foreign telecommunications

7/23/2019 Foreign telecommunications

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GENERAL FACTS ON FOREIGN TELECOMMUNICATION INVESTMENT

1. What are foreign corporations?

Answer:

A foreign corporation exists mainly due to the laws of another state and generally,

has no existence in another state. Under the Corporation Code, it is one formed,

organized and existing under any laws other than those of the Philippines and

whose laws allow Filipino citizens and corporations to do business in the Philippines.

2. What are foreign investments?

Answer:

Dened in !.". #o. $$%, &foreign in'estments& shall mean e(uity in'estments

owned by a non)Philippine national made in the form of feoreign exchange or other

assets actually transferred to the Philippines and registered with the Central *an+and the *oard, which shall assess and appraise the 'alue of such assets other than

foreign exchange.

3. What is Telecommunications?

Answer:

Dened in epublic Act #o. -$/, 0elecommunications is any process which enables

a telecommunications entity to relay and recei'e 'oice, data, electronic messages,

written or printed matter, xed or mo'ing pictures, words, music or 'isible or

audible signals or any control signals of any design and for any purpose by wire,radio or other electromagnetic, spectral, optical or technological means.

4. Is Telecommunications business a public utility?

Answer:

1es. &Public utility& refers to a business or ser'ice which is engaged in regularly

supplying the public with some commodity or ser'ice of public conse(uence, such

as electricity, gas, water, transportation or telephone or telegraph ser'ice. 2t implies

a public use and ser'ice to the public. 3D"4 "pinion #o. 566, s. 6$, dated $7

4anuary 6$8

5. What are the investment opportunities in the telecommunications

sector?

Answer:

0he Philippines telecommunication industry is e'ol'ing. 9obile has been the

primary mode of telecommunication in the country as shown by its o'er 655:



penetration rate. ;ince most people ha'e multiple subscriber identication module

3;298 cards, the actual penetration rate is estimated to be around 75 percent.

0he needs of the Filipino consumers in communication are shifting, it demands more

from the telecommunication companies. From a purely text and call culture, mobile

connecti'ity to the 2nternet is now dri'ing demand. <rowth pro=ections for the

telecommunications industry is based on the following sub)sectors>

368 9obile> the mobile industry has reached maturity with its 65 million subscriber

base 3<lobe ? @%./ million, ;9A0 ? -$./ million8. Fierce competition between <lobe

0elecom and ;9A0 Communications has led to lower a'erage re'enue per user

3APU8 for 'oice and short message ser'ice 3;9;8. 0he traditional mobile re'enue is

expected to slow as consumers shift to wireless broadband.

3$8 *roadband> the broadband sub)sector has o'er 'e million subscribers 3<lobe ?

$.$ million, ;9A0 ? @.@ million8. 0here is tremendous growth potential for the

broadband sub)sector, both xed and wireless. ireless broadband is seen as the

growth area for the mobile industry. 0his is based on the continuous increase of

smartphone ownership that is becoming more aBordable and the growing demand

for high)speed 2nternet access.

0he challenge for the Philippines is to continue to upgrade its telecom infrastructure

to +eep up with the growing demand for broadband. 2n its ;tate of the 2nternet

report published in the third (uarter of $56@, A+amai, a content deli'ery networ+,

states that the Philippines a'erage connection speed is 6.7 9egabits per second

39bps8$, wellbelow the global a'erage of @.% 9bps. A+amai ran+ed the Philippines

at 66Eth from 67/ countries.

3@8 Fixed ine> xed line penetration is at E percent with an estimated E million

subscribers. 0his sub)sector is expected to remain stagnant.

Foreign in'estment in the Philippine 0elecommunication is one way of inno'ating

our telecommunication industry. 2n'estors can establish ad'ance technologies for

faster communication and connection. 2nternet opportunity is also a necessity today.

2n'esting in people by pro'iding digital literacy can also uplift the industry.



6. Which Telecommunication products are in demand in thehilippines?

Answer:

2n the Philippine settings, telecommunication companies pro'ide Unlimited

ser'ices and Promos in call and texts also in 2nternet connections other than the

egular oad to their ser'ice consumers. Customers usually consume these

products because they are more practicable to use than the regular load. 9obile

phones are the number one source or mode of telecommunication nowadays,

people tend to use their phones regularly for texting and calling, also in surng the

2nternet. 0hese products are 'ery useful to consumers who regularly text, call andsurf the 2nternet for unlimited time. 0elecommunication companies also pro'ides

Postpaid plans to those consumers who does not prefer to use Prepaid ser'ices.

