PHILIPPINES
SUBSIDY PROGRAMS: GENERAL
Last Reviewed December 31, 2000
Effective February 15, 2000, Import Administration began publishing "Decision Memos" to reduce the size of antidumping and countervailing duty Federal Register notices. In cases in which a decision memo was published, you will find a link to the memo listed below.
In addition, in the following programs, in instances below in which a proceeding was a Sunset Review, you will see the letters SR after the product name.
COUNTERVAILABLE SUBSIDY PROGRAMS
The subsidy programs listed below have been investigated by the Department and have been
found to be "countervailable" based on the criteria established in the Tariff and Trade Act of
1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition,
you may click on the cases listed below the subsidy program title for a full explanation of the
Department's analysis in those cases.
Development Bank of the Philippines Interest Moratorium (DBP)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
The DBP provided interest free loans to companies. We determined these loans to be countervailable.
Export Processing Zone Authority (EPZA)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
The Export Processing Zone Authority (EPZA) was created by PD 66, as amended by PD 1449. To be eligible for incentives granted by the EPZA, a company must be located in one of the
designated export zones. To locate in one of the zones, a company is required to export a certain percentage of its production. Because availability of the incentives is limited to companies
located in the zones, and location in the zones is contingent upon export performance, we determined that section 17(a) of the PD 66 confers a countervailable benefit.
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
The Philippines Central Bank operates a rediscounting facility for selected loans. Each of those programs is detailed separately.
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final)
The export packing credit (EPC) program is a rediscounting program offered by the Central Bank which provides credit on eligible paper with maturity of one
year or less. Exporters may request a bank loan predicated on the letter of credit to finance working capital and other requirements. Exporters are charged a maximum
interest rate of 12 percent, including fees. Since this program is solely available to exporters, and interest rates are less than those for comparable
commercially available loans, we determined that this program provides a countervailable benefit.
Tax Incentives Available Under the Omnibus Investment Code (OIC)
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
The Omnibus Investments Code, Presidential Decree 1789, provides a variety of investment incentives only to registered enterprises for the purpose
of accelerating development of the economy of the Philippines by encouraging investment in projects to develop various sectors of the economy.
Programs under the OIC are regulated by the Board of Investments (BOI). Because registration to be part of the program is limited by
government direction to industries included in the Investment Priorities Plan, we determined that certain of the OIC provide countervailable
benefits. The programs under the OIC are listed below. The OIC was amended by the IPPA which was enacted in January 1983.
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final)
Under Article 48(b) of the OIC, a registered export producer may, for the first five years from its registration of commercial operations, deduct from its
taxable income from domestic and export sales and from all registered operations, an amount equivalent to the direct labor cost of the product and the local
raw material cost of its export products. The deduction may not exceed 25 percent of a company's total export revenue.
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
Article 48(d) of the 11PA provides for a tax credit on net local content of exports for registered new or existing export producers. Because receipt of this tax credit
is contingent upon export performance, we determined that this program provides a countervailable benefit.
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
Article 48(f) of the OIC provides for export producers a tax exemption on imported capital equipment in the amount of:
50 percent of the tariff duties and compensating tax payable on the imported capital equipment and accompanying spare parts for domestic producers; and
100 percent of the tax for imports within seven years from the date of registration for export producers.
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
Article 49(d) of the OIC provides for a tax deduction to export trading companies. For the first five years form the date of registration
of its commercial operations, a registered export trading company may deduct an amount equal to 20 percent of its total export sales. This deduction is made from
taxable income attributable to all registered operations of the firm. However the Board of Investments (BOI) may apportion up to one half of this deduction to the
registered export producer which is exporting through the registered trader.
SUBSIDY PROGRAMS FOUND TO BE NOT COUNTERVAILABLE
The subsidy programs listed below have been investigated by the Department and have been
found to be "not countervailable" based on the criteria established in the Tariff and Trade Act
of 1930, as amended. Please refer to this Act for further detail of the criteria applied. In
addition, you may click on the cases listed under the subsidy program title for a full
explanation of the Department's analysis in each case where the subsidy program has been
examined.
Article 45(b) Accelerated Depreciation
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
Article 45(b) of the OIC allows registered enterprises to use accelerated depreciation. We determined that some companies
depreciate their equipment over half its estimated useful life, as allowed under the Code, and others depreciate it in the same manner using the
Philippines Bureau of Internal Revenue regulations. Since these regulations have an identical provision for accelerated depreciation which is generally
available, we determined that Article 45(b) does not confer a countervailable benefit.
Article 45(c) Carry forward Operating Losses
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Under Article 45(c) of the OIC, a registered enterprise may carry forward all net operating losses incurred in any of the first ten years of operation.
Such losses may be carried forward for six years immediately following the year in which the loss was incurred and may be used as a deduction from taxable income.
