO operator/enterprise serving the secondary, tertiary or developmental routes, as indicated in the Certificate of Public Convenience (CPC). ESTAIH

• Projects with the following minimum cost based on the ship type involved in the project:

Ship Type involved in the Project	Minimum Cost per Vessel *
	(the Philippine Peso equivalent of)
Passenger-Cargo Vessel or	US$ 10 million
RORO/Passenger Vessel
Cargo Ship and Tanker	US$6 million
High-Speed Craft	US$4 million

b. Overseas shipping

 The following are the qualifications for registration:

• MARINA accredited Philippine shipping enterprise.

• Vessels must be currently registered under the Philippine Flag.

• Vessels must be at least 500 tons gross tonnage and must not be more than fifteen (15) years old.

• Foreign owned vessels covered by lease purchase agreement may be allowed.

 The following may qualify for pioneer status:

• Projects that cost at least the Philippine Peso equivalent of US$15 million per vessel.

• Acquisition of brand new vessels.

 Acquisition of additional vessel/s may be registered as new project.

 New shipping projects, other than overseas shipping and those serving the nautical highways and missionary routes, applied during the effectivity of this IPP, to be undertaken by the same BOI-registered firm or an entity with the same stockholders or interlocking stockholders to the extent of 50% ownership shall be entitled to diminishing ITH rate of exemption as follows: cHCIEA

1. First project — 100%

2. Succeeding projects — 5% reduction for every succeeding project but the rate of ITH exemption shall not be less than 70%.

 All applications for registration must be endorsed by the MARINA. Vessels for tourism purposes must also be endorsed by the Department of Tourism (DOT).Prior to start of commercial operation of each vessel, the registered enterprise must submit a Certificate of Seaworthiness issued by MARINA.

c. Passenger and Cargo Air Transport

 Air transport operation includes passenger and/or cargo operation classified as a public utility.

 Lease with option to purchase the aircraft may be allowed.

 Pure lease may be allowed provided that the lease contract is for a minimum of five (5) years; Provided further, that the lease may be renewed on a yearly basis.

 Acquisition of additional aircraft/s may be registered as new project.

 New air transport projects, other than those serving the missionary routes, applied during the effectivity of this IPP, to be undertaken by the same BOI-registered firm or an entity with the same stockholders or interlocking stockholders to the extent of 50% ownership shall be entitled to diminishing ITH rate of exemption as follows: AcISTE

1. First project — 100%

2. Succeeding projects — 5% reduction for every succeeding project but the rate of ITH exemption shall not be less than 70%.

 The following may qualify for pioneer status:

• Serving the missionary/developmental routes, as indicated in the Certificate of Public Convenience and Necessity (CPCN);or

• Air transport projects involving purchase/lease-purchase of brand new aircraft. For lease-purchase, the option to purchase should be exercised before the end of the 4th year of ITH availment.

d. Ports/Terminals

 This covers development and operation of airports, seaports and terminals in government identified logistics hubs.

i) Development and operation of airports

• Must be endorsed by the Air Transportation Office (ATO).

ii) Development and operation of seaports

• Must be endorsed by the Philippine Ports Authority (PPA).

iii) Passenger/Intermodal Terminals

 The following are the qualifications for registration:

• Must have new facilities with parking, comfort rooms, ticketing and reservation office, air-conditioned waiting area and provide shuttle services; and DTEcSa

• Caters to shipping lines or airlines and/or different land transportation systems (rail system, buses, taxis, etc.).

iv) Cargo Terminals/Container Yards

  Must have a system of ingress and egress to prevent traffic buildup/obstruction of thoroughfares on a 24-hour basis as certified by the appropriate DOTC/MMDA traffic management office

e. Warehousing

 This covers establishment of warehouses complete with state-of-the-art facilities.

f. Post Harvest Facilities include cold storage/blast freezing cold chain system, grains handling and storage facilities.

g. IT-Enabled Logistics Services

 This covers the provision of logistics services employing IT-enabled system such as e-procurement, GPS tracking system, etc.

h. IT Services Rendered to Government Agencies and LGUs

 This covers contact center, business/knowledge process outsourcing, software development, animation, data transcription, engineering design, and ICT support services.

