Republic of the Philippines

MINISTRY OF FINANCE Office of the Minister Manila

MINISTRY ORDER NO. 55_82

SUBJECT:

Rules and Regulations Implementing. the. Provisions anuary - , 2, to er NO. 765, o Executive azc Credit Regarding the issuance and Use o

Certificates. Pursuant to the provisions of Paragraph 3 of Executive Order No. 765, dated January 13, 1982, the following rules and regulations are hereby promulgated: Section 1. Scope - These Rules and Regulations shall govern the Persons Qualif ie3; Eligible Importations; Coverage of Tax Credit; Use of Tax Credit Certificates; and Procedure for Availment of Tax Credit, for the supply of articles, materials or supplies for government projects financed out of the proceeds of foreign loans. Section 2. Credit are:

Persons Qualified - The persons qualified for Tax

a) Single Proprietorships; Partnerships; Cooperatives, Corporations or Associations; b) Organized under Philippine law and licensed to do business in the Philippines; c) Actually engaged in the manufacturing of articles, materials or supplies, and d) Suppliers of.articles, materials or supplies for government projects financed out of the proceeds of foreign loans. Section 3. Eligible Importations - The importations eligible for tax credit are supplies, raw materials, semi-manufactured components: a) used in the manufacture, processing or production of articles, materials or supplies subject of an international competitive bidding for government projects; b) not locally available and with no suitable substitutes as certified by the Board of Investments.

.

"Isang Sense, Isang Diwa"

4

-2 Section 4.

Coverage of Tax Credit - The Tax Credit shall

cover: a) b) tax, and c)

customs duties; advance sales tax or compensating specific tax,

actually paid on the importationcof Eligible Importations as defined in Section 3 hereof. Thus, a Ferson Qualified who enjoys partial exemption from any of the duties or taxes enumerated herein, shall avail of the tax credit only to the extent of the duties and taxes actually paid. Section S.

Use of Tax Credit Certificates -

1. Tax Credit Certificates issued pursuant to Executive Order No. 765 and these Rules and Regulations may be applied in the settlement of any and all liabilities for which Tax Credit Certificates are authorized to be utilized. 2. Tax Credit Certificates are Non-Transferrable and NonNegotiable. 3. In no case shall the use of a Tax Credit Certificate result in a refund. Committee - A Committee Regulations is hereby created

Section 6. Ministry Order No. for the implementation o t ese Rules an composed of: 1. 2. 3.

a representative of the Ministry of Finance

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Chairman

a representative of the Bureau of Customs

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Member

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Member

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Secretary

a representative of the

Bureau of Internal Revenue 4.

The Head, Revenue Service Ministry of Finance

The Committee shall invite representatives from the Board of Investments and the Resident Auditor of the Ministry of Finance as permanent Observers and representatives of Government Agencies implementing specific projects with foreign financing as Consultants on an as needed basis. "[

$5. - 3Section 7. 'Procedure for Availment 1. Persons Qualified shall file their respective applications with the government agency implementing the project.

2. The government agency shall examine the documents submitted which shall include, among others, the import entries involved; the formula of consumption which shall indicate the actual quantity of imported articles, materials or supplies used; the receipts evidencing payment of customs duties, compensating or advance sales tax or specific tax; the Supply Contracts to the government agency; evidence of receipt and the actual quantities of articles, materials or supplies delivered to the foreign financed project and the value of tax credit certificate recommended for issuance. 3. The government agency implementing the proiect shall file the applications with the Secretary of the Committee created under Section 6 hereof, at the Fifth Floor, Ministry of Finance Building. Agrifina Circle. Manila. 4. The Secretary of the Committee shall examine the completeness of the Application and forthwith return incomplete applications or include complete applications in the Agenda of the next meeting of the Committee. 5. The recommendation of the Committee shall be submitted to the Minister of Finance for final action. 6. The Tax Credit Certificate for approved applications or the letter of denial shall be issued by the Minister of Finance. This Ministry Order shall take effect January 13. 1982.

CESAR VIRATA Minister