0hey also pro'ide Combinations for example 2nternet connections are already

connected to the telephone lines. 0his is more li+ely in fa'or on the part of the

consumers wherein telecommunication companies are proting.

-. What is the role of !oreign Investments in the hilippines in its

Telecommunications "ector?

Answer:

0elecommunications is one of the most strategic industries of national economic

control. 2t plays dual role in economic acti'ities, not only itself a distinct circle in

economic system but also a supplying mean for other sectors. Ga'ing this special

+ind of character, telecommunications co'er and relate to many other industrial and

economic sectors. Foreign in'estment has been one of the most important dri'ing

force in the exploration od natural resources and impro'ement of economic

conditions in the underde'eloped and de'eloping countries for centuries. ecently,

foreign in'estments has not only increased rapidly but also co'ered a wide

spectrum of industries around the world. 0he role of foreign in'estments has played

a more and more important role in the Philippines. <enerally spea+ing, money will

spur economic growth and create a better li'ing standard in our country. Foreignin'estment on telecommunications will bring ad'ance technological s+ills, large

amount of funds, as well as mar+et competition and will benet national

telecommunication de'elopment.

#. What is the procedure for setting up$establishing a foreign business

in the hilippines?



Answer:

Under the Philippine system, businesses can be organized as proprietorship,

partnership, corporation, regional head (uarters or regional operating head(uarters.

A foreign corporation must rst secure the necessary licenses or registrations from

the appropriate go'ernment bodies. 2n the case of corporations or partnerships, the

necessary incorporation papers from the ;!C must rst be obtained. 2n the case of

single proprietorship, registration from the *ureau of 0rade egulation H Consumer

Protection of the Department of 0rade and 2ndustry must be secured.

%. &an a !oreign &ompany invest in the hilippine Telecommunication

sector?

Answer:

A foreign in'estment company can in'est in the Philippine telecommunications

sector. 0he Foreign 2n'estments Act of 66 3.A. -5E$, 66, amended by .A.

76-, 6%8 attracts, promotes and producti'e in'estments from foreign indi'iduals,

partnerships, corporations, and go'ernments, including their political subdi'isions,

in acti'ities which signicantly contribute to national industrialization and

socioeconomic de'elopment to the extent that foreign in'estment is allowed in such

acti'ity by the Constitution and rele'ant laws. Foreign in'estors are free to set up

in'estment pro=ects in all sectors of the Philippine economy, such as

0elecommunication companies. Under the F2A, foreign in'estors are generally

treated li+e their domestic counterparts and must register with the ;ecurities and

!xchange Commission 3;!C8 3in the case of a corporation or partnership8 or with the

Department of 0rade and 2ndustryIs *ureau of 0rade egulation and Consumer

Protection 3in the case of a sole proprietorship8.

1'. What is the percentage of foreign e(uity allo)ed under the

!I*?

ith the liberalization of the foreign in'estment law, 655: foreign e(uity may be

allowed in all areas of in'estment except those reser'ed for Filipinos by mandate of

the Philippine Constitution and existing laws.

11. *re there any restrictions in a business )ith foreigninvestment?

Answer:

2t is stated in the Foreign 2n'estment Act the two negati'e list, also +nown as the

Foreign 2n'estment #egati'e ist. 0hese are #egati'e ist A and #egati'e ist *,

which are limited or restricted by the Constitution and specic laws.

http://www.sec.gov.ph/


http://www.dti.gov.ph/

http://www.dti.gov.ph/





12. What are the &overage of +egative ,ist *?

Answer:

2n #egati'e ist A, foreign ownership is limited by mandate of the Constitution and

specic laws. 0hese are>

#o Foreign !(uity

6. 9ass 9edia except recording

$. Practice of professions

@. etail trade enterprises with paid)up capital of not less than U;J $,/55,555.55

E. Cooperati'es

/. Pri'ate ;ecurity Agencies

%. ;mall)scale 9ining

-. Utilization of 9arine esources in archipelagic waters, territorial sea, and

exclusi'e economic zone

7. "wnership, operation and management of coc+pits

. 9anufacture, repair, stoc+piling andKor distribution of nuclear weapons

65. 9anufacture, repair, stoc+piling andKor distribution of biological, chemical andradiological weapons and anti)personal mines