 Registration shall be on a per contract basis.

 All ICT projects shall install internal security system compliant with BS 7799 or its equivalent.

 The following may qualify for pioneer status:

• Physical infrastructure, airports, seaports, and rail transport projects costing at least the Philippine Peso equivalent of US$100 million. TIESCA

• Other infrastructure and logistics projects that cost at least PhP1.0 billion.

C. Tourism

This covers the establishment of tourist accommodation facilities, resorts, retirement villages and medical tourism (including the production of healthcare and wellness products).Revenues from golf courses and casinos are not entitled to ITH.

1. Tourist accommodation facilities covers the following:

a. Hotels, apartels/serviced residence, condotels, tourist inns, and pension houses as classified and endorsed by DOT

 Qualification for registration:

i) For hotel projects located within Metro Manila, project cost, excluding cost of land, must be at least the Philippine Peso equivalent of US$20,000/room.

ii) Condotel/Apartel/Serviced Residence

• 100% of the total number of units/rooms per building must cater to tourists/guests

• Each unit must have fully equipped kitchen and laundry facilities.

 The following may qualify for pioneer status:

• Hotel projects costing at least the Philippine Peso equivalent of US$100,000/room. This is also applicable to Condotel/Apartel/Serviced Residence provided that 100% of the building is utilized similar to hotel operations or as purely accommodation facility; AHCaES

• Projects locating in LDAs; or

• Modernization projects (that are considered as expansion projects) with a project cost of at least the Philippine Peso equivalent of US$10,000/room.

b. Resorts that include special interest activities (that may or may not have accommodation facilities) such as but not limited to eco-tourism, agri-tourism, theme parks, conventions and exhibition/trade.

i. Eco-tourism projects or those involving environmentally sound tourism activities, which blend with the natural and cultural environment in a given eco-system/specific locality.  

ii. Agri-tourism projects or those involving working farms where the working environment forms part of the tourism project and promotes an appreciation of local culture, heritage and traditions through personal contact with people and maximize the potentials of income generation of existing farms through tourism-related activities. SCEHaD

 The following may qualify for pioneer status:

• Projects locating outside Metro Manila must have project cost of at least the Philippine Peso equivalent of US$10.0 million;

• Projects located in Metro Manila must have project cost of at least the Philippine Peso equivalent of US$20 million;

• Projects locating in LDA must have project cost of at least the Philippine Peso equivalent of US$ 5.0 million/project; or

• Agricultural and ecological tourism projects with a minimum lot area of fifty (50) hectares.

 Application for registration shall be endorsed by the Department of Tourism. (Note: applicable to all activities under Item 1)

2. Retirement Village

This refers to areas suitable for development that will ensure healthful, safe and environmentally-sound community life with prescribed carrying capacities of village facilities and activities such as but not limited to accommodation, food, recreation, medical/health care needs, security and other amenities/facilities, and provided with roads, power and water supply systems, drainage and sewerage systems and other infrastructures. The village should be under a unified and continuous management. The following are the qualifications for registration: HDacIT

• A retirement village must have a minimum of four (4) hectares of contiguous land; and,

• Project cost must be at least the Philippine Peso equivalent of US$10 million.

Locators inside the retirement villages/parks such as retirement centers/condominiums or those engaged in the activities listed in the IPP that are related to retirement business may be registered as separate activity.

Retirement villages with a minimum area of twenty (20) hectares may qualify for pioneer status.

3. Healthcare and Wellness Products and Services

a. Hospital/Medical Services

 This covers tertiary care hospitals and specialized services as endorsed by the Department of Tourism (DOT).

• "Tertiary care hospital" is a teaching and training hospital that provides clinical care and management on the prevalent diseases in the locality as well as specialized and sub-specialized forms of treatment, surgical procedure and intensive care.

• "Specialized services" refers to focused expertise on certain types of services mostly with low patient numbers, and need critical mass of patients to make treatment centers cost effective. Services generally include training of specialist staff, high quality research programs and use of scarce resources like expertise, high technology equipment and donated organs. TaCSAD

 Prior to availment of ITH, hospitals classified for 'medical tourism' must be accredited by the Department of Tourism (DOT).

