Download Manual for Registration and Availment of Local Incentives

Manual for Registration
and Availment of
Local Incentives
Table of Contents
Acronyms……………………………………………………………………….
iii.
I.
Introduction……………………………………………………………………..
1
II.
Qualifications……………………………………………………………………
1
III.
Local Incentives………………………………………………………………...
3
IV.
Registration Procedures……………………………………………………….
5
V.
Procedure of Availing of Incentives ………………………………………….
7
Figures
Figure 1
Investment Registration Flowchart…………………………………………...
6
Figure 2
Certificate of Entitlement Flowchart …………………………………………
7
Annexes
Annex 1
Ordinance 8268 – 2002……………………………………………………….
8
Annex 2
Ordinance 10014 – 2006……………………………………………………...
13
Annex 3
Executive Order (EO) 151-14…………………………………………………
15
Annex 4
Requirements for Registration………………………………………………..
34
Annex 5
Application Form for Registration ……………………………………………
35
Annex 6
Project Study Profile…………………………………………………………...
37
Annex 7
Pre-evaluation Form ………………………………………………………….
39
Annex 8
Final Recommendation Form…………………………………………………
40
Annex 9
Notice of Approval Form………………………………………………………
41
Annex 10
Application for Certificate of Entitlement…………………………………….
42
Annex 11
Certificate of Entitlement ……………………………………………………...
43
Acronyms
BIR
BOI
CDA
CLUP
CTO
DTI
ECC
EO
ICT
IPA
LGC
ORO- TIPC
SEC
Bureau of Internal Revenue
Board of Investments
Cooperative Development Authority
Comprehensive Land Use Plan
City Treasurer's Office
Department of Trade and Industry
Environmental Clearance Certificate
Executive Order
Information and Communications
Technology
Investment Priority Areas
Local Government Code
Cagayan de Oro Trade and Investment
Promotion Center
Securities and Exchange Commission
iii
I.
Introduction
To attract more investments into the city, the Cagayan de Oro Investment Incentives
Code (Ordinance 8268 – 2002) was passed and approved in July 2002 (see annex
1). It provides local tax breaks to eligible businesses, as defined in the ordinance and
its implementing rules and regulations, within a prescribed period. Another ordinance
was passed in Y2006 (annex 2) that gave additional incentives to Information and
Communications Technology (ICT)-related businesses.
To assist new and existing investors in their information and registration
requirements, at any point in the investment process, the Cagayan de Oro Trade and
Investment Promotion Center (Oro-TIPC) was created as a tripartite cooperation of
the City Government, Department of Trade and Industry- Misamis Oriental Provincial
Office and Promote CDO Foundation, Inc., a private sector business organization.
Activated through Executive Order (EO) 151-14 (annex 3), the ORO-TIPC will accept
and process the applications for certificate of registration for local incentives.
When already registered and compliant with the terms and conditions of registration,
the registrant may claim the exemptions, at the appropriate time, by filing and
obtaining a certificate of entitlement from the Oro-TIPC and presenting the same to
the City Treasurer’s Office (CTO).
II.
Qualifications
The Oro-TIPC will accept applications for registration to avail of local incentives
provided by the Cagayan de Oro Investment Incentives Code – 2002 for projects that
meet the following criteria:
i.
New projects located within the jurisdiction of Cagayan de Oro that have a
minimum capitalization of Php 10 million or employ at least 50 people,
majority of whom are residents of Cagayan de Oro City;
ii.
Existing businesses, already registered and operating in Cagayan de Oro,
that will relocate its principal office from other places in the Philippines to
Cagayan de Oro City, and the cost of relocation is at least Php 8 million and
generate new employment of at least 40 persons, majority of whom are
residents of Cagayan de Oro;
iii.
Existing investors that will expand its existing production capacity or construct
new buildings and other civil work for the installation of new machinery and
equipment or improvements thereof, which will result in an increase in
production capacity, and at a cost of at least Php 8 million or employ an
additional 40 persons, majority of whom are residents of Cagayan de Oro
1
The above businesses should belong to or undertake any of the following Local
Investment Priority Areas (IPA):
A. Priority Industry Clusters:
A.1 Agribusiness
Agriculture production in less developed areas with
minimum project cost of 5M ( excluding cost of land )
Commercial production of high-value crops
Agri-processing such as food processing and triple A
slaughterhouse
A.2 Logistics as defined in the Board of Investment’s
Investment Priorities Plan
A.3 Tourism
A.4 ICT (and its support infrastructure)
B. Tertiary education, in support of ICT and science and engineering, that will
lead to accreditation as a Center of Excellence
C. Modernization of medical facilities (for tertiary hospitals only)
D. Light Metal Industries
E. Small enterprises in manufacturing, tourism and ICT
F. Infrastructure projects implemented under the Public – Private
Partnership scheme
G. Modernization, Diversification and Expansion of existing businesses in the
above list of priority industries.