66. 9anufacture of recrac+ers and other pyrotechnic de'ices

Up to 0wenty Percent 3$5:8 Foreign !(uity

6$. Pri'ate radio communication networ+

Up to 0wenty)Fi'e Percent 3$/:8 Foreign !(uity

6@. Pri'ate recruitment, whether for local or o'erseas employment

6E. Contracts for the construction and repair of locally)funded public wor+s, except>

a. infrastructureKde'elopment pro=ects co'ered in A --67L andb. pro=ects which are

foreign funded or assisted and re(uired to undergo international competiti'e

bidding 3;ec. $3a8 of A --678



6/. Contracts for construction of defense)related structure

Up to 0hirty Percent 3@5:8 Foreign !(uity

6%. Ad'ertising

Up to Forty Percent 3E5:8 Foreign !(uity

6-. !xploration, de'elopment and utilization of natural resources

67. "wnership of Pri'ate ands

6. "peration and management of public utilities

$5. "wnershipKestablishment and administration of educational institutions

$6. Culture, production, milling, processing, trading excepting retailing, of rice and

corn and ac(uiring, by barter, purchase or otherwise, rice and corn and the by)

products thereof

$$. Contracts for the supply of materials, goods and commodities to go'ernment)

owned or controlled corporation, company, agency or 9unicipal Corporation

$@. Pro=ect Proponent and facility "perator of a *"0 pro=ect re(uiring a public

utilities franchise

$E. "peration of deep)sea commercial shing 'essels

$/. Ad=ustment Companies

$%. "wnership of condominium units where the common areas in the condominium

pro=ects are co)owned by the owners of the separate units or owned by a

corporation

Up to ;ixty Percent 3%5:8 Foreign !(uity

$-. Financing companies regulated by the ;ecurities and !xchange Commission

$7. 2n'estment housed regulated by the ;!C

1-. Where can a foreign corporation le for permits/ licenses/ and

clearances?



Answer:

Gere is the list of oMces or go'ernment agencies where a foreign corporation may

le for its permits, licenses, and clearances>

A<!#C1 C"#0AC0 ADD!;;

Philippine Board of

Investments

Investment Assistance Center (IAC)

Ground Floor Industry and Investments

Bldg

385 Sen. Gil Puyat Ave., Makati City

TL. 895.36.40 / 895.36.41 / 895.36.57

DL. 895.83.22

Email : [email protected]

Atty. Raul V. Angeles

Executive Director – Investment

Assistance Center

Telefax: 897-3079

Board of Investments

Industry and Investments

Building

385 Senator Gil Puyat

Avenue, Makati City

1200 Metro Manila,

Philippines

Philippine Economic Zone

Authority

Dr. Lilia B. De Lima

Director – General

Tel No: 551-3454

Fax No: 891-6380

E-mail: [email protected]

Mr. Elmer H. San Pascual

Group Manager Promotions

and Public Relations Group

Tel No.551-3438

(0917) 822-0326

Fax No: 551-3436


Ms. Mary Grace Celestino-Perez

Tel No: 551-3438

Email:[email protected]

PEZA Building

Roxas Boulevard corner

San Luis Street

Pasay City, Metro Manila



[email protected]

Authority of the

Freeport Area of

*ataan

0eogracias .. &ustodio

Chairman H Administrator!)mail> deo.custodioNafab.go'.ph

deo.custodioNgmail.com

r. !rancis Theodore Initrio

!mail> francis.initrioNafab.go'.ph

nitrioNyahoo.com

nitrioNgmail.com

0el #o> 35E-8 @/)E55E

Fax #o> 35E-8 @/)E55

2/F AFAB Administration

Bldg.,

Free Port Area of Bataan,

Mariveles, Bataan 2106

Aurora Special Economic

Zone Authority

Mr. Gerardo D. Erguiza

President and CEO

Email: [email protected]

Tel No: 813-4381

813-4384

Fax No: 813-3674

Mr. Leo Angelo C. Salinel

Business Development Manager

Tel No: 813-4381

Fax No: 813-3674


3rd floor, Languages

International Bldg.,

926 A. Arnaiz Avenue, San

Lorenzo, Makati CityAurora

Special Economic Zone

Authority

2/F SSS Makati Bldg.,

6782 Ayala Ave.,

Makati City

Bases Conversion and

Development Authority

Mr. Arnel Paciano D. Casanova, Esq.