 The following may qualify for pioneer status:

• Tertiary hospitals with a minimum capacity of 100 beds or with investment cost of at least the Philippine Peso equivalent of US$10 million.

• Specialized services with project cost of at least the Philippine Peso equivalent of US$10 million.

b. Ambulatory Surgical Services

 This covers services such as elective (non-emergency) surgical procedures ranging from minor to major operations, where patients are discharged within the day for continuing post-operative care. This includes comprehensive ophthalmologic, dermatologic, cosmetic, and reconstructive surgeries, etc. Applications for registration must be endorsed by the DOT.

 Projects that cost at least the Philippine Peso equivalent of US$2.0 million may qualify for pioneer status.

c. Dental Services

 This covers the establishment of a dental services facility offering both regular and specialized dental services such as orthodontic procedures, dental implants and cosmetic dentistry.

 Projects that cost at the least the Philippine Peso equivalent of US$1.0 million may qualify for pioneer status.

d. Other Human Health and Wellness Services including Rehabilitation and Recuperation Services

 This covers the following:

• Health spa

 The following are the qualifications for registration:

o The activity must be either a 'destination spa' or a 'resort/hotel spa' category based on DOT accreditation and classification.

o Must be endorsed by the DOT.

 "Destination spa" or "resort/hotel spa" projects that will apply "hilot" or any indigenous Filipino healing modality as endorsed by the DOT may qualify for pioneer status.

• Rehabilitation and Recuperation Services

 To qualify for registration, it must have a minimum investment of US$1 Million, excluding the cost of land.

4. Healthcare and Wellness Products

This covers the manufacture of drugs and medicines in accordance with the Philippine National Drug Formulary (PNDF), food supplements limited to Vitamin A, iron and iodine compounds either mixed, coated or incorporated in appropriate medium added to flour, rice, sugar, oil as required by Food Fortification Law (RA 8976) and salt as required by ASIN Law (R.A. 8172), herbal medicines, and active substances of these drugs. EIcSTD

Prior to availment of ITH, the firm shall submit a License to Operate (LTO) issued by BFAD.

The production of generic drugs and medicines is strongly encouraged.

Projects that cost at least the Philippine Peso equivalent of US$20 million may qualify for pioneer status.

D. Research and Development

This covers commercial and in-house R & D activities, and the establishment of Centers of Excellence, innovation, and skills development training institutions.

This also covers establishment of Centers of Excellence and training institutions specializing in developing skills for manufacturing, agriculture/agribusiness, fishery, mining, tourism infrastructure, information technology (IT),services (including the training of maintenance personnel, complying with international standards and the development of environmental sustainable disciplines, i.e., pollution control officers/managers, environmental auditors).

1. Commercial/Contract R & D

 Commercial/contract R & D refers to R & D activities done for external clients.

 Application for registration shall be endorsed by the Department of Science and Technology (DOST) or the relevant agency concerned.

2. Center of Excellence (COE) shall serve as venue for at least two (2) of the following activities:

a. Innovation and skills development through the provision of training facilities and programs.

 The COE shall offer continuing education for purposes of acquiring new skills and/or providing advanced training in the area of excellence it is in. This may involve the establishment of specialized schools, finishing schools and schools offering bridging courses/programs. Only the courses/trainings/programs catering to the activities or created in support of the activities listed in the IPP, except those identified to be not applicable to COE, may qualify for registration and may be granted incentives. ESTAIH

 The course offered by COE shall be accredited either by CHED (for academic institutions) or by TESDA or other appropriate accrediting bodies (for occupational skills).

b. Research and development and other productivity enhancement activities;

c. Technology scanning, selection and adoption;

d. Incubation program; or

e. Common service facilities.