Because this loss carryforward is available to domestic producers, we determined that this program is not countervailable.
Article 45(d) Tax Exemption on Imported Capital Equipment
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Article 45(d) of the OIC allows registered producers a tax exemption on imported capital equipment in the amount of 50 percent of the tariff duties and
compensating tax payable on imported capital equipment and accompanying spare parts. This program is not limited to a specific industry or industries or group of enterprises or industries.
Therefore, we determined this program to be not countervailable.
Article 45(i) Tax Deduction for Expansion Reinvestment
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
Article 45(i) of the OIC provides for a tax deduction for expansion reinvestment. This tax deduction is allowable when a registered
enterprise reinvests its undistributed profit or surplus by transfer thereof to its capital account for procurement of machinery, equipment and spare parts, or for
expansion of machinery and equipment used in the production or for the construction of buildings, improvements, and equipment. The amount reinvested is, to a certain percent,
allowed as a deduction from its taxable income in the year in which the reinvestment is made.
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final)
Article 48(a) of the OIC provides tax credits for raw materials and semi-manufactured products used in production and actually forming part of
the product. Suppliers that are not physically incorporated in the product are not eligible for this tax credit. Since the tax credit does not exceed
taxes actually paid, and the materials are physically incorporated in the product, we determined that this Article does not provide a countervailable benefit.
Article 48(c) Tax Credit on Net Value Earned by Registered New or Expanding Export Producers
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Article 48(c) provides for a tax credit on the net value earned by registered new or expanding export producers. The same provision is available to domestic producers
under Article 45(c) of the 11PA. Since Article 45 has been determined not to confer a bounty or grant on the basis that registration and
benefits provided under Article 45 are not limited to a specific enterprise or industry or group of enterprises or industries. Therefore we determined that this
program is not countervailable.
Article 52 Preferential Private Financial Assistance
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final)
This Article of the OIC provides for financial assistance to registered enterprises through preference for private financial assistance. Article 52
also authorizes the Insurance Commissioner to allow insurance companies to invest in new issues of stock of registered enterprises. The Philippine government does not provide
funds or incentives to the insurance companies. Therefore, we determined the benefits under this program are not countervailable.
Development Bank Loans
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
The Development Bank of the Philippines has the power to grant loans to any company in the agricultural or industrial sectors. In addition,
their charter also allows them to grant loans to municipalities and individuals. We determined that in practice, the loans are generally available, and
that the bank only granted loans on the basis of commercial considerations. Therefore, we determined the loans available from the Development Bank do not
provide a countervailable benefit.
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
(Also called "Unsupervised Credit") Preferential loans/credits which are rediscounted by commercial banks with the Central Bank under this program are available to producers of canned Tuna at a ceiling interest
rate of 12 percent, including fees. We determined that all industries in the Philippines have equal access to this program.
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final)
Presidential Decree 1892 suspended for a one-year period beginning on December 4, 1983, the 60 percent Philippine ownership requirement for enterprises registered under
Article 34(1) of the OIC. Although this decree allows increased foreign equity in registered enterprises, the Philippine government does not provide funds or
incentives to foreign investors. Therefore, we determined this program to be not countervailable.
Marginal Deposit Requirements
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
The relaxed marginal deposit requirements is a guideline issued by the Bankers Association of the Philippines (BAP) which is not a government-owned or
controlled entity. Since the BAP operates independently of the government and the Central Bank, and the guidelines reflect commercial considerations of the
BAP, we determined that this program does not confer bounties or grants.
Philippine Export and Foreign Loan Guarantee Corporation (PHILGUARANTEE)
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
PHILGUARANTEE, a government-controlled institution, provides guarantees on bid, performance and advance payment bonds, as well as working capital loans. These guarantees are available from
private institutions at the same charges as from PHILGUARANTEE. These guarantees are generally available. We determined that these guarantees provide no countervailable benefits.
Preferential Leasing Rates in the Bataan Export Processing Zones (BEPZ)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
We determined that the (BEPZ) does not operate at a loss, and, therefore, this program does not convey a countervailable benefit.
Tax Deductions in Export Processing Zones
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
We determined that tax deductions allowable under the EPZA is the same amount that is provided to producers registered under Article 45 of the OIC.
Since Article 45 has been determined not to confer a bounty or grant on the basis that registration and benefits provided under Article 45 are not limited to a specific
enterprise or industry or group of enterprises or industries.
SUBSIDY PROGRAMS THAT HAVE BEEN TERMINATED
The subsidy programs listed below have been investigated by the Department and have been
found to have been terminated based on the criteria established in the Tariff and Trade Act of
1930, as amended. Please refer to this Act for further detail of the criteria applied. In addition,
you may click on the cases listed below the subsidy program title for a full explanation of the
Department's analysis in each of these cases.
