Duterte extends duty-free importation of capital equipment

President Rodrigo Duterte has signed an executive order (EO) extending the duty-free importation of capital equipment, spare parts, and accessories of companies registered with the Board of Investments (BOI).

Executive Secretary Salvador Medialdea, by authority of the President, signed Executive Order 85 on July 19 and copy of the document was given to reporters on Wednesday (July 24).

In signing the EO, government considered how “the extension of the zero percent duty importation will enhance the attractiveness of the country as an investment destination and improve industry competitiveness, in line with the Philippine Development Plan 2017 to 2022.”

“Considering that importation of capital equipment remains as one of the major cost burdens of business enterprises in their start-up and expansion, there is a need to again extend the grant of zero percent duty on capital equipment, spare parts, and accessories, currently being enjoyed by BOI-registered enterprises,” the EO read.

The EO also noted that duty-free importation remains to be “an important fiscal incentive in promoting investments into the Philippines considering the global competition for foreign direct investments.”

All BOI-registered new and expanding enterprises of capital equipment, spare parts, and accessories can avail of the duty-free importation as long as they are reasonably needed and will be used exclusively by the enterprise in its registered activity.

However, these enterprises are prohibited from selling, transferring, or disposing the capital equipment, machinery, spare parts, and accessories without prior BOI approval within five years from the date of importation.

Otherwise, the BOI-registered enterprise will be liable to pay twice the amount of the PHP500,000, whichever is higher, without prejudice to other applicable penalties.

The EO was signed after the NEDA Board, on June 10, 2019, endorsed the extension of the zero-percent duty on capital equipment, spare parts, and accessories imported by BOI-registered new and expanding enterprises. PNA