3. Training/Learning Institutions cover those key employment generators (KEGs) identified by the Department of Labor and Employment (DOLE) and those specializing in developing skills for the manufacturing, agriculture/agribusiness, fishery, mining, tourism, infrastructure, creative industries, and service (including the training of maintenance personnel, seafarers complying with international standards and the development of environmental/sustainable disciplines — i.e.; pollution control officers/managers, environmental management auditors) sectors. Following are the requirements for registration:

a. The curriculum must be endorsed by the appropriate industry association and approved by either the Technical Education and Skills Development Authority (TESDA) for training courses or Commission on Higher Education (CHED) for degree courses or other appropriate government agencies.

b. The registered education/training/learning institutions must provide training laboratories and equipment, if applicable. IcTEaC

E. Engineered Products

This covers shipbuilding, manufacture of machinery and equipment, including their parts and components, basic iron and steel products, long steel products (billets and reinforcing steel bars),and flat hot-/cold-rolled products integrated with basic iron and steel production; and the manufacture of parts and components of motor vehicles, and assembly or manufacture of motor vehicles under the Motor Vehicle Development Program provided there is investment in the production of major parts and/or components.

1. Shipbuilding

 This covers shipbuilding, ship repair and shipyard operations (excluding shipbreaking).

a. Shipbuilding refers to the design, construction, outfitting and launching of any type of ship.

b. Ship Repair refers to the conversion, overhaul, alteration, modification or repair of hull, machinery, equipment, outfits and components of any type of ship. DAETHc

 Prior to start of commercial operation, the registered enterprise must submit a License to Operate from the Maritime Industry Authority (MARINA).

 Any of the following may qualify for pioneer status:

• Shipyard operation with a minimum berthing capacity of 7,500 DWT;

• Shipbuilding with a minimum lifting capacity of 20,000 DWT; or

• Project cost of at least the Philippine Peso equivalent of US$10 million.

2. Manufacture of Machinery and Equipment

 This covers the manufacture of machinery and equipment including its parts and components.

 Mere assembly (screwdriver assembly) of machinery and equipment shall not qualify for registration. 

 Project cost of at least the Philippine Peso equivalent of US$20 million may qualify for pioneer status.

3. Iron and Steel

 This covers basic iron and steel products, long steel products (billets and reinforcing steel bars),and flat hot-/cold-rolled products integrated with basic iron and steel production. AIaDcH

a. Basic Iron and Steel Products

• Refined iron ore, e.g., pig iron, hot briquetted iron (HBI),direct reduction iron (DRI).

• Primary steel products in the form of slabs.

b. Long Steel Products

• Billets.

• Reinforcing steel bars.

c. Flat hot-/cold-rolled products integrated with basic iron and steel production

• Intermediate steel products such as hot-rolled flat products or down to cold-rolled flat products may qualify for registration provided the operations are integrated with an upstream facility (slab-making or up to iron-making).

 Modernization must result in any of the following:

• At least ninety six percent (96%) yield for long products;

• At least ninety eight percent (98%) yield for flat products; or

• At least five percent (5%) reduction in energy usage.

 ITH for modernization projects shall be limited to those involving the manufacture of long steel products (billets and reinforcing steel bars) only.

 Prior to availment of ITH, the registered enterprise must submit the following:

• Certification from the Bureau of Product Standards (BPS) that it is a PS licensee of good standing where the products are covered by product standards or Philippine National Standards (PNS). aCcHEI

4. Manufacture of Parts and Components of Motor Vehicles

 Projects complying with any of the following may qualify for Pioneer status:

• Manufacture of transmission/engines;

• Manufacture of tool & die to produce chassis and engine; or

• Common facility for forging/metal stamping of motor vehicle parts and components

5. Manufacture/Assembly of Motor Vehicles

 This covers the assembly or manufacture of motor vehicles under the Motor Vehicle Development Program provided there is investment in the production of major parts and components.

 Qualification for registration:

a. Must be registered participants of good standing under the Motor Vehicle Development Program and must invest in the production of major parts and components such as engine, transmission, power train, differential, body, motorcycle frame, fuel, tank, swing arm, plastic injection parts and die cast products.

b. Existing MVDP participants must have minimum additional investments of Philippine Peso equivalent of US$5 million for passenger cars and commercial vehicles, and US$2 million for motorcycles. cEAHSC

c. New assemblers must comply with the minimum investment requirement under E.O. 156 plus the additional minimum investment requirement under No. 2 above.