Preferential Access to Foreign Exchange
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final)
(Terminated October 15, 1984) Because of the financial crisis and foreign exchange shortage in 1983 and 1984, the Philippine government established an interim system that would allocate scarce foreign
exchange to those sectors that would lead the country towards economic recovery. Under Bank Circular 970, commercial banks are required to sell to the central bank all foreign exchange receipts from exports of
merchandise and services. Circular 970 set the following priorities for distribution of foreign exchange (1) oil imports, (2) debt servicing, and (3) exporters in need of imported raw materials.
SUBSIDY PROGRAMS THAT HAVE NOT BEEN USED
When potential subsidy programs are investigated and found not to be used by the companies
being investigated, the Department makes no determination as to their countervailability. If
you click on the cases listed under the subsidy program title, you will be linked to each case in
which the subsidy program was referenced.
Article 45(a) Deduction from Taxable Income
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Under Article 45(a) of the OIC, all enterprises registered with the BOI may take a deduction from taxable income of all capitalized organization and
pre-operating expenses, over a period not more than ten years from beginning of operations.
Article 45(e) Tax Credit Compensating for Value of Tax and Customs Duties
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Under Article 45(e) of the OIC, a registered enterprise which has purchased domestically produced equipment and received prior BOI approval may
take a tax credit equivalent to 100 percent of the value of compensating tax and customs duties that it would have paid had it imported the machinery, equipment and spare parts.
Article 45(f) Deduction from Taxable Income
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Article 45(f) of the OIC provides registered export producers with a similar tax exemption as Article 45(d). This Article
allows a registered enterprise to take a tax credit for taxes withheld on interest payments on foreign loans when no such credit is available to the lender-remittee
in its own country and the registered enterprise has assumed the liability for the payment of the tax due from the lender remittee.
Article 45(l) Deduction from Taxable Income for Labor Training
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
The Article of the OIC allows registered enterprises to take an additional deduction from taxable income of 50 percent of all expenses for
labor training incurred for upgrading the productivity and efficiency of unskilled labor, provided that such deduction does not exceed 10 percent of all direct
labor wages for a given year.
Article 48(e) Deduction from Taxable Income for New Brand Names
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
This Article of the OIC allows a registered export producer an additional deduction from taxable income equal to one percent of the annual increase
in its exports when it uses a new brand name that distinguishes its products from non-Philippine products.
Article 49(e) Income Tax Deduction for Financial Assistance
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
Part of the OIC. No program description available.
Article 49(f) Income Tax Deduction for Overseas Offices
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
Part of the OIC. No program description available.
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
Part of the OIC. No program description available.
Article 51 Preferential Government Loans
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
Article 51 of the OIC sets forth a policy that government financial institutions should accord priority to applications for financing made by BOI registered firms.
However, this policy is not binding on either government of other financial institutions.
Article 53 Financial Assistance to Employee Stock Purchases
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
This Article of the OIC provides for financial assistance to employees of registered enterprises through government loans for the purchase of
shares of stock in registered enterprises, at a rate not to exceed six percent per annum. This article provides a benefit to private individuals who wish to purchase stock.
Article 54 Creation of Institute for Export Development
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
This Article of the OIC provides for the creation of an Institute of Export Development which promotes exports by providing
government funded assistance.
Certain Provisions Provided Under the Export Processing Zone Authority
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85) not used
Export Credit Insurance and Guarantee Corporation (ECIGC)
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
The ECIGC provides insurance policies and certificates of guarantee against credit risks arising out of or in connection with export transactions.
Foreign Currency Retention Scheme
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85) not used
No program description available.
Government Equity Investment
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
No program description available.
Offsetting Export Tax
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
No program description available.
Section 17(f) of PD 66 Creating the Export Processing Zone Authority
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85) not used
No program description available.
Tax Credit for Net Local Value
Canned Tuna (1984) 51 FR 36260 (10/9/86-prelim); 51 FR 43758 (12/4/86-final) not used
No program description available.
World Bank Import Funding
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
No program description available.
SUBSIDY PROGRAMS DETERMINED NOT TO EXIST
The following subsidy programs were alleged by the petitioning industries and were
investigated by the Department. However, during the investigation we found no evidence that
such programs actually existed. If you click on the cases listed under the subsidy program title,
you will be linked to each case in which the subsidy program was referenced. It is possible
that, while the program named did not exist, a similar program having a different name
actually was investigated. If this is the case, you will find that program listed elsewhere in this
library.
No programs listed.
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final)
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final)
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final)
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final)
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85)
Certain Textiles (1983) 50 FR 1607 (1/11/85-prelim); Investigation Terminated 50 FR 15208 (4/17/85) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (1982) 48 FR 37051 (8/16/83-prelim); 48 FR 50133 (10/31/83-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used
Canned Tuna (8/83-12/83) 50 FR 9474 (3/8/85-prelim); 50 FR 30287 (7/25/85-final) not used