Declaration of Policy
- State policy to develop Subic Special Economic Zone as a self-sustaining industrial, commercial, financial, and investment center.
- Objective: generate employment and attract productive foreign investments.
Definitions
- "Act": Republic Act No. 7227 (Bases Conversion and Development Act).
- "SBMA": Subic Bay Metropolitan Authority.
- "Zone": Subic Special Economic and Freeport Zone, including City of Olongapo, Municipality of Subic, and former Subic Bay Naval Base area.
- "Secured Area": The fenced former naval base; the only fully tax and duty-free zone within the Zone.
- Customs terms and distinctions between Domestic and Foreign Articles explained.
- Definitions for Resident, Registered Enterprise, Transshipment, Retail Sale, Foreign Exchange, and Gross Income Earned.
- Specific allowable deductions for calculating gross income for manufacturing, service enterprises, and financial institutions.
Tax Exemptions and Incentives
- Exemptions from customs duties and national internal revenue taxes on importations of raw materials, capital goods, and equipment imported into the Secured Area.
- Consumption items are tax free only if consumed within the Secured Area.
- Residents and Filipinos have specific privileges to bring out limited value consumer items duty-free.
- Duty-free shops to operate under SBMA and Customs regulations with strict controls.
- Foreign tourists, balikbayans, and returning residents have similar tax-free privileges subject to control systems.
- Exemption from VAT, gross receipts tax, ad valorem, excise, franchise, and other percentage taxes on business within the Secured Area.
- Preferential income tax treatment on earnings from operations inside the Secured Area or foreign sources.
- Zero-rating of purchases from Customs Territory by SBMA and accredited enterprises for VAT purposes.
- Enterprises may earn up to 30% income from Customs Territory without losing tax incentive status.
- Carriers transporting goods between Secured Area and Customs Bonded Warehouses must post bonds.
- Manufactured articles exported from Secured Area subject to import regulations upon return to Customs Territory.
- Non-registered enterprises in the Secured Area do not enjoy these incentives.
Customs Duties and Taxation on Removal of Goods
- Foreign articles removed to Customs Territory subject to regular customs duties and taxes.
- Articles admitted from Customs Territory to the Secured Area under permit are zero-rated.
- Foreign articles used by subcontractors in production may move under bond with guarantees.
- Foreign articles sold within Secured Area to residents or tourists exempt from duties if consumed within or exported.
- Duty-free consumer purchase limits and conditions clarified.
- Illegal removal of foreign articles in commercial quantities subject to seizure and criminal penalties.
Fiscal Obligations and Tax Liabilities
- Registered enterprises pay a combined 5% of gross income earned: 3% to National Government, 1% to local government units, 1% to a special development fund.
- 3% paid to the National Government considered for foreign tax credit claims.
- Enterprise responsible for safekeeping and accounting of articles received.
- Missing or unaccounted articles presumed unlawfully transferred into Customs Territory and taxed accordingly.
- Registered enterprises must comply with SBMA and Customs Operations Manuals.
- Enterprises act as withholding agents for employee compensation and other income payments.
- Preferential tax rates apply to interest income from deposits of registered enterprises in Secured Area.
Return Filing and Tax Payment Procedures
- 5% tax based on gross income earned payable quarterly and annually.
- Periodic tax returns filed in duplicate, signed and sworn by responsible corporate officers.
- Returns filed with the Revenue District Office or accredited bank within the Zone.
- Tax return filing and payment dates follow National Internal Revenue Code rules and applicable regulations.
Allocation and Disposition of Tax Revenues
- Tax proceeds divided into general fund (3%), local governments (1%), and special development fund (1%) for surrounding municipalities.
Record Keeping and Auditing
- Registered enterprises must keep accurate and regular books of accounts and related documents.
- Records subject to inspection and audit by authorized officers of SBMA and Bureau of Internal Revenue.
Applicability of Existing Laws
- Provisions of National Internal Revenue Code on keeping books and records, penalties, and offenses apply to enterprises in Secured Area.
Effectivity
- Regulations take effect fifteen days after publication in Official Gazette or newspaper of general circulation, whichever is earlier.