H. Relocation of existing businesses from officially declared hazard zones to
nonhazardous zones as reflected in the City’s Comprehensive Land Use Plan
(CLUP).
I.
Location of medium to large commercial/retail establishments in new growth
areas or less developed areas as identified in the CLUP
J. New or expanding businesses with a Certificate of Registration from a proper
registering agency, such as the Board of Investments, and extended
incentives not only at the national but also at the local level pursuant to an
applicable Incentive Law, such as the Investment Priorities Plan under the
Omnibus Investment Code.
2
III.
Local Incentives
The following general policies govern the grant of local incentives:
The grant of local tax exemptions shall not extend to fees and charges imposed
for services rendered by the City, such as garbage fees, sanitary inspection fees,
electrical inspection fees and other similar fees, as well as rental for use of public
utilities owned and operated by the local government such as charges for actual
consumption of water, electric power and toll fees for use of public roads and
bridges and the like, and those levied for the use of government facilities and
properties.
Incentives granted shall take effect from:
a. the Date of Registration, until the lapse of the term of such incentive,
unless another reckoning date is approved by the City Mayor on justifiable
grounds, but in no case beyond six (6) months from the Date of
Registration; or
b. such other reckoning as may be prescribed under an applicable Incentive
Law; Provided, that in the case of Board of Investments (BOI)-registered
enterprises, their local incentives shall be reckoned from the date of their
registration with the BOI, as provided under Section 133(g) of the Local
Government Code (LGC).
In case of change of ownership of the enterprise, the local incentives which it is
enjoying shall continue to be enjoyed by the enterprise provided that the terms
and conditions of the registration of the project are assumed by the new owner/s,
provided further, that if a Registered Enterprise is enjoying local incentives
pursuant to an Incentive Law, the Certificate of Registration issued by the
Registering Agency remains valid despite the change of ownership. Any change
in the controlling shareholders of a Registered Enterprise shall be reported to the
Oro-TIPC.
The local incentives to which a Registered Enterprise is entitled to
shall be limited to those specified under its Certificate of
Registration, regardless of the enumerated incentives under the
Ordinance.
A registered enterprise shall enjoy the incentives that are specifically granted under
FISCAL
INCENTIVES.
– Registered
Localthe
Applicants
its Certificate
of Registration
which
may include
following:may be entitled
to the
Exemption from local licenses, fees, dues. Within three (3) years from the
date the business starts operation, a registered investor under this Ordinance
shall be fully exempt from the:
a. Mayor’s permit fee
3
b.
c.
d.
e.
Business Manager’s fee
Oath fee
Building Permit fee
Other kinds of local licenses, fees, dues, imposts except
regulatory fees such as:
1. Health Certificate fee
2. Garbage fee
3. Fire Inspection fee
4. Tax on Billboard
5. Tax on Delivery Van
6. Tax on Weight and Measures
7. Sanitary Permit Fee
Exemption in Business Tax from Gross Sales/Receipts. For a period of not
more than six (6) years starting from the date of approval of their application,
registered investors shall be entitled to the following reductions/exemptions in
business tax from the gross sales or receipts earned or realized during the
preceding calendar year.
First Year
Second Year
Third Year
Fourth Year
Fifth Year
Sixth Year
Seventh Year
100% of GROSS SALES/RECEIPTS
100% of GROSS SALES/RECEIPTS
100% of GROSS SALES/RECEIPTS
75% of GROSS SALES/RECEIPTS
50% of GROSS SALES/RECEIPTS
25% of GROSS SALES/RECEIPTS
Taxable in Full
Exemption from Real Property Tax. The following real properties, equipment
or devices are exempted:
a. Commercial buildings and/or improvements, including a portion of the lot
where said commercial building and/or improvement are found, provided
that the subject lot is owned by the applicant or having legal interest
therein;
b. Equipment or devices or other investments for pollution control and
environmental protection and fire protection equipment;
c. Lands, whether classified as commercial or residential, used exclusively
for parking purposes; Provided, that no commercial activity shall be
conducted within the premises and that all available parking spaces shall
be open to the general public.
d. Lots actually used as road lot; provided, that the same shall be open to
the general public.