President and CEOTel No:575-1700

Fax No:816-0915


Mr. Eduardo G. Policarpio, Jr.

Department Manager Corporate

BCDA Corporate Center

2nd floor,

Bonifacio TechnologyCenter 31st St.,

Crescent Park West,

Bonifacio Global City,

Taguig 1634



Planning

Telefax. No: (632) 816-0987

Ms. Levy D. Vicente

planning Officer

Department Manager Corporate

Planning

Tel. No: 575-1731


[email protected]

Clark Development

Corporation

Mr. Arthur P. Tugade

President and CEO

Tel No:(045) 599-2090

Fax No: (045) 599-2507

Ms. Keann Mallari

Office Secretary

Tel No: 045-599-2092


Engr. Mariza O. Mandocdoc, Phd

OIC/Vice-President,

Business Development & Business

Enhancement Group

Tel No:(045) 499-1139

(045) 499-1140

Fax No:(045) 599-2616


Ms. Ma. Cynthia Edelita S. Chaves

Asst. Manager, Corporate Planning

Department

Fax No: (6345) 599-3855

Email:

[email protected]

Clar+ De'elopment

Corporation*ldg $6$$, C.P. <arcia

;t., Clar+ Freeport

Oone, Pampanga



[email protected]

Cagayan Economic Zone

Authory

Mr. Jose Mari B. Ponce

Administrator and CEO

Tel No: (02) 747-3058

Tel No:(0920) 915-7521

Fax No: (02) 631-3997


Ms. Michelle

Office Secretary

Tel No: (078) 846-2165

Fax No: 631-3991


Mr. Julius C. Ordoña

Department Manager – Planning and

MIS

Tel No: (02) 747-3058

Fax No: (02) 631-3997


Ms. Novelyn Cruz

Investor Relation Officer

Tel No: 747-444-6946

Fax No: (02) 631-3997


-th Floor,

estar *uilding %66;haw *oule'ard,

Pasig City 6%5@

PHIVIDEC Industrial

Authority

Mr. Leo Tereso A. Magno

Administrator

Tel No: (088) 567-0260; (088) 567-0135

Engr. Avalyn Cahulogan

Corporate Planning

Mindanao Container

Terminal, Tagoloan, 9000

Misamis Oriental



and Business Development

Port Magmt. Dept.

Tel No: (08822)740-245 loc. 221

Fax No: (08822) 740-294

Philippine etirement

Authority

Mr. Ray R. Souza

Chief, Client Relation Division

Tel No: 848-1418


Mr. Veredigo P. Atienza

General Manager

Tel No: 848-1412 loc. 102

Fax No: 848-7106

29th floor, Citibank Center,

8741 Paseo de Roxas,

Makati City, Philippines

REGIONAL BOARD OF

INVESTMENTS – ARMM

Atty. Ishak Mastura

Chairman and Managing Head

Fax No. (064) 421-1591


Mr. Larzon Santos

Chief Investment Specialist, Reseasrch

Div.

Fax No: (064) 421-1591


Ms. Farida Biruar


ORG Compound, Cotabato

City 9600

Subic Bay Metropolitan

Mr. Roberto V. Garcia

Chairman and Administrator

Tel No. (047) 252-4422

Administration Building,

229 Waterfront Road,

Subic Bay Freeport Zone



Authority

Fax No. (047) 252-4428


[email protected]

Mr. Ronnie R. Yambao

Manager

Manufacturing & Maritime Business

Department

Tel No: (047) 252-4791

(047) 252-4636

Fax No: (047) 252-4216


[email protected]

Tourism Infrastructure and

Enterprise Zone Authority

Mr. Mark T. Lapid

Chief Operating Officer

Atty. Nino Rufino Aquino

Corporate Secretary

Fax No:(02) 525-3008


Mr. Cesar B. Ladringan

Senior Analyst


[email protected]

142 Amorsolo St., Legaspi

Village, Makati City

Oamboanga City

;pecial !conomic Oone

Authority

Mr. Christopher Lawrence S. Arnuco

Chairperson and Administrator

Tel. No. (062) 991-3155

Fax No. (062) 991-3155

Ms. Marilou dR. Vasquez

Corporate Sales and Locators

Zamboanga City Office

Address:Brgy. San Ramon,

Zamboanga City

Philippines,Metro Manila

Office:Unit 1614

Torre Lorenzo



Management Division

Tel No: (062) 991-3158

Fax No: (62) 991-3155


Carma Ayn Mendoza

Manila Office

Tel No: (062) 464-9059

Fax No: (62) 464-9001


Condominium

Cor. P. Ocampo St., Vito

Cruz

Taft Ave. Manila,

Philippines27th flr.