 Investments in parts and components manufacturing shall be in any of the following schemes:

• Equity investment, either minor or major stockholdings in new or existing motor vehicle parts manufacturing company; or

• Investments in in-house motor vehicle parts manufacturing; or

• Cost-sharing schemes with existing motor vehicle parts manufacturing companies in terms of tooling and/or modernization/upgrade of facilities; or

• Participation under the DTI's SME Assistance Program (Center Satellite Program for SME Guarantee and Facility);or EaISTD

• Other investments that BOI may consider for the development of the motor vehicle industry.

 Projects complying with any of the following may qualify for pioneer status:

a. At least US$50 million (for Passenger Cars and Commercial Vehicles) and US$4 million (for motorcycles) new investments, which may include acquisition of existing assets or facilities.

b. Exports at least 10,000 units (for Passenger Cars and Commercial Vehicle);30,000 units (for motorcycle) and 500 units (for buses) per annum of completely-built-up (CBU) motor vehicles.

c. At least US$20 million (for Passenger Cars, Commercial Vehicles and Buses) and US$1 million (for motorcycles) incremental investments for Modernization/Expansion projects.

d. Manufacture of generic vehicles that are designed/suited for Asian market. Generic vehicles are those produced using a common platform such as but not limited to chassis; and should have the following features:

• Vehicle model/variant should be produced in the Philippines and at least one other ASEAN country;

• There should be resource sharing/pooling or industrial complementation of parts and components among countries that produce the model. TcaAID

e. Manufacture/assembly of brand new three or four-wheel Philippine utility vehicles for cargos and/or passengers.

f. Manufacture of alternative fuel vehicle

• Alternative fuel vehicle covers the manufacture of the following brand new vehicles powered by alternative sources, as classified accordingly under Section 1 of Article 1 of EO 156 (passenger cars, commercial vehicles and motorcycles):

o Hybrid vehicles — vehicles that run on electric batteries and gasoline/diesel/other fuels;

o Electric Vehicles — vehicles that run solely on electric power;

o Flexible-fuel vehicles — vehicles that run on gasoline/diesel in combination with alternative fuel such as but not limited to:

— Bioethanol vehicles that run on gasoline and a minimum ethanol content/blend of at least 20%

— Biodiesel vehicles that run on a diesel and a minimum biodiesel blend/content of at least 10% ITScAE

o Compressed Natural Gas Vehicles — vehicles that run on Compressed Natural Gas (CNG)

F. Strategic Activities

This covers activities with a minimum project investment cost of the peso equivalent of US$300 million and complied with either of the following:

a. Employment generation of at least 1,000; or

b. Use of internationally accepted high level of technology.

This also covers major projects of global companies intended to be located only in one country as a regional hub where the Philippines is one of the short-listed countries for investment location.

A global company is one that has manufacturing and/or services operations in at least two (2) countries.

The BOI, for reasons of public health or morals, may deny applications for registration.

Projects under Strategic Activities will be approved upon determination by the Board in consultation with the DOF, NEDA and other appropriate agencies.

II. MANDATORY INCLUSIONS

A. Tree Plantation under RD. 705

This covers extensive plantation of forest land of tree crops (except fruit trees) for commercial and industrial purposes.

Tree crops include timber and non-timber species such as rubber, bamboo, rattan, etc. (excluding fruit trees) for commercial and industrial purposes.

New project refers to the development of any public or private land to plantation of timber and non-timber producing species to supply the raw material requirements of forest-based industries. It also includes plantation with existing tree crops, which have not yet reached commercial harvest. HICATc

Each Industrial Tree Plantation (ITP) project must have an approved and issued forest management/development agreements such as:

• Socialized Industrial Forest Management Agreement (SIFMA)

• Integrated Forest Management Agreement (IFMA)

• Private Forest Development Agreement (PFDA)

• Community-based Forest Management Agreement (CBFMA)

ITP projects, in general, are not entitled to ITH.

B. Exploration, Mining, Quarrying and Processing of Minerals under R.A. 7942

This covers the exploration, development and utilization of mineral resources.

1. Exploration of mineral resources including those covered by mineral agreements may qualify for pioneer status.

 Note: Not entitled to Income Tax Holiday (ITH).