The abovementioned tax exemptions shall start upon occupancy or
completion of the building whichever comes first and under the following
schedule:
4
Year
First Year
Second Year
Third Year
Fourth Year
Fifth Year
Sixth Year
Seventh Year
Exemption Rate
100%
100%
100%
75%
50%
25%
Taxable in Full
In addition to the incentives provided above, Information and
Communications Technology (ICT)-related businesses shall enjoy the
exemption from real property tax on the following ICT equipment and
other related facilities:
Computer network, hardware and peripherals
Telecommunications and telephony equipment
Structured cabling and hardware
Fiber optic equipment
Air conditioning units
Standby generators and unlimited power supply
The tax exemptions shall commence upon start of business
operations under the following schedule:
Year
First Year
Second Year
Third Year
Fourth Year
IV.
Exemption
100%
75%
50%
Taxable in full
Registration Procedures
Businesses seeking to avail themselves of local investment incentives under the
Investment Incentives Code (Ordinance 08268 – 2002) shall first obtain a Certificate
of Registration from the ORO-TIPC. Figure 1 details the registration process while
Annexes 5-9 are the forms associated with registration.
5
Figure 1. Investment Registration Flowchart
Note: Steps identified with ** are to be accomplished by the applicant
** S u b m
Ev a l u a t e
i t
(r e f e r
N o t a r iz e d
A p p li c a t i o n
re q u ir e m
w /
d o c u m
to
e n t s
c h e c k l i s t )
a ll
e n t s
R e t u r n
in c o m
w /
p l e t e
d o c s
D o c u m
N
c h e c k l i s t
e n t s
o k a y ?
Y
R e c e i v e
re c o r d
d o c u m
in
w it h
d a t e
C o n d u c t
d o c u m
e n t s
o ff i c i a l
o f
a n d
lo g b o o k
re c e i p t
e v a lu a t i o n
e n t s
a n d
o f
o c u l a r
in s p e c t i o n
Se n d
n o t ic e
a p p r o v a l
o f
to
a p p l ic a n t
Pr e - e v a l u a t i o n
s h e e t
Pr e p a r e
re c o m
w it h
M e e t i n g
C o n d u c t
C o m
m
to
o f
C it y
a p p l ic a t io n
sig n
of
a n d
c e r t if i c a t e
r e g i s t r a t i o n
M a y o r
ag e n d a
In v e s t m
Ev a l u a t i o n
A p p r o v e
e n d a t i o n
re g i s t r a t i o n
pr e p a r a t i o n s :
n o t i c e s ,
m
c e r t i fi c a t e
e n t
Y
i t t e e
m e e t i n g
M in u t e s
o f
m e e t i n g ,
A p p r o v e d ?
re s o l u t i o n s
D e f e r r e d .
** S u b m
i t
a d d i t i o n a l
re q u ir e m
e n t s
n o t i c e
o f
w it h
S e n d
d e f e r m
q u e r y
e n t
or
N
a d d i t i o n a l
re q u ir e m
e n t
(s )
D is a p p r o v e d .
Se n d
n o t ic e
o f
dis a p p r o v a l
6
V.
Procedure for Availing of Incentives
Once registered, the applicant may avail itself of the incentives by obtaining a
certificate of entitlement from the Oro- TIPC. The procedures are indicated below
through Figure 2. Annexes 10-11 are the forms pertinent to this phase.
Figure 2. Certificate of Entitlement Flowchart
7
ANNEX 1: Ordinance 8268 – 2002
8
9
10
11
12
ANNEX 2: Ordinance 10014-2006
13
14
ANNEX 3: Executive Order (EO) 151-14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
ANNEX 4: Requirements for Registration
Applicants shall submit the following to the ORO-TIPC:
1.
a.
b.
c.
d.
2
Additional Requirements for those Registered Under an Incentive Law
a.
b.
c.
3.