BPI Buendia Centre

372 Sen. Gil J. Puyat Ave.,

Makati City

14. What are the costs of doing business in the hilippines?

Answer:



RIGHTS OF FOREIGN INVESTORS

What are the basic rights and guarantees given for the safety of foreign

investors?

Answer:

All in'estors and enterprises are entitled to the basic rights and guarantees

pro'ided in the Philippine Constitution, such as>

A. ight to !PA02A02"# "F 2#!;09!#0;

2n the case of foreign in'estments, the right to repatriate the entire proceeds of the

li(uidation of the in'estment in the currency in which the in'estment was originally

made at the exchange rate pre'ailing at the time of repatriation.

*. ight to !9200A#C! "F !A#2#<;

2n the case of foreign in'estments, the right to remit earnings from the in'estments

in the currency in which the in'estment was originally made and at the exchange

rate pre'ailing at the time of remittance.

C. ight to F"!2<# "A# A#D C"#0AC0;

0he right to remit, at the exchange rate pre'ailing at the time of remittance, such

as may be necessary to meet the payment of interest and the principal on foreign

loans and foreign obligations arising from technological assistance contracts.

D. ight to F!!D"9 F"9 !QP"P2A02"#

0here shall be no expropriation by the go'ernment of the property represented by

the in'estments or of the property of enterprises except for public use or in the

interest of national welfare and defense and upon payment of =ust compensation. 2n

such cases, foreign in'estors of enterprises shall ha'e the right to remit sums

recei'ed as compensation for the expropriated property in the currency in which the

in'estment was originally made and at the exchange rate pre'ailing at the time of

remittance.

!. ight to #"#)!RU2;202"# "F 2#!;09!#0

0here shall be no re(uisition of property presented by the in'estment or of the

property of enterprises, except in the e'ent of war or national emergency and only

for the duration of such. 4ust compensation for the re(uisitioned property may be

remitted in the currency in which the in'estment was originally made and at the

exchange rate pre'ailing at the time of remittance.



LABOR AND EMPLOYMENT

1. "hould the !oreign &orporation comply )ith hilippine ,abor

re(uirements? What are these re(uirements?

Answer:

1es. Foreign Corporation are sub=ect to Philippine laws.

0he Foreign Corporation can hire and employ laborers complied with the rules and

duties under the Philippine existing law on labor.

0he laws on labor standards and employment relations are consolidated in the

abor Code of the Philippines, which is supplemented, from time to time, by

legislati'e issuances. 0he salient points of employment conditions and employee

benets co'ered by Philippine labor laws are gi'en below>

• Gours of or+

• or+ Day

• "'ertime enumeration

• #ight ;hift DiBerential Pay

• ;er'ice 2ncenti'e ea'e Pay

• 9eal and est Periods

•

9inimum age• !mployeesI Compensation Program

• #ational Gealth 2nsurance

• !mergency, 9edical, and Dental ;er'ices

• oman and Child abor

• Paternity ea'e

• 0ermination of !mployment

• Unions

$. &an !oreign &orporation in the hilippines hire foreign nationals?

Answer:

1es. 0hey can hire foreign nationals sub=ect to 2mmigration and !mployment

egulations for Foreigners in the Philippines.

0he go'ernment has liberalized the 'isa re(uirements for certain categories of

foreigners to encourage foreign participation in the economic de'elopment of the



country. Foreign stoc+holders, in'estors, representati'es of in'estment houses, and

land de'elopers are among the categories granted this special incenti'e.

-. What 3ind of visas may be granted to foreigners )ho )ill )or3 or

render service in the hilippines?