2. Mining, quarrying and/or processing of metallic and non-metallic minerals (except those involving riverbed operations, cave mining and beach mining) ESHcTD

 The parameters for entitlement to ITH are any of the following:

a. Mining, quarrying and/or mineral processing

• The mining and/or mineral processing projects require a process or technology other than the normal or usual processes or technology to mine and/or process the minerals, without which, the resource will not be developed or the mining activity will not be possibly undertaken;

• For copper and gold project, a hurdle on the magnitude of investments equivalent to US$50 million for gold and US$300 million for copper;

• For nickel, chromite and iron projects, an additional processing step that will add further value to the mineral end product is required (e.g., ferronickel, mixed sulfites, nickel pig iron, ferrochrome, refractory bricks);

• For all projects, there should be a mine life of at least ten (10) years. CHTAIc

b. Non-metallic mineral activity must support a downstream industry, e.g., clay for ceramic manufacturing, silica for glass manufacturing.

c. Mining and processing of aggregates is not entitled to ITH. Mining and quarrying of marble and other dimension stones are not entitled to ITH.

d. Marble and/or other dimension stones processing projects, whether or not integrated with mining and quarrying, must export at least fifty percent (50%) of production, if Filipino-owned or at least seventy percent (70%),if foreign-owned.

e. Mineral processing projects must locate outside the National Capital Region.

All projects must have the necessary permits/licenses from competent authorities.

C. Printing, Publication and Content Development of Books or Textbooks

This covers printing, re-printing, publication and content development of books or textbooks.

This covers the following activities:

1. Publication of books and textbooks

2. Printing of books and textbooks

3. Reprinting of books and textbooks

4. Content development of books

Book is defined as a printed non-periodical publication of at least forty-eight (48) pages, exclusive of cover pages, published in the country and made available to the public. Textbook is an exposition of generally accepted principles in one subject, intended primarily as a basis of instruction in a classroom or pupil-book-teacher situation. aTcIAS

Content development of books consists of the following:

a. Development of new technologies directly related to book printing or publishing, such as but not limited to digitization, electronic books (E-books),Internet-based archiving and retrieval systems, electronic content creation and development systems, educational and/or "how-to" audio-visual presentations with or without interactive segments, and the like; and

b. Research and development activities directly related to book printing or publishing, such but not limited to translation, editing, analysis and/or interpretation of text and materials into local dialects or adaptation/application to the domestic setting.

Application for registration shall be on a per book or title basis and must be endorsed by the National Book Development Board (NBDB).

D. Refining, Storage, Distribution and Marketing of Petroleum Products1

This covers refining, 2 storage, distribution, and marketing of petroleum products.

a. Oil refining refers to the manufacture of all petroleum products as defined under RA 8479 through distillation, conversion and treatment of crude oil and other naturally occurring petroleum hydrocarbons. This may include expansion, modification and modernization of a refinery, resulting in an increase in existing volume of production, and/or improvement in the quality of petroleum products in conformance with the Philippine National Standards (PNS), the Clean Air Act, and other applicable laws and regulation. IcESaA

b. Storage refers to the business of receiving/discharging and storing petroleum crudes and/or products of others for compensation or profit.

c. Distribution refers to bunkering and fuels shipping and transport. Fuels shipping and transport cover shipping and transport through land such as tank trucks, lorries and pipeline and tankers, and barges for the fuels to get to the points or areas where they are needed. Bunkering covers the activity of selling fuel for direct use by a vessel, usually for water and air transport, through a smaller transport vessel.

 Distribution projects are limited to those utilizing brand new equipment and double-hulled vessels.

d. Marketing covers the following:

å Retailing of petroleum products refers to selling of petroleum products or fuels in retail generally directed to the end users, through dispensing pumps in gasoline stations or in packaged containers such as drums for the liquid fuels or metal cylinders for LPG that are compliant with Philippine National Standards (PNS).This includes the establishment and operation of gasoline stations and LPG retailing.

