The Program is tasked to evaluate and process request from inventors for the issuance of certification for tax and duty exemption application. Only “Filipinos” can avail of tax and duty exemption subject to the rules and regulations of the Bureau of Internal Revenue (BIR Regular 19-93), Department of Finance or the Bureau of Customs (DOF Department Order No. 121-93).
The Program assists inventors seeking tax and duty exemption privileges with the Bureau of Internal Revenue (BIR) and Department of Finance (DOF) as provided for in R.A. No. 7459. TAPI as Screening Committee Secretariat facilitates the evaluation of the Screening Committee for R.A. No. 7459.
Frequently Asked Questions (FAQ):
1. What is Republic Act No. 7459?
Also known as the “Inventors and Invention Incentives Act of the Philippines”, this Act provides encouragement and support to Filipino Inventors to maximize their capability and productivity through incentives and other forms of assistance and support. This also expanded the functions of the Technology Application and Promotion Institute (TAPI), an agency under the Department of Science and Technology (DOST).
2. Who are eligible for tax exemption privilege under R.A. No. 7459?
Filipino inventors who have valid IPOPHL Letters Patent or Utility Model (UM)/ Industrial Design (ID) Registration and produced on commercial scale.
3. What are the requirements for the issuance of SC certification?( Please click the applicable forms)
- Annex “A” - for Tax
- Annex “B” - for Duty
- Annex “C” – Data Privacy Consent Form
4. How does an inventor avail of the tax exemption?
The inventor shall submit his application for tax/duty exemption to the Commissioner of Internal Revenue, Attention: Legal and Legislative Division together with the required documents
in per BIR Revenue Regulations No.19-93 or to the Bureau of Customs (BOC) of the Department of Finance (DOF) per DOF Department Order No. 121-93.
5. What are the requirements under Section 4 of BIR Revenue Regulations No.19-93?
- Certification issued by FIS that the Invention is new or original and the technology is newly developed by local researches or adopted locally from foreign sources;
- Confirmation by the Screening Committee;
- Certification from the FIS that the manufacture and or sale of the invention products from technology developed is made on a commercial scale;
- Taxpayer Identification Card (TIN) and registration as non-VAT taxpayer;
- Initial capitalization required to fund the invention/technology;
- Volume/capacity/amount required in the manufacture and fabrication of the invention/ technology to attain the status of commercial scale.
6. What are the requirements under Section 4 of DOF Department Order No. 121-93?
- A letter – application signed by the inventor or his/her duly authorized representative should be submitted attaching thereto the following usual import documents:
- Bill of lading, Airway Bill, Parcel Post Notice or other shipping documents;
- Tax Identification Number (TIN), Commercial Invoice and Packing List; and
- Other relevant documents concerning the shipments.
- Sworn Statement of the inventor that the imported articles are actually, directly and exclusively needed in his/her inventions and that they are not for sale, hire or barter.
- Certification from the Department of Science and Technology that the importer is an accredited member for the Filipino Inventor Society and that the importation/s is/re indispensable in his invention/s.
- Certification from the Department of Trade and Industry (DTI) that the proposed importations (machinery, equipment, raw material and spare parts) are not locally available in sufficient quantity, comparable quality, and reasonable price.
- Nothing in these rules shall be construe to include motor vehicle, home appliances and furniture and fixtures as among the equipment/articles to be used for the Technology or to produce the invention.
7. How does an inventor secure the Certification by the Screening Committee for R.A. No. 7459?
The Screening Committee (SC) for R.A. No. 7459 is composed of technical representatives from the Department of Science and Technology (DOST), the Filipino Inventors Society (FIS), the Department of Trade and Industry (DTI), the Department of Agriculture (DA) and the Department of Environment and Natural Resources (DENR).
The request for SC certification should be addressed to the Screening Committee Chairperson through the Technology Application and Promotion Institute (TAPI) which acts as the SC Secretariat with address at: TAPI Building, DOST Compound, General Santos Avenue, Bicutan, Taguig City .
Certification/non-certification is based on the SC’s evaluation of the invention. A Resolution signed by the SC members and a Certificate signed by the Chairperson shall be issued for inventors with approved request.
This Certificate together with all the requirements indicated in BIR Revenue Regulation No. 19-93 or DOF Department Order No. 121-93 shall be submitted by the inventor directly to the Commissioner of Internal Revenue, c/o Legal and Legislative Division, 7th Floor, BIR National Office Building, BIR Road, Diliman, Quezon City or to the Department of Finance, DOF Building, Roxas Boulevard, corner Pablo Ocampo Street, Manila City, Metro Manila.
8. How would I know if an invention is on a commercial scale?
Per BIR Rev. Reg.19-93, commercial scale refers to the sale of goods and services pertaining to the invention exceeding P200,000 during any twelve-(12) month period.
9. What is covered by the tax/duty exemption?
Present BIR Ruling No. 011-2016 dated 08 January 2016, “the tax exemption is for the inventor and not for the entity that commercially produces and distributes the invented product”.
The duty exemption privileges to be granted shall cover the importation of necessary machinery, equipment, spare parts, and raw materials used for the production of the invention/utility model/industrial design, provided that the said articles are not available locally in sufficient quantity, comparable quality, and reasonable price. The exemption shall conform to the orders, revenue regulations and/or administrative issuances from the DOF through the Bureau of Customs (BOC).
10. How long shall an inventor enjoy his tax/duty exemption privilege?
An inventor is entitled to tax/duty exemption for a period of ten years from the issuance of his Certificate of Tax Exemption.
11. What are the requirements for an inventor who qualified for exemption?
For tax exemption, the inventor shall keep regular and accurate records of his transactions and shall maintain separate books of accounts of his transaction involving the sale of invention products and technologies in accordance with existing law and the Bookkeeping Regulations.
The inventor shall file an annual information return on or before the 15th day of the fourth month following the end of his taxable period which shall be subject to examination by the BIR to determine if the conditions under which he was granted tax exemption are complied with and the taxes, if any. (Section 7, BIR Regulation 19-93).
For duty exemption, the inventor/heir/assignee shall allow the duly authorized representative of Revenue Office, Department of Finance to conduct pre/post inspection of the facilities and imported articles released duty-free in accordance with these rules in line with the monitoring functions of said Office (Section 6, Dept. Order 121-93).