General Requirements
Duly accomplished and notarized application form;
Certified true copy of the primary registration of the applicant to do business
in the Philippines as issued by the Department of Trade and Industry (DTI),
Securities and Exchange Commission (SEC), or the Cooperative
Development Authority (CDA), as applicable;
If the applicant has already commenced operation, its latest available
comparative audited financial statements acknowledged and received by the
Bureau of Internal Revenue (BIR) and the SEC (in the case of corporations);
and
Proof of proposed place of business which shall show that the main operating
facility, whether a services/manufacturing/production facility or plantation, and
not just the warehouse or the administrative office of the applicant is located
within the territorial jurisdiction of the City.
Certified true copy of its Certificate of Registration with the appropriate
Registering Agency pursuant to the applicable Incentive Law granting
applicant’s business, investment incentives, including the terms and
conditions of the same;
Proof of commencement of commercial operation, if commercial operation
has commenced; and
Copy of the feasibility study or Project Study submitted to the Registering
Agency.
Additional Requirements for Local Registrants
a. Project Study;
b. Proof that the applicant meets the criteria pursuant to which it is claiming
eligibility to avail of incentives; and
c. Other specific permits applicable to the business of the applicant by virtue of
its location or the nature of its activity, e.g., environmental clearance
certificate (ECC)
34
ANNEX 5: Application Form for Registration
APPLICATION FOR REGISTRATION UNDER THE
CAGAYAN DE ORO INVESTMENT INCENTIVES CODE OF 2002
Ordinance 8268 - 2002
APPLICANT INFORMATION
Name of Entity:
Office Address:
Name of Project:
Project Address:
Authorized Representative:
Position:
Landline/Mobile Number:
Email Address:
Business Organization




Business Registration ( please attach
certificate of registration)




Sole Proprietorship
Partnership
Corporation
Cooperative
PROJECT PROFILE
Type of Project:
 New
 Expansion
(Please specify and give brief
description of project)









Project Cost:
Number of bona fide residents
of Cagayan de Oro employed
Estimated Breakdown of
Project Cost





DTI
SEC
SEC
CDA
Investment Area
Agribusiness
Logistics
Tourism
ICT and its support infrastructure
Tertiary education. In
support of ICT and science and
engineering
Modernization of medical facilities
Light Metal Industries
Small enterprises in
manufacturing, tourism and ICT
Infrastructure projects
implemented in Public-Private
Partnership scheme
 Relocation of
businesses from hazard
zones to nonhazardous
zones as reflected I the
Comprehensive Land
Use Plan (CLUP)
 Location of medium to
large commercial/retail
establishments in new
growth areas or less
developed areas as
identified in the CLUP
P10 M – 60 M
60M - 100 M
20 persons but not more than 40
40 persons but not more than 100
100 persons and above
Land
Building
Machines/Equipment
Operating Capital (1 yr.)
TOTAL
 Over 100 M
P_________________
_________________
___________________
___________________
P_____________________
35
CERTIFICATION
This is to certify that information reflected herein is true and correct to the best of my
knowledge and that our company, as represented by the undersigned authorized representative, has
read and understood the Cagayan de Oro Investment Incentives Code and the rules and regulations
implementing the same, and commits itself to abide by the provisions thereof.
Done this ____ day of __________at the City of Cagayan de Oro, Philippines.
_______________________
Signature over Printed Name
36
ANNEX 6: Project Study
PROJECT STUDY
1.
2.
3.
4.
PROJECT TITLE
Project Location ( please indicate project site on Google map)
Projected Revenues
Labor Generation
No. of Employees
Annual Payroll
Direct Labor
Indirect Labor
Administrative
Total
5. Proposed Market
6. Equipment
Quantity
Description
Cost (Php)
Source (local or
imported)
End Use
Total
Note: The total amount of equipment must be consistent with the indicated
amount in the Project Timetable and Cost.
7. Project Timetable and Cost
Description
Site acquisition
Business
registration
Construction
Acquisition
/installation of
equipment
Hiring and training
of employees
Start of commercial
operation
Schedule
(Month/Year)
Related Expenses
Cost (P’000)
Cost of land
Civil works, etc.
Capital equipment,
furniture and
fixture
Training Cost
Working capital (
one quarter only)
37
8. Sources of Financing
Item
Amount (Php ‘000)
%
Bank Loan
Equity
Total
Note: Total must be consistent with the total of the Project Timetable and Cost
9. FINANCE
1. Financial Analysis (based on pro-forma financial statements
a. Internal Rate of Return
b. Payback Period
c. Return on Investment
2. Pro-forma Financial Statements (at least 5 years and with and without incentives)
a. Projected Income Statement
b. Projected Balance Sheet
c. Projected Cash flow Statement
38
ANNEX 7: Pre-Evaluation Form
PRE-EVALUATION
Application No.