 For gasoline retailing stations, except those locating in Less Developed Areas (LDAs) listed in this IPP, the applicant shall be required to invest a minimum capital of PhP10 million per station, excluding land, or such amount as may be determined jointly by BOI and DOE for augmentation purposes, as the need arises; Provided, that foreign retailers shall comply with the requirements provided under RA 8762, otherwise known as the Retail Trade Liberalization Law, and its implementing rules and regulations.

• Fuels bulk marketing covers the selling of petroleum products or fuels in wholesale through tank trucks, lorries, double-hulled vessels/tankers, barges or pipelines, which may be sourced from one's own storage facilities. Investment shall include underground tanks and other equipment intended for fuels retailing through outlets such as gasoline stations and LPG outlets. aTIEcA

• LPG refilling and marketing — A combination of storage, distribution, and marketing activities may also be eligible for registration. For storage, marketing and distribution, only investments of new industry participants may be entitled to incentives. The applicant shall submit an endorsement from the Department of Energy certifying that the applicant is a new industry participant with new investments.

Projects registered under R.A. 8479 are entitled to the incentives provided therein.

Refinery projects, in general, may be entitled to ITH under E.O. 226. Blending alone, within or outside the refinery, may only be entitled to capital equipment and other non-fiscal incentives. Projects involving storage, marketing and distribution of petroleum products may be entitled to ITH when located in government identified logistics hubs, LDAs or 30 poorest provinces; otherwise, projects will only be entitled to capital equipment and other non-fiscal incentives under E.O. 226.

E. Solid Waste Management under R.A. 9003

This covers the establishment of waste recycling facilities. 2

Recycling or Treatment Facility integrated with Manufacturing Facility to produce semi-finished or finished product using as inputs 100% locally generated solid waste materials or scraps.

Recycling refers to the treating of used or waste (i.e., biodegradable, non-biodegradable, recyclable, special and residual) materials through a process of making them suitable for beneficial use and for other purposes, and includes any process by which solid waste materials are transformed into new products in such a manner that the original products may lose their identity, and which may be used as raw materials for the production of other goods or services. cIDHSC

F. Clean Water Act under R.A. 9275

This covers the establishment of industrial wastewater treatment facilities, and sewage collection integrated with treatment facilities 2 and the adoption of water pollution control technology, cleaner production and waste minimization.

1. Application for registration shall be accompanied by the following documentary requirements depending on the type of project:

	Type of Project		Documentary Requirement
a.	Industrial wastewater	•	Environmental Compliance Certificate
	treatment facilities		(ECC) or a Certification from the
			DENR-EMB or LLDA (for projects
			located in areas identified by LLDA)
			that the enterprise has filed an ECC
b.	Sewage collection integrated	•	Environmental Compliance Certificate
	with treatment facilities		(ECC) or a Certification from the
			DENR-EMB or LLDA (for projects
			located in areas identified by LLDA)
			that the enterprise has filed an ECC;
			and
		•	Authorization from an appropriate
			government agency or local
			government unit that the enterprise is
			allowed to engage in such project.
c.	Projects adopting water	•	Certification from the DENR-EMB or
	pollution control technology,		LLDA (for projects located in areas
	cleaner production and waste		identified by LLDA) that the project
	minimization		will enable the enterprise to comply
			with applicable effluent standards, or
			as the case may be, allow the
			achievement of at least 20% better
			than effluent standards for enterprise
			that is already in compliance prior to
			its application for registration

2. Private entities that are engaged in sewage collection and treatment facilities is a proponent of infrastructure or development projects for introduction of facilities for sewerage, drainage, or other form of technology for pollution control, waste management and treatment. In case an infrastructure or a development facility's operation requires a public utility franchise, the facility operator must be a Filipino corporation and must be responsible for all aspects of operation and maintenance of the facility and must have an adequate financial base to implement the same.

3. Clean Water Act projects undertaken by the private sector with local government units under the BOT Scheme may be registered in accordance with the guidelines set forth under the DOT Law projects of this 2008 IPP.

4. Industrial wastewater treatment facilities and sewage collection integrated with treatment facilities may be entitled to ITH except those with sovereign guarantee or guaranteed rate of return.