Answer:

• 0reaty 0raderIsK2n'estorIs isa under ;ection 3d8 of the Philippine

2mmigration Act

• Prearranged !mployeeIs isa under ;ection 3g8 of the Philippine 2mmigration

Act

• ;pecial #onimmigrant isa under ;ec. E-3a83$8

• ;pecial #onimmigrant isa under !" #o. $$%

• ;pecial #onimmigrant isa under PD #o. 65@E

• ;pecial ;ubic or+ isa

4. ther Immigration olicies

Foreign nationals who wish to come to the Philippines can either enter as a tourist

without 'isa under !" #o. E57, or secure a temporary 'isitorIs 'isa under ;ection

3a8 before any Philippine consular post abroad. 0he ;ection 3a8 'isa can either be

for business, pleasure, or health and normally entitles an alien to an initial stay of

/ days, extendible to a year. hile in the Philippines, aliens are allowed by the *2

to con'ert their immigration status from touristK temporary 'isitor to another 'isa

category without ha'ing to lea'e the country. 0he foreign national must be in thePhilippines when his or her application for con'ersion of immigration status is

appro'edL otherwise, it will be in'alidated. 2f this happens, there will be a need to

le an application for re'alidation. 0he spouse and dependent children may li+ewise

(ualify for the same 'isa category as that of the principal applicant. hile the *2 is

processing the expatriateIs application for con'ersion of immigration status, he or

she should apply for a Pro'isional Permit to or+.



INVESTMENT REGISTRATION IN THE PHILIPPINE ECONOMIC ZONE

AND/OR BOARD OF INVESTMENTS

1. o) to (ualify the investment registration )ith the I$78*?

Answer:

0o (ualify for registration with the *"2 for incenti'e purposes, the proposed foreign

in'estment must be made in any of the following>

a8Preferred areas of in'estment listed in the current 2n'estment Priorities Plan

32PP8. A preferred area may be declared pioneer if it> 368 in'ol'es the

manufacturing of processing 3not merely assembly or pac+aging8 of goods or raw

materials that ha'e not been produced in the Philippines on a

commercial scaleL 3$8 uses a design, formula, scheme, method, process or

system of production or transformation of any element or raw materials into

another raw materials or nished good which is new and untriedL 3@8 engages in

agricultural acti'itiesKser'ices essential to the achie'ement of the countryIs self)

suMciency programL and 3E8 produce non)con'entional fuels or manufactures

e(uipment which utilize non)con'entional sources of energyL pro'ided that the nal

product in any of the foregoing instances in'ol'es substantial use and processing of

domestic raw materialsL

b8 enterprises engaged in preferred non)pioneer area and exporting at least -5: of

their outputL and

c8pro=ects in less)de'eloped areas pro'ided that the acti'ities in all of the abo'e

cases are not reser'ed for the Philippine nationals.



"n the other hand, the pro=ect that may (ualify for registration with P!OA are

those that in'ol'e manufacturing for export and the domestic mar+et, free trade,

tourism, utilities, facilities enterprises including those engaged in warehousing and

trading operations in the ecozones and de'elopment and operations of ecozones.

2. o) does a !oreign &orporation le an application )ith the

I$78*?

Answer:

An application shall be made in the from prescribed by the *"2KP!OA in two3$8

copies and properly sworn to before a notary public. A pro=ect feasibility study is

re(uired as one of the primary document supporting the application for registration.

Gow long will it ta+e to obtain *"2KP!OA appro'al once all re(uirements are

complied withS

Under the 67- "mnibus 2n'estment Code, application led with the *"2 shall be

considered automatically appro'ed if not acted upon by the *oard within twenty

3$58 wor+ing days from oMcial acceptance thereof, sub=ect to the usual terms and

conditions.

-. o) much time is an investor allo)ed to start his pro9ect?

Answer:

0he amount of time allotted for starting a registration pro=ect depends on the period

set by the proponent, with the appro'al of the *"2KP!OA.

4. &an the application for registration )ith the I$78* and the "7&

be led simultaneously/ or must )e )ait for the I$78* approval

before going to the "7&?

Answer:

egistration with the *"2KP!OA is re(uired only for purposes of a'ailing in'estment

incenti'es. 2t is preferable to rst see+ appro'al from the *"2KP!OA before ling an

application with the ;!C.



5. o) long after the submission of the application and all the

re(uired documents )ill approval be obtained?

Answer:

0he processing and appro'al of the papers ta+e around fteen 36/8 wor+ing days

from oMcial acceptance of the application.

OWNERSHIP, RESTRICTIONS AND LIMITATION (STOCK OWNERSHIP,

REAL PROPERTY, ETC.)