Applicant
Office Address
1. Qualifications
1.1 Type of Registration:
1.2 Activity
:1.3 Total Investment cost:
1.4 Employment Generated
___New
____Expansion
__________________
__________________
_________
2. Authorized Capital
Subscribed Capital
Paid-up Capital
Sources of Financing
____Equity
____Loan
3. Project Cost
Land
Building
Machinery and Equipment
Leasehold Improvements
Merchandise Inventory
Office Equipment
Working Capital
4. Incentives Applied For
Business Tax Exemption
Real Property Exemption
Equipment
Machinery
39
ANNEX 8: Final Recommendation Form
Republic of the Philippines
City of Cagayan de Oro
Cagayan de Oro Trade and Investment Promotions Center
RECOMMENDATION FOR INVESTMENT INCENTIVE
IIA No.: _________________________________________
Issuance Date: _________________________________
Name of Applicant:
Name of Business & Location:
Address/Tel. No:
Type of Registration:
New
Existing/Expansion
Activity:
Total Investment Cost (PhP)
Labor/Employment Generation:
Authorized Capital/Subscribed/Paid-Up
Project Cost:
Sources of Financing
Land
_______________________________
Building
_____________________________________
Machinery & Equipment
Leasehold Improvements
Merchandise Inventory
Office & Store Equipment
Working Capital
Equity
PhP
Loan
Incentives Due (Exemption/Reduction)
Business Tax
Real Property Tax
Building
Machinery and Equipment
Local Business Fees and Dues:
Social Impact:
Remarks
40
ANNEX 9: Notice of Approval Form
Republic of the Philippines
Cagayan de Oro City
OFFICE OF THE CITY MAYOR
Application No.
(Date)
(Name of entity)
(Address)
Attention: (Name of Contact Person)
Gentlemen:
Please be informed that your application for registration of (Name of Project) under
the Investment Incentive Ordinance of 2002 (Ordinance No. 8268 -2002) was
approved by the City Mayor. This entitles your firm to the exemption/reduction of
business taxes and real property taxes as provided in the abovementioned ordinance.
We therefore advise your firm to submit within five working days from receipt hereof
the following:
1. Board resolution accepting the attached terms and conditions
2. Board resolution adopting or affirming all representations, commitments
and information in your application for registration.
You may contact the Cagayan de Oro Trade and Investments Promotion Center,
located at the 3rd Floor of the New Administrative Building, for any inquiries or
assistance with your business registration.
Very truly yours,
Eileen E. San Juan
Local Economic and Investment Promotions Officer
Attachment: Terms and Conditions
41
ANNEX 10: Application form for Certificate of Entitlement
Application No:
Date Filed:
Time Filed:
REPUBLIC OF THE PHILIPPINES
CAGAYAN DE ORO CITY
REQUEST FOR CERTIFICATE OF ENTITLEMENT
REGISTERED ENTERPRISE:
CERTIFICATE OF REGISTRATION NO:
DATE OF REGISTRATION:
TYPE OF BUSINESS:
INCENTIVE(S) GRANTED:
YEAR STARTED COMMERCIAL OPERATION:
YEAR APPLIED FOR INCENTIVE(S)
NUMBER OF EMPLOYEES IN YEAR APPLIED FOR
Contact Details of Representative
Authorized Representative/Position
-------------------------------------------------------------------Payment:
Amount:
Official Receipt No.
Date:
For Official Acceptance
Pick-up Date:
Time:
Attending TIPC Staff:
Deferred Acceptance Due To:
Others (Please specify)_________________
42
ANNEX 11: Certificate of Local Incentive Entitlement
For Taxable Year 20______
This is to certify that _____________________________________ is a registered
enterprise of Cagayan de Oro City with Certificate of Registration No. ________ and
granted local incentives under the Cagayan de Oro Investment Incentives Code of
2002 and its amended Implementing Rules and Regulations; as follows: ( please
write detailed list of incentives )
1. Business Tax ( state date of effectivity )
2. Real Property Tax (state date of effectivity )
3. Fees and charges
Issued on the _____ day of _________________ at the Oro- TIPC, Cagayan de Oro
City.
Signed by:
EILEEN E. SAN JUAN
Head, Cagayan de Oro Trade and Investment Promotion Center
.
43