5. Projects adopting water pollution control technology, cleaner production and waste minimization are only entitled to capital equipment incentive. TSHcIa

6. Projects that will employ new or proprietary technologies shall submit an Environmental Technology Verification (ETV) issued by the DOST.

7. Activities such as 5S and Good Housekeeping are not qualified for registration.

G. Rehabilitation, Self-Development and Self-Reliance of Disabled Persons under R.A. 7277

This covers the manufacture of technical aids and appliances for the use and/or rehabilitation of disabled persons, and the establishment of special schools, homes, residential communities or retirement villages solely to suit the needs and requirements of persons with disability. Disabled Persons are those suffering from restriction or different abilities, as result of a mental, physical or sensory impairment, to perform an activity in the manner or within the range considered normal for a human being.

Manufacturing of technical aids and appliances used by disabled persons includes but not limited to the following:

• Walk-in baths designed for people with disabilities

• Commode chairs

• Braille books

• Hoists and lifting chairs designed for incapacitated people, including stair lifts.

• Wheelchairs, scooters and automobiles using special controls or assistive technology designed for people with disabilities

• Hearing-aids

• Artificial limbs, orthotics, prosthetics and orthopedic braces

• Automatic/mechanical lifts to be attached to motor vehicles

Application for registration must include an endorsement from the Department of Social Welfare and Development (DSWD). CTEDSI

III. EXPORT ACTIVITIES

This covers the production/manufacture of non-traditional export products and services in support of exporters as identified under the Medium-Term Philippine Development Plan (MTPDP) 2004-2010 and/or the updated Philippine Export Development Plan (PEDP).

A. Production and Manufacture of Export Products

This covers the production/manufacture of non-traditional export products and-with export requirement of at least 50% of its output, if Filipino-owned or at least 70%,if foreign-owned. Non-traditional products include but not limited to electronics, garments and textile, footwear and leather goods, furniture, jewelry, marine and aquaculture, and others.

B. Export Services

This covers service activities rendered to clients abroad and paid for in foreign currency with export requirement of at least 50% of its revenue, if Filipino-owned or at least 70%,if foreign-owned.

For IT and IT-enabled services activities such as contact center, business/knowledge processing, software development, animation, data transcription, engineering design, and ICT support services.

1. Contact Center

 A contact center project must have a minimum investment cost of Philippine Peso equivalent of US$2,500 per seat to qualify for registration. This amount covers the cost of equipment (hardware and software),office furniture and fixture, building improvements and renovation, and other fixed assets except land, building and working capital. SEHTAC

∑ If equipment used were leased, the same should be converted to assets in terms of commercial interest rates and amortized over a five-year period.

∑ If equipment were consigned, the same should have an assigned value to be considered part of project cost.

2. Business/Knowledge processing

3. Software Development

4. Animation

5. Data Transcription

6. Engineering Design

7. ICT Support Activities except internet/cyber cafes

The following may qualify for pioneer status:

• Introduces a major innovation in technology; or

• With project cost of at least the Philippine Peso equivalent of US$5.0 million (excluding cost of land and building) to be put up during the first year of operations.

All ICT projects shall install internal security system compliant with BS 7799 or its equivalent.

C. Activities in Support to Exporters

This covers:

1. Sub-assembly/fabrication of parts/components of the final export product supplied to exporters located in export processing/economic zones/Freeports or to exporters operating Bonded Manufacturing Warehouse (BMW);

2. Manufacture of supplies directly/reasonably needed in the production of non-traditional export products to exporters located in export processing/economic zones/Freeports or to exporters operating BMW; DIAcTE

3. Services comprising a portion of the manufacturing process;

4. Product testing and inspection;

5. Repair and maintenance; and

6. Logistics services rendered to exporters. Entitled to capital equipment incentives only.

These General Policies and Specific Guidelines shall take effect immediately after its publication.

(SGD.) LUCITA P. REYESExecutive DirectorBoard of InvestmentsDepartment of Trade and Industry

Footnotes

1. Entitled to Income Tax Holiday if registered under RA 8479 (Downstream Oil Industry Deregulation Act).

2. May be entitled to Income Tax Holiday.

* Covers acquisition and refurbishing costs only.

Published in The Philippine Star on June 2, 2008.