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Copy of Subic-Ciark Joint Policy Guidelines on the Admission Privilege for Duty-Free and Tax-Exempt Motor Vehicle

CLARK DEVELOPMENT CORPORATION

Memorandum Circular No. ERD 11-323

January 11, 2011

FOR : All Concerned CFZ Registered Enterprises

SUBJECT : Copy of Subic-Ciark Joint Policy Guidelines on the Admission Privilege for Duty-Free and Tax-Exempt Motor Vehicle

1. We are furnishing you copy of Subic-Glark Joint Policy Guidelines on the

Admission Privilege for Duty-Free Tax-Exempt Motor Vehicle.

2. For your information, reference and file.

BENIGNO N. RICAFORT

President/CEO

Cc; RMO

bcc: CFZ-Registered Locators & Investors

SUBIC-CLARK JOINT POLICY GUIDELINES

ON THE ADMISSION PRIVILEGE FOR DUTY-FREE AND

TAX-EXEMPT MOTOR VEHICLES

WHEREAS, under Section 13 of Republic Act 7227, as amended by Republic Act No.

9400, the Subic Bay Metropolitan Authority (SBMA) as the Zone Management Authority of

the Subic Special Economic and Freeport Zone, and pursuant to the Memorandum of

Agreement between the SBMA and the Bureau of Customs (BOC) adopting and

implementing Administrative Order No. 4-93 and in coordination with and cooperation of the

Land Transportation Office (LTO), formulated rules and regulations pertaining to the duty-

free and tax-exempt motor vehicle admission privilege of Subic Bay Freeport (SBF)

registered business enterprises;

WHEREAS, in accordance with Section 149 of Republic Act No. 8424, otherwise

known as the Tax Reform Act of 1997, the Clark Development Corporation (CDC) jointly

with the BOC promulgated rules and regulations for the proper identification, control, and

use of motor vehicles admitted as duty-free and tax-exempt into the Clark Freeport Zone

(CFZ).

WHEREAS, following the mandate of the Subic-Clark Alliance for Development

Council (SCADC) to orchestrate and accelerate the development of the Subic-Clark corridor,

there is a need to harmonize policies relevant to the duty-free and tax-exempt motor

vehicle admission privilege of persons and entities operating inside the SBF and CFZ.;

WHEREAS, both SBMA and CDC, each acting respectively as “Zone Authority” of the

Subic Bay Freeport Zone and Clark Freeport Zone, recognize the need to support the

domestic car industry by encouraging a duly-registered Freeport Zone Enterprise or

“Locator” to patronize local car dealers and for them to avail of their zero-rated value added

tax incentive on any local purchase of motor vehicles;

NOW THEREFORE, for and in consideration of the foregoing premises, the following

guidelines are hereby promulgated on the admission, registration and monitoring of duty-

free and tax-exempt motor vehicles (TEV), as follows:

I. COVERAGE

These guidelines shall cover the duty-free and tax-exempt admission of se

propelled land transportation motor vehicles designed to travel on roads, classified

follows:

1. UTILITY-SERVICE/SPECIAL-PURPOSE VEHICLES – vehicles which an

indispensable in the conduct and operations of the Locator’s authorized busines

activities, such as delivery trucks, cargo vans, and buses, designed and for use

exclusively for the transport of cargoes and passengers.

2. TOURIST-SERVICE VEHICLES – vehicles which are indispensable in the

ordinary course of business of tourist-oriented industries, such as hotels, resort

and leisure estates, theme parks and casinos to be utilized actually, directly and

exclusively for the purpose of transporting tourists in tourism related activities.

COMPANY-SERVICE VEHICLES – limited to brand new vehicles that are to be \

used as service vehicles of the Locator. No luxury motor vehicle intended to l

utilized as a company-service vehicle shall be admitted duty-free and tax-exempt

into the Freeport Zone, unless the official stature of the assignee requires the

same which shall be limited to the Chairman, Members of the Board of Directors,

President, or Vice-president on a strictly one-to-one official to luxury vehicle

assignment.

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JOINT POLICY GUIDELINES

ON THE ADMISSION PRIVILEGE FOR DUTY-FREE AND

TAX-EXEMPT MOTOR VEHICLE

A listing of luxury motor vehicle marquee annexed herewith as Attachment 1 shall

serve as reference for luxury vehicle classification. The catalog shall be automatically

updated whenever new luxury vehicle productions are created.

