Legal basis and policy intent
- Republic Act 7227 created the Subic Special Economic and Free Port Zone (SSEFPZ) with tax and other incentives.
- Republic Act 7227 directs the development of the SSEFPZ into a self-sustaining industrial, commercial, financial, and investment center to generate employment and attract and promote productive foreign investments.
- Executive Order No. 97-A establishes a special tax and duty-free privilege within a Secured Area in the SSEFPZ to attract local and foreign visitors to the zone.
Scope: Secured Area and covered privileges
- The Secured Area consists of the presently fenced-in former Subic Naval Base and is the only completely tax and duty-free area in the SSEFPZ (Section 1.1).
- Business enterprises and individuals (Filipinos and foreigners) residing within the Secured Area may import raw materials, capital goods, equipment, and consumer items on a tax and duty-free basis (Section 1.1).
- Consumption items must be consumed within the Secured Area (Section 1.1).
- Removal of raw materials, capital goods, equipment, and consumer items out of the Secured Area for sale to non-SSEFPZ registered enterprises subjects such items to the usual taxes and duties, except when Executive Order No. 97-A provides otherwise (Section 1.1).
- Access and tax/duty-free consumption and purchase privileges in the Secured Area are granted based on residency status and—where stated—age (Sections 1.2–1.4).
Tax and duty-free rules by user category
- SSEFPZ residents living outside the Secured Area may enter the Secured Area and consume any quantity of consumption items in hotels and restaurants within the Secured Area (Section 1.2).
- SSEFPZ residents living outside the Secured Area may purchase and bring out to other parts of the Philippine territory consumer items worth not exceeding US $100 per month per person (Section 1.2).
- SSEFPZ residents entitled to the US $100 per month privilege must be age 15 and over (Section 1.2).
- Filipinos not residing within the SSEFPZ may enter the Secured Area and consume any quantity of consumption items in hotels and restaurants within the Secured Area (Section 1.3).
- Filipinos not residing within the SSEFPZ may purchase and bring out to other parts of the Philippine territory consumer items worth not exceeding US $200 per year per person (Section 1.3).
- Filipinos entitled to the US $200 per year privilege must be age 15 and over (Section 1.3).
- Foreign tourists, balikbayans, and returning residents (from abroad) passing through the Secured Area receive the same prevailing tax and duty-free privileges they presently enjoy (Section 1.4).
Limits and restrictions on entitlement use
- Entitlement amounts of US $100 and US $200 must not be pooled, tacked, or advanced (Section 1.5).
- The no-pooling/tacking/advance-use restriction applies to the US $100 and US $200 entitlement similar to the entitlement enjoyed by returning residents who shop at existing government-owned tourist duty-free shops (Section 1.5).
Duty-free shop sales and regulatory controls
- The sale of tax and duty-free consumer items in the Secured Area is allowed only in duly authorized duty-free shops (Section 1.6).
- Duty-free shops in the Secured Area are subject to joint regulation by the Bureau of Customs and the Subic Bay Metropolitan Authority (SBMA) to ensure proper accounting of imports and sale (Section 1.6).
- A control system must be set up by duty-free shop operators at their own expense (Section 1.7).
- The control system must be approved by the SBMA and Customs authorities before any duty-free outlet is permitted to operate (Section 1.7).
- Pending the definition and installation of control measures, the SBMA is directed to require other duty free shops located in the SSEFPZ to desist from further selling duty- and tax-free goods to persons other than tourists, balikbayans, and returning residents (Section 1.7).
Identification, access control, and entry-exit operations
- The SBMA shall install a computerized identification system to ensure compliance with the guidelines governing the SSEFPZ, particularly the Secured Area (Section 1.8).
- Customs authorities together with SBMA personnel shall man the entry/exit gates of the Secured Area (Section 1.8).
Implementation rules and effectivity
- The Bureau of Customs and the SBMA must jointly promulgate rules and regulations to implement Executive Order No. 97-A (Section 2).
- Executive Order No. 97-A takes effect immediately (Section 3).