BOI defines rules on ownership ratio

Title

Language

English

Source

Business Day Special Report March 27, 1974

Year

1974

Rights

In Copyright - Educational Use Permitted

Fulltext

March 27, 1974 Business Day Page 19 Secs. 52 & 55, Public Aoi No. 4003 Issuance of license to take hawksblll turtle; transfer or assignment of right; Issuance of special permit. ibid. ibid BOI defines rules on ownership ratio a. Sec. 63, Public Act No. 4003, as amended by C.A. 471. Issuance of fishpond and fishery permit or lease agreement within forest lands. Same as provided for In Sec. 1, Public Act No. 3674, lupra. Same as provided for In Sec. 1, Public Act No. 3674. supra. 9. Sec. 67, Public Act No. 4003, as amended by C.A. 471. Granting of exclusive privilege by municipal councils to erect fish corrals, or operate fishponds, or take or catch "bangus” fry, or fry or other species for propagation; transfer or assignment of right. Grantee must be Filipino citizen. Grantee must have at least 61 per cent Filipino capital. 10.Sec. 74, Public Act No. 4003 Authorizing the sale of any land or portion thereof, owned by reserved for or occupied by Sale or exchange limited to Filipino and American citizens. any fishery farm, experimental station or fishery project for exchange thereof with any site Sale or exchange limited to corporations or associations with at least 61 per cent Filipino or American capital. x private ownership. GEOTHERMAL ENERGY Rep. Act No. 5092 Granting of permits and/or leases for exploration, tapping and utilization of geothermal Leasee or permittee must be Leasee or permittee must have at least 60 per cent Filipino capital. GOVERNMENT CONTRACTS 1. Public Act 4239 Awarding of contracts for the construction of public works. Awardee must be citizen of the Phil, or the U.S. or of any other country granting similar rights to Filipino or American citizens. Awardee must have at least 70 per cent Filipino or American capital. 2. Rep. Act No. 5183, Sec. 4 Awarding of contracts for the supply to, or procurement by, any government-owned or Limited to Filipino citizens. controlled corporation of Sixty per cent of the capital stock must be owned by Filipino citizens. commodities. 3. Com. Act No. 138 (Flag Law) Regulating the purchase of equipment and supplies for government offices and entitles; giving preference to articles produced In the Philippines or In the US. Preference In award of blds given to Filipino or American citizens. Preference In awards of blds given to corps, or commercial companies with at least 75 per cent Filipino or American capital. 4. Com. Act No. 541 Preference In awarding of contracts for the construction or repairs of public works, and building and structure for national defense. Preference given to Filipino or American citizens In award of blds for construction or repair of public works If lowest domestic bld Is not In excess of 15 per cent of lowest foreign bld; no foreign bld allowed for construction or repair of building or structures for national defense. Preference given to corps, or commercial cos. with at least 75 per cent Filipino or American capital In award of blds for construction or repair of public works If lowest domestic bld Is not in excess of 15 per cent of lowest foreign bld; no foreign bld allowed for construction or repair of bldgs, or structure for national defense. GOVERNMENT OBLIGATIONS - Rep. Act No. 504 (Back Pay Law) as amended by RA No. Application of backpay certificates to payment of obligations. Certificates can be applied In payment to Filipino citizens Certificates can be applied In payment only to corps, or associations with at least 60 per cent Filipino capital. INVESTMENT COMPANIES Rep. Act No. 2629 Sec. 15 INVESTMENT HOUSES P.D. 129 (The Investment Houses Law) Regulation of Investment companies. Regulation of Investment houses All directors must be citizens of the Philippines. MARKET STALLS Rep. Act No. 37 Majority of voting stock must be owned by Filipinos. Majority of members of the Board must be Filipino citizen Preference In the lease of market stalls. Filipino citizens given preference. No Provision. MINERALS ANO MINERAL LANDS/ NATURAL RESOURCES 1. Sec. 9, Art., Xlv, Const, of the Phil. Disposition, exploitation, development exploration, or utilization of any of the natural resources of the Phil. Filipino citizens At least 60% of the Capital stock must be owned by Filipino 2. Public Act No. 2719 (Coal Land Act), as amended by RA No. 740 Lease of unreserved and unappropriated coal-bearing Leasee must be Filipino citizen. Leasee must have at least 60% Filipino capital. 3. Com. Act No. 137 (Mining Act), as amended by CA No. 309, and RA NOS. 225 & Disposition, exploitation development or utilization of minerals and mineral lands of the public domain. Limited to Filipino citizens. Limited to corporations or associations with at least 60% Filipino capital. 