EO 226 BOOK III INCENTIVES TO MULTINATIONAL COMPANIES ESTABLISHES REGIONAL OR AREA HEADQUARTERS IN THE PHILIPPINES CHAPTER I LICENSING OF THE

MULTINATIONAL COMPANY Article !" Qualifications of Multinational Company. Any foreign business entity formed, organized and existing under any laws other than those of the Philippines whose purpose, as expressed in its organizational documents or by resolution of its Board of irectors or its e!ui"alent, is to super"ise, superintend, inspect or coordinate, its own affiliates, subsidiaries, or branches in the Asia#Pacific $egion may establish a regional or area head!uarters in the Philippines, after securing a license therefor from the %ecurities and &xchange Commission, upon the fa"orable recommendation of the Board of 'n"estments. (he %ecurities and &xchange Commission shall, within thirty )*+, days from the effecti"ity of this Code, issue the implementing rules and regulations. (he following minimum re!uirements shall, howe"er, be complied with by the said foreign entity. )a, A certification from the Philippine -oreign (rade %enior .fficer or in the absence of such an official, a Philippine Consul in the foreign firm/s home country that said foreign firm is an entity engaged in international trade with affiliates, subsidiaries or branch offices in the Asia#Pacific $egion. )b, A certification from a principal officer of the foreign entity to the effect that the said foreign entity has been authorized by its Board of irectors or go"erning copy to establish its regional head!uarters in the Philippines, specifying that0 1. (he acti"ities of the regional head!uarters shall be limited to acting as a super"isory, communications and coordinating center for its subsidiaries, affiliates and branches in the region2 3. (he head!uarters will not deri"e any income from sources within the Philippines and will not participate in any manner in the management of any subsidiary or branch office it might ha"e in the Philippines2 *. (he head!uarters shall notify the Board of 'n"estments and the %ecurities and &xchange Commission of any decision to close down or suspend operations of its head!uarters or terminate the ser"ices of any expatriate at least fifteen )14, days before the same is effected. )c, Any underta5ing that the multinational company will remit into the country such amount as may be necessary to co"er its operations in the Philippines but which amount will not be less than fifty thousand 6nited %tates dollars or its e!ui"alent in other foreign currencies annually. 7ithin thirty )*+, days from receipt of Certificate of $egistration from the %ecurities and &xchange Commission, the multinational company will submit to the %ecurities and &xchange Commission a Certificate of inward remittance from a local ban5 showing that it has remitted to the Philippines the amount of at least thirty thousand 6nited %tates dollars or its e!ui"alent in other foreign currencies and con"erted the same to Philippine currency. Annually, within thirty )*+, days from the anni"ersary date of the multinational company/s registration as a regional or area head!uarters with the %ecurities and &xchange Commission, it will submit proof to the %ecurities and &xchange Commission of inward remittance amounting to at least fifty thousand 6nited %tates dollars or its e!ui"alent in other foreign currencies during the past year. )d, Any willful "iolation by the regional or area head!uarters of a multinational company of any of the pro"isions of this Code, or its implementing rules and regulations, or other terms and conditions of its registration, or any pro"ision of existing laws, shall constitute a sufficient cause for the cancellation of its license or registration. CHAPTER II INCENTIVES TO E#PATRIATES Article $" Multiple entry "isa. -oreign personnel of regional or area head!uarters of multinational companies, their respecti"e spouses, and unmarried children under twenty#one years of age, if accompanying them or if following to 8oin them after their admission into the Philippines as non# immigrant shall be issued a multiple entry

