These guidelines cover how to avail of VAT and customs duty exemption on importation of capital equipment, raw materials, spare parts or accessories by all BOI Registered Business Enterprises (RBEs). For Export Enterprises, this will involve their VAT and customs duty exemptions 17 years from date of registration, while for Domestic Market Enterprises, this will involve their customs duty exemptions 12 years from date of registration.

The conditions for customs duty and VAT exemptions are the following:

• Direct and exclusive use in registered project or activity of RBEs;
• In case of duty exemption, capital equipment, raw materials, spare parts or accessories are:
• Direct and reasonably needed by the RBE;
• Used exclusively in and as part of the direct costs of the registered project or activity of the RBE; and
• Not produced or manufactured domestically in sufficient quantity or of comparable quality at reasonable prices as certified by the BOI through the issuance of Certificate of Non-Local Availability (CNLA)
• In case of duty exemption, approval from the BOI prior to importation by securing BOI-issued Certificate of Authority to Import (CAI), containing the list of capital equipment, raw materials, space parts or accessories to be imported
• Unless otherwise lifted, posting of performance bond, valid for 1 year, from the Government Service Insurance System (GSIS), equivalent to the VAT and/or duties waived, or in lieu of the bond, providing a guarantee from the principal stockholder/s or other form of guarantee to ensure performance

Regarding the sale, transfer and disposition of the items granted customs duty exemption, the guidelines provide that:

• Within the first 5 years from date of importation, it will need BOI approval prior to the sale/transfer/disposition and it will only be allowed under circumstances enumerated in Section 5 of the guidelines
• After five years from date of importation, the RBE will only need to notify BOI prior to the sale/transfer/disposition

If the sale/transfer/disposition is made without BOI approval, the RBE and the vendee/transferee/assignee are solidarily liable for twice the amount of duty exemption that should have been paid during the importation, without prejudice to penalties.

If imported items are to be used in a non-registered project or activity by the RBE within the first 5 years from date of importation, the RBE should secure prior approval of BOI and pay the amount corresponding to other exempt customs duty on importation.

If it is a part-time utilization in a non-registered project or activity, payment shall be in proportion to the specific items’ utilization in the non-registered project or activity.