1. &an !oreign Investors lease land?

Answer:

1es. 0hey can lease lands as long as it is for the sole purpose of in'esting.

2n'estorIs ease Act 3A #o. -%/$8 A #o. -%/$ allows foreign in'estors to leasecommercial lands in the Philippines for a maximum of -/ years 3pre'iously /5

years8. Under this law, any foreign in'estor infusing capital into the country can

lease pri'ate lands, in obser'ance of Philippine laws and the following>

6. ease contract shall rst be for /5 years, renewable only once for another $/

years.

$. eased area will be used solely for in'estment.

@. ease contract will conform with the Comprehensi'e Agrarian eform aw and

the ocal <o'ernment Code.

2. &an a Telecommunication 7ntities o)n stoc3s and real

property?

1es. Under the ;ecurity and !xchange Commission rules, there are two

cases in determening the nationality of the 2n'estee Corporation or in a



telecommunication entity. 0he rst case is the liberal rule, later coined by

the ;ecurity and !xchange commission as the Control test. Control test

pertains to the portion in said Paragraph - of 6%- ;!C rules which states,

;hares belonging to coporations or partnerships at least %5: of the capital of

which is owned by Filipino citizens shall be considered as Philippine

#ationality. Under the rst case, there is no need to further trace the

ownership of the %5: Filipino stoc+holdings of the 2n'esting Corporation

since a corporation which is at least %5: Filipino)owned is considered lipino.

) *ased on the corporation code of the Philipinnes, the sencond case

is the ;trict rule +nown as the <randfather rule. 2f the

percentage of Filipino ownership in the corporation or in a

0elecommunication entity is less than %5:, only the number of

shares corresponding to such percentage will be counted as of

Philippine nationality. Under such rule <randfather rule proper, the

combined totals in the in'esting Corporation and the 2n'estee

Corporation must be traced to determin the total percentage of

lipino ownership in a particular telecommication entity.

-. What provisions are involved or related to o)nership of

Telecommunication 7ntities?

A -$/ 3An Act to <o'ern the Philippine De'elopment of the Philippine

0elecommunications and the Deli'ery of Public 0elecommunications ;er'ices8

o A02C! 222 30elecommunications De'elopment8

o U! 7@5 3!xpansionK9odernization8

A %7E 3An Act Pro'iding for the 2nstallation, "peration, and 9aintenance of

Public 0elephones in !ach and !'ery 9unicipality in the Philippines,

Appropriating Funds therefor and for "ther Purposes8

4. What rule is applied on public o)nership of stoc3s of

Telecommunication 7ntities?



All telecommunications entities with regulated types of ser'ices shall ma+e a

bona de public oBering through the stoc+ exchanges of at least thirty

percent 3@5:8 of its aggregate common stoc+s within a period of 'e 3/8

years from the entityTs rst start of commercial operations.

0he public oBering shall comply with the rules and regulations of the

;ecurities and !xchange Commission.

5. What if a Telecommunication 7ntity )ants to e:pand or

moderni;ed its facilities?

!xpansion and upgrading of existing and pre'iously appro'ed plant and

facilities for purposes specied in A-$/ within the same areas co'ered by

the existing plant and facilities pre'iously appro'ed shall not re(uire

appro'al by the Commission.

6. What restrictions and regulations governing e:pansion and$or

moderni;ation of Telecommunication facilities?

Any nancing arrangement for the purpose specied in ule 7@53a8 including

increase of capital shall not re(uire appro'al by the Commission.

) 0he P0! who wishes to expand andKor upgrade its existing or

pre'iously appro'ed plant and facilities within the same appro'ed

area shall submit to the Commission its planned expansion andKor

upgrading, the timetable of implementation and the amount needed

to carry out such expansion andKor upgrading thirty 3@58 days prior

to the commencement of the pro=ects.) P0!s underta+ing expansion and upgrading of facilities shall submit

a (uarterly report on the status of the pro=ect implementation

incorporating therewith the list of e(uipment, materials and

accessories and the amount actually in'ested.



TAX SYSTEM OF FOREIGN TELECOMMUNICATIONS INVESTORS

1. What is Tax?

•

Tax is a compulsory contribution to state revenue, levied by thegovernment on workers' income and business profits or added to the

cost of some goods, services, and transactions. (National Revenue

ode!2. What is a Tax Liability

• Tax "iability is the total amount of tax that an entity is legally obligated

to pay to an authority as the result of the occurrence of a taxable event.