special "isa, "alid for a period of one year, to enter the Philippines0 Pro"ided, (hat a responsible officer or the applicant company submits a certificate to the effect that the person who see5s entry into the Philippines is an executi"e of the applicant company and will wor5 exclusi"ely for applicant/s company and will wor5 exclusi"ely for applicant/s regional or area head!uarters which is duly licensed to operate in the Philippines, and that he will recei"e a salary and will be paid by the head!uarters in the Philippines an amount e!ui"alent to at least twel"e thousand 6nited %tates dollars, or the e!ui"alent in other foreign currencies per annum. (he admission and stay shall be co#terminus with the "alidity of the multiple entry special "isa. (he stay, howe"er, is extendible yearly upon submission to the Commission on 'mmigration and eportation of a sworn certification by a responsible officer of the regional or area head!uarters2 that its license to operate remains "alid and subsisting2 that he has been paid in the Philippines from the date of original admission, the e!ui"alent of at least one thousand 6nited %tates dollars per month, or its e!ui"alent in other foreign currencies2 and that the regional or area head!uarters has withheld the tax due on said compensation and the same has been paid to the Bureau of 'nternal $e"enue. 9on#immigrant who ha"e been admitted under the multiple entry special "isa, as well as their respecti"e spouses and dependents, shall be exempt from0 the payment of all fees due under the immigration and alien registration laws2 securing alien certificates of registration2 and obtaining immigration clearance certificates, and all types of clearances re!uired by any go"ernment department or agency, except that upon final departure from the Philippines the employer of the said non#immigrants shall so ad"ise in writing the Commission on 'mmigration and eportation at least fi"e )4, wor5ing days prior to the non#immigrant/s departure, and the finally departing non#immigrant employee shall be re!uired to submit to the said office a tax clearance from the Bureau of 'nternal $e"enue. Article 6%" 7ithholding (ax of 14 :. Aliens employed by regional or area head!uarters of multinational corporations shall be sub8ect for each taxable year upon their gross income recei"ed from the regional or area head!uarters established in the Philippines by multinational companies as salaries, wages, annuities, compensations, remunerations, and emoluments to a tax e!ual to fifteen percentum of such gross income. Article 6&" (ax and uty -ree 'mportation. An alien executi"e of the regional or area head!uarters of a multinational company shall en8oy tax and duty free importation of personal and household effects as pro"ided for under %ection 1+4 )h, of the (ariff and Customs Code, as amended, and %ection 1;< )b, )=, of the 'nternal $e"enue Code, as amended. Article 62" (ra"el (ax &xemption. Personnel of multinational companies performing technical and super"isory functions with regional head!uarters at, but not engaged in business in the Philippines and the dependents of such foreign personnel if 8oining them during the period of their assignment in the Philippines, as certified to by the Board of 'n"estments, shall be exempted from the payment of tra"el tax imposed under %ection 1 of Presidential ecree 9o. 11>*, by securing a (ra"el (ax Certificate from the Philippine (ourism Authority. CHAPTER III INCENTIVES TO THE REGIONAL HEADQUARTERS Article 6'" &xemption from 'ncome (ax. $egional or area head!uarters established in the Philippines by multinational corporations and which head!uarters do not earn or deri"e income from the Philippines and which act as super"isory, communications and coordinating center for their affiliates, subsidiaries, or branches in the Asia#Pacific $egional shall not be sub8ect to income tax. Article 6(" &xemption from Contractor/s (ax. (he regional or area head!uarters established in the Philippines by multinational corporations, including their alien executi"es, are exempted from the contractor/s tax. Article 6 " &xemption from all ?inds of @ocal @icenses -ees, ues. (he regional or area head!uarters of multinational companies shall be exempt from all 5inds of local licenses, fees, dues, imposts or any other local taxes or burdens. Article 66" (ax and uty -ree 'mportation of (raining Materials2 'mportation of Motor Aehicles. $egional or area head!uarters shall also en8oy tax and duty free importation of e!uipment and materials for training, conferences which are needed for the functions of the regional or area head!uarters and which are not locally a"ailable sub8ect to the prior appro"al of the Board of 'n"estments. $egional or area head!uarters shall be entitled to the importation of motor "ehicles sub8ect to the prior appro"al of the Board and the payment of the corresponding taxes and duties0 Pro"ided, (hat such motor "ehicles shall be for the exclusi"e use of its expatriate executi"es and that the number thereof shall not exceed the number of its expatriate executi"es and that such motor "ehicles may be replaced e"ery three )*, years from their importation. Article 6)" &xemption from $egistration $e!uirements. (he regional or area head!uarters of multinational

companies shall be exempt from the pro"isions of Boo5 '' of this Code.