Section 7. Tax and Other Incentives. —
The provisions of any law to the contrary notwithstanding, the transactions of offshore banking unit authorized hereunder with non-residents and other offshore banking units shall be subject to a five per cent (5%) tax on the net income from such transactions which shall be in lieu of all taxes on the said transactions: Provided, however, That transactions of offshore banking units with local commercial banks, including branches of foreign banks that may be authorized by the Central Bank to transact business with offshore banking units, shall likewise be subject to the same tax, except net income from such transactions as may be specified by the Secretary of Finance upon recommendation of the Monetary Board, to be subject to the usual income tax payable by banks. Any income of non-residents from transactions with said offshore banking units shall be exempt from any tax.
In the case of transaction with residents (other than other offshore banking units or local commercial banks including local branches of foreign banks that may be authorized by the Central Bank of the Philippines to transact business with offshore banking units), interest income from loans granted to such residents shall be subject only to a ten per cent (10%) withholding tax as final tax.
Notwithstanding the provision of any law to the contrary, foreign personnel may be assigned by any foreign bank to work in its offshore banking unit in the Philippines. Such foreign personnel, their spouses and unmarried children under twenty-one years of age, shall be issued a multiple entry special visa, valid for a period of one year, to enter the Philippines: Provided, however, that a responsible officer of such foreign bank submits a certificate of the effect that the person who seeks entry in the Philippines is an employee of the said foreign bank and will work exclusively for its offshore banking unit in the Philippines and that he will be paid by the foreign bank in the Philippines compensation in foreign currencies: Provided, further, That in the case of the spouse and unmarried children mentioned herein, the certificate shall be to the effect that they are dependents of the foreign personnel working in the offshore banking unit.
The admission and stay of the foreign personnel and their dependents mentioned in the next preceding paragraph shall be co-terminous with the validity of the multiple entry special visa: Provided, however, that their stay may be extended yearly upon submission to the Commission on Immigration and Deportation of a sworn certification by a responsible officer of the offshore banking unit in the Philippines that such bank's authority to operate as an offshore banking unit is valid and subsisting and that the personnel concerned has been paid in the Philippines, from the date of original admission, the compensation mentioned in the next preceding paragraph, for which the tax due thereon has been withheld and paid to the Bureau of Internal Revenue.
The foreign personnel and their respective spouses and dependents mentioned in this Section shall be exempt from: the Payment of all fees due under the immigration and alien registration laws; securing alien certificates of registration; and obtaining emigration clearance certificates, and all types of clearances required by any government department, or agency except that upon their final departure from the Philippines, the employer of the said foreign personnel shall so advice in writing the Commission on Immigration and Deportation at least five (5) working days prior to such departure, and the finally departing personnel shall be required to submit to the said office a tax clearance from the Bureau of Internal Revenue.
Section 22 of Commonwealth Act No. 466, as amended, is hereby amended to include an additional subsection (d) to read as follows:
"(d) Aliens employed by offshore banking units. — There shall be levied, collected and paid for each taxable year upon the gross income received by every alien individual employed by offshore banking units established in the Philippines as salaries, wages, annuities, compensations, remunerations and emoluments from such offshore banking units a tax equal to fifteen per centum of such gross income."e. The alien executives of offshore banking units shall enjoy the privileges extended to foreigners coming to settle in the Philippines for the first time as provided for under Section 105(h) of the Tariff and Customs Code, as amended.f. The offshore banking units shall be exempt from all forms of local licenses, fees, dues, imposts, or any other local taxes or burdens.