COMPARISON OF INCOME TAX HOLIDAY VS. 5% GROSS INCOME TAX

		Income Tax Holiday	Gross Income Tax (5%)
1	As to Income Tax	100% exemption from Income Tax	5% preferential tax rate on Gross Income
		-six (6) years for pioneering entities
		-four (4) years for non-pioneering
		-extendable up to eight (8) years after meeting certain criteria
2	As to VAT imposition	Zero-rated VAT registered	VAT Exempted
3	As to Real Property Tax	Subject to RPT (Real Property attached  to Real Estate)	Not subject to RPT (see EO 226)
4	As to other taxes	Subject to other National & Local Taxes	Not subject to Local & National Taxes
5	Expanded Withholding Tax (EWT)	Exempted from EWT	Exempted from EWT
6	In lieu of business permits & licenses	Subject to payment of business permits, licenses & taxes	Part of 5% PTR (see EO 226)
7	Other fiscal incentives	Tax & duty free from importation of raw materials, capital equipment, machineries and spare parts
		Exemption from wharfage dues and export taxes, impost or fees
		Machineries installed & operated in the ecozone for manufacturing, processing or for industrial purposes shall be exempted from RPT for 3 years from SCO.
		Production equipment not attached to real estate shall be exempted from RPT

The following are criteria for ITH extension, one criterion is equivalent to one (1) ITH year extension, provided that the total ITH entitlement period shall not exceed eight (8) years.

(1)    The average net foreign exchange earnings of the project for the first three (3) years of operations is at least USD 500,000.00 and,

(2)    The capital equipment to labor ratio of the project does not exceed USD 10,000.00 to 1 for the year immediately preceding the ITH extension year being applied for,

(3)    The average cost of indigenous raw materials used in the manufacture of the registered product is at least fifty per cent (50%) of the total cost of raw materials for the preceding years prior to the ITH extension year.