4. Rep. Act No. 387 (Petroleum Act of 1949( OTHER PUBLIC SERVICE Exploration, development, exploitation, or utilization of petroleum resources; assignment or transfer right thereto; preference in employment concessions. Concessionaire or transferee .must be Filipino citizen. Concessionaire or transferee must have at least 60% Filipino capital. Sec. 5, Art. the Phil. xlv. Const, of Sec. 7(1), Art. XV, Const, of Ownership the Phil. Mass media. operation of Limited to Filipino citizens. Must be wholly-owned and manged by Filipino citizens. Governing body of any entlry telecommunications shall controlled by citizens of Phil. be Sec. 8(7) Article XV, Const, of the Phil. Operation of Institutions other established by mission boards organizations educational religious orders, and charitable Issuance of certificates of public convenience and necessity. Limited to Filipino citizens 60% of Its capital must be owned by such citizens. Control and administration must be limited to citizens of the Philippines. Grantee must be Filipino or American citizen. Grantee must have at least 50 per cent Filipino or capital. American (Continued on page 20) The accompanying table of nationalization laws has been prepared by the Board of Investments as a basic guideline for fo reign investors who are not aware of the existing regulations concerning ownership of Philippine companies and industrial properties. Recent foreign invest ment liberalization measures are intended to support the intentions of the Investment Incentives Act and the Export In centives Act. Both Acts provide for special treat ment of foreign capital in prescribed areas of invest ment for a specified period of time. New rules Some of these new regulations are as fol lows: (1) Pioneer areas One of the conditions in allowing foreignowned or controlled firms in pioneer areas of investment is that the foreign enterprise ob ligates itself to accept Filipino investments sub sequently and that within 20 years (extendable for another 20 years only in certain areas), it per cent controlled by Fili pinos. The recent amend ment requires attainment of filipino control within 30 years or within 40 years, if the enterprise is engaged primarily (at least 70 per cent) in the exportation of registered products, which period is extendible for another 10 years by BOI. (2) Complementation arrangements In addition to the Constitutional provision limiting to 60 per cent Filipino-owned firms, the exploitation of natural resources and engaging in public utilities, there are other statutes requiring ownership by Filipino stockholders of all or the major portion of the equity in certain trades, etc. The BOI, subject to the approval of the National Economic Deve lopment Authority, is now empowered to suspend such requiremnt (except in areas covered by the Constitutional prohibition) in big multi national projects pur suant to international complementation ar rangements for the man ufacture of a particular product on a regional basis. Under this amend ment, foreign investors may consider the Philip pines as the base for serving the Southeast Asian market in cases of complementation schemes without being subjected to the various statutes limiting owner ship of the majority of the stockholdings to Fili pinos in case the par ticular activity is subject to such limitation. Export firms (3) Foreign export firms. Foreign-owned or controlled firm engaged or proposing to engage in the production of ''export products'' in tended primarily for foreign markers are now qualified to apply for registration with BOI and avail of incentives, the principal ones being: a. Tax credit on im ported materials and sup plies equivalent to the amount of duties and compensating taxes paid; b. Tax exemption on inported capital equip ment or tax credit on taxes that would other wise be paid if the domestic capital equip ment was imported, for new capacity designated as intrisically exportoriented or for additional capacity deemed neces sary to meet export orders; c. Deduction for tax able income of undHtributed pjofits used for"1 expansion reinvestment; d. Carry-over of net operating loss as a de duction from taxable in come; e. Accelerated depre ciation; f Additional dedui n fram taxable in corn; o. an amount equivalent to 50 per cent of training expenses in curred; g. Exemption from all internal revenue taxes except income taxes if the project is a pioneer undertaking; h. Exemption from ex port tax, impost or fee. (4) Tourism incentives A new addition to the Export Incentives Act is the grant of incentives to tourism ventures. Among beneficiaries of such in centives would be fo reign-owned or con trolled service exporters engaged in the business of primarily catering to foreign tourists and tra velers. Incentives avail able to such service ex porters for the first 5 years from registration are: a. Reduced income tax, i.e., the enterprise may deduct from its taxable income an amount equivalent to 50 per cent of its total export fees during the year in which the in centive is claimed; and b. Tax and duty-free importation of capital equipment directly and actually needed by such service exporter.

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