FIRMS registered with the Board of Investments (BOI) may continue to enjoy duty-free importation of capital equipment, spare parts and accessories based on a new executive order issued by President Rodrigo Duterte.

Under Executive Order (EO) 85 signed by Duterte on July 19, the zero percent duty importation will be extended for another three years to boost the country's attractiveness as an investment destination and improve industry competitiveness in line with the Philippine Development Plan 2017 to 2022.

The incentive is given to BOI-registered new and expanding enterprises that need to import capital equipment, spare parts and accessories that are "reasonably needed and will be used exclusively by the enterprise in its registered activity" and are "not manufactured domestically in sufficient quantity of comparable quality, and at reasonable prices."

"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," EO 85 read.

"The grant of duty-free importation of capital equipment remains to be an important fiscal incentive in promoting investments into the Philippines, considering the global competition for foreign direct investments," it added.

The National Economic and Development Authority Board on June 10 recommended the extension of the zero percent duty on imported equipment, after EO 57 which granted a one-year extension of the incentive expired on July 6, 2019.

The new EO prohibits the BOI-registered companies from selling, transferring, or disposing the imported equipment without prior BOI approval within five years from the date of importation.

Otherwise, they will have to pay twice the amount of the foregone duty or P500,000, whichever is high without prejudice to other applicable penalties.

EO 85, which was made public by Palace just on Wednesday, July 24, will take effect immediately after publication in a newspaper.

It will be valid for three years or until a law amending EO 226 or the Omnibus Investments Code of 1987 is enacted, whichever comes earlier. (SunStar Philippines)