Section 8. Special Export Incentives for Registered Agricultural Enterprises. —
Registered agricultural enterprises shall be entitled to the following special incentives for exports their registered products and commodities:
Special Tax Credit. — A tax credit equivalent to the sales, compensating and specific taxes and duties on the supplies, raw materials and semi-manufactured products used in the manufacture, processing or production of its export products and forming part thereof, whether exported directly by the registered agricultural enterprise or sold to another export producer which uses such sold product as a direct input in export products manufactured or processed by it and subsequently exported, or to an export trader: Provided, That the tax credit shall accrue to the registered agricultural enterprise only after the other export producer or export trader has in fact exported the products of the export producer or those in the manufacture or processing of which such inputs were used.
Reduced Income Tax. — Registered agricultural enterprises shall be entitled for the first five years from its registration, to deduct from its taxable income an amount equivalent to the sum of the direct labor cost and local raw materials utilized in the manufacture of its export products. For projects with long gestation, this period may be extended for another period of five years by the Board upon recommendation of the Department or the appropriate government agencies. Provided, however, That such deduction shall in no case exceed twenty-five percent (25%) of its total export revenue; Provided, further, That in case of traditional exports, the local raw material component shall not be included in computing the above deduction.
Before registered agricultural enterprises may avail themselves of the foregoing export incentives benefits, they shall apply first with the Board, which shall approve the application upon proof: (1) that the enterprise proposes to engage in good faith in creating a market for its products abroad; (2) that the product to be exported is one included in the government priorities plan as suitable for export, or if not so included, that its export will not adversely affect the needs of the domestic market for the finished product to be exported or for the domestic raw materials used in its manufacture; (3) that the enterprise has or will set up an adequate accounting system to segregate revenues, purchases and expenses of its export market operations from those of its domestic market operations; and (4) that the exported products and commodities meet the standards of quality established by the Bureau of Standards, or by the Board and the Department jointly.
The Board may suspend or cancel wholly or partially the above deduction under this Section whenever any action is threatened or taken by an international association or foreign nation which would nullify the purposes of said incentive and would impair or threaten to impair the export trade of the Philippines or its relations with other nations.
The provisions of Presidential Decree No. 930 on simplified export procedures shall apply to registered agricultural enterprises under this Decree.