#t is also considered as a debt to a government incurred by a tax payeras accrued or assessed taxes.

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3. Are franchises of telecommunications exempted from taxes?

Virtue of Section 23 of epublic Act !o. "#2$ %&ublic

Telecommunications &olicy of the &hilippines'

Section 23. Equality of Treatment in the Telecommunications Industry. - Any advantage,favor, privilege, exemption, or immunity granted under existing franchises, or may hereafter be granted, shall ipso facto become part of previously granted telecommunicationsfranchises and shall be accorded immediately and unconditionally to the grantees of suchfranchises: Provided, however, That the foregoing shall neither apply to nor affect provisionsof telecommunications franchises concerning territory covered by the franchise, the life spanof the franchise, or the type of service authorized by the franchise.



$%T#&N (R )*)+!. Tax rovisions. The grantee shall be liable to

pay the same taxes on its real estate, buildings, and personal

property exclusive of this franchise as other persons or

corporations are now or hereafter may be re-uired by law to pay.

(. What are the rates imposed on taxin) domestic telecommunication

corporation ?

S*+. 2". ates of ,ncome tax on -omestic +orporations %!ational ,nternal

eenue +ode'

• #n the case of corporations adopting the fiscalyear accounting period, the

taxable income shall be computed without regard to the specific date when

specific sales, purchases and other transactions occur. Their income and

expenses for the fiscal year shall be deemed to have been earned and spente-ually for each month of the period.

• The reduced corporate income tax rates shall be applied on the amount

computed by multiplying the number of months covered by the new rateswithin the fiscal year by the taxable income of the corporation for the period,

divided by twelve.

$. What are the rates imposed on taxin) forei)n telecommunication

corporation?

S*+. 2/. ates of ,ncome Tax on 0orei)n +orporations.

• The reduced corporate income tax rates shall be applied on the amount

computed by multiplying the number of months covered by the new rates

within the fiscal year by the taxable income of the corporation for the period,divided by twelve.

• rovided, however, That a resident foreign corporation shall be granted the

option to be taxed at fifteen percent (/0! on gross income under the same

conditions, as provided in $ection 1) (!.

6. What ma9or ta: investment incentives are available to registeredenterprises?

Answer:

oard of Investment <I= Incentives



6. ;ix year income tax holiday 320G8 for pioneer rms while four years 20G for non)

pioneer rms. A non)pioneer rm will be entitled to % years 20G if it is located in a

less de'eloped area. 2n 9etro 9anila, to be granted an 20G they must be within a

go'ernment industrial estate, ser'ice)type pro=ects which has no manufacturing

facilities, power generating plants or exporters with expansion pro=ects.

$. 0ax credit on semi)manufactured product, raw materials and supplies

@. Further deduction from taxable income for expenses in labor

E. Further deduction from taxable income for ma=or and necessary wor+s in

infrastructure

/. Additional deductions cannot be en=oyed simultaneously with the 20G incenti'es

+on> !iscal Incentives

6. Assured repatriation of foreign in'estment and earnings thereon,

$. Consigned e(uipment importation, and

@. Foreign nationalsI employment.

hilippine 7conomic 8one *uthority <78*= Incentives

<ranted to registered enterprises operating within the !cozones

6. 2ncenti'es under the *"2 incenti'es with additional tax and duty exemption on

importations raw materials, capital e(uipment and other merchandise that are

essential to its operations.

$. *enets pro'ided for in the !xport De'elopment Act of 6E shall be en=oyed by

exporters using local materials.

@. A preferential rate of /: shall be remitted to the go'ernment by the enterprises

with lapse !"$$%.

ther Incentives

0he Cagayan ;pecial !conomic Oone and the Oamboanga City ;pecial !conomic

Oone grant the same incenti'e gi'en to enterprises within the ecozone of P!OA.



;ubic *ay Freeport 3;*F8 and the Clar+ ;pecial !conomic Oone allow enterprises to

pay a nal tax of /: of their gross income as long as their income from non)export

sale shall not go beyond @5: of their income coming from all sources.

2.*re investment incentives transferrable?

Answer:

0hey are non)transferable.



STATISTICS AND CHARTS



SOURCE: PHILIPPINE STATISTICS OFFICE

foreign telecommunications

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