T itle iii incentives to registered enterprises a

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TITLEIIIIncentives to Registered EnterprisesARTICLE39.Incentives to Registered Enterprises.All registeredenterprises shall be granted the following incentives to the extent engaged in apreferred area of investment:casia(a)Income Tax Holiday. —(1)For six (6) years from commercial operation for pioneer firmsand four (4) years for non-pioneer firms, new registered firmsshall be fully exempt from income taxes levied by the nationalgovernment. Subject to such guidelines as may be prescribedbythe Board, the income tax exemption will be extended foranother year in each of the following cases:(i)The project meets the prescribed ratio of capitalequipment to number of workers set by the Board;(ii)Utilization of indigenous raw materials at rates set by theBoard;(iii)The net foreign exchange savings or earnings amount toat least US$500,000 annually during the first three (3)years of operation.cdtThe preceding paragraph notwithstanding, no registered pioneerfirm may avail of this incentive for a period exceeding eight (8)years.(2)For a period of three (3) years from commercial operation,registered expanding firms shall be entitled to an exemptionfrom income taxes levied by the national governmentproportionate to their expansion under such terms andconditions as the Board may determine:Provided, however,That during the period within which this incentive is availed ofby the expanding firm it shall not be entitled to additional
Copyright 2016 CD Technologies Asia, Inc. and Accesslaw, Inc.Philippine Taxation Encyclopedia First Release 201613deduction for incremental labor expense.(3)The provision of Article 7(14) notwithstanding, registered firmsshall not be entitled to any extension of this incentive.(b)Additional Deduction for Labor Expense. —For the first five (5) yearsfrom registration a registered enterprise shall be allowed an additional deductionfrom the taxable income of fifty percent (50%) of the wages corresponding to theincrement in thenumber of direct labor for skilled and unskilled workers if theproject meets the prescribed ratio of capital equipment to number of workers set bythe Board:Provided,That this additional deduction shall be doubled if the activityis located in less developed areas as defined in Article 40.cd i(c)(d)(e)(f)Unrestricted Use of Consigned Equipment.Provisions of existinglaws notwithstanding, machinery, equipment and spare parts consigned to anyenterprise shall not be subject to restrictions as to period of use of such machinery,equipment and spare parts:Provided,That the appropriate re-export bond is postedunless importation is otherwise covered under subsections (c) and (1) of thisArticle:Provided, further,That such consigned equipment shall be for theexclusive use of the registered enterprise.

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