II. POLICY ON DUTY-FREE AND TAX-EXEMPT MOTOR VEHICLE ADMISSION

l.THE FOLLOWING ARE QUALIFIED TO APPLY FOR ADMISSION OF DUTY-FREE

AND TAX-EXEMPT MOTOR VEHICLES:

Locators with valid Certificate of Registration and Tax Exemption (CRTE) and

with valid Lease Agreements having a remaining term of at least three (3) years

may apply for admission into the Freeport Zone of TEVs necessary for the conduct

and operation of their registered business activity, subject to the criteria/limitations

set forth herein, provided, however, that the Zone Authority reserves the right to

disapprove or limit the admission of TEVs when, in its judgment, it becomes

necessary to avert a violation of any law or any of its rules and regulations, or to

enforce a regulatory or administrative measure.

2. CRITERIA TO AVAIL OF THE DUTY-FREE AND TAX-EXEMPT MOTOR VEHICLE

ADMISSION PRIVILEGE

2.1 For TEVs Considered As Company-Service Vehicles

An applicant Locator must have an investment of SIX HUNDRED THOUSAND

UNITED STATES DOLLARS (US$600,000.00) or its equivalent in peso for

every vehicle to be admitted at the time of the application.

Additional TEVs can be availed of for every additional investment of SIX

HUNDRED THOUSAND UNITED STATES DOLLARS (US$600,000.00) or i

equivalent in peso. The maximum number of TEVs a locator can import are:

a. Utility Vehicles – 10 Units;

b. Tourist Vehicles – 6 Units; and

c. Company Vehicles-6 Units

2.2 For TEVs Considered As Utility-Servtce/Spedal-Purpose or Tourist-

Service Vehicles

Locators involved in transportation, travel and tours, and the like, are entitled

the admission of TEVs as capital equipment vis-a-vis its duly-registered

business activity and operation, but subject to the endorsement of the Zon

Authority’s Business & Investment unit.

3. PERIOD TO EXERCISE THE PRIVILEGE

The applicant Locator must have been operating for at least one (1) year at the

time of the application for Admission Authority, unless by the very nature of their

business and the classification of the vehicles to be admitted, it is necessary to admit

the same upon actual commencement of operations, in which case admission may be

allowed subject to the endorsement of the Zone Authority’s Business & Investment

unit.

4. LIMITATIONS ON THE DUTY-FREE AND TAX-EXEMPT ADMISSION PRIVILEGE

A. The privilege is granted only to certified/registered Locators and is non-

transferable.

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JOINT POLICY GUIDELINES

ON THE ADMISSION PRIVILEGE FOR DUTY-FREE AND

TAX-EXEMPT MOTOR VEHICLE

Office of the Government Corporate Counsel Opinion No. 108 Series of 2008

B. The Applicant Locator must have no outstanding financial obligations with

the Zone Authority unless he can show an approved payment scheme covering

the obligation and the fact that it has not defaulted on the said payment scheme

agreement.

C. The Applicant Locator must identify the principal user of the vehicle and show

proof or justification detailing the necessity of the vehicle(s) to be admitted in

direct relation to its registered business activity.

D. The issuance of Admission Authority shall be prior to the admission of the TEV

into the Freeport Zone.

E. A request for extension or amendment of Admission Authority shall be accepted

only if the request is made within its validity period.

F. The TEV shall be registered with the LTO for a blue license plate under the

“Special Registration of Tax-Exempt Vehicles in Free Ports and Special Economic

Zones” and with the Zone Authority’s Motor Vehicle Registration unit or its

equivalent office.

G. The Applicant Locator shall present to the Zone Authority for inspection the TEV

together with the registration papers from LTO and the Admission Authority.

H. Subsequent renewals of the LTO registration shall require the endorsement of the

Zone Authority subject to the verification that the Locator remains qualified for

the TEV privilege.

I. Subject to the conditions herein provided under Section IV, all TEVs shall be for

use inside the Freeport Zone only.

j. Within three (3) years from the date of admission, no TEV shall be allowed to

sold, assigned, transferred, or paid duties and taxes.

K. Notwithstanding the limitation mentioned in the preceding item letter *J”,

the registered owner ceases to be a bona fide Locator, he must:

1. For TEVs admitted either as brand new vehicles or as used trucks, buses

and heavy and/or agricultural equipment referred to in Sections 3.1.1 to

3.1.5 of Executive Order No. 156,

a. Sell, assign or convey the same to a qualified Locator;

OR

b. Pay the corresponding duties and taxes for the sale, assignment, or

transfer to any entity.

To be considered BRAND NEW, the motor vehicle shall be of current or\ \|Β»<

advance year model in the country of origin and/or manufacturer at the\ IsJjS

time of admission.

2. For TEVs admitted as USED VEHICLES, the Locator must:

a. Sell, assign or convey the same to a qualified Locator;

OR

b. Re-export the same to other countries1.

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JOINT POLICY GUIDELINES

ON THE ADMISSION PRIVILEGE FOR DUTY-FREE AND

TAX-EXEMPT MOTOR VEHICLE

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