(NAR) VOL. 10 NO. 4 / OCTOBER - DECEMBER 1999
"o. Gross Income Earned. — x x x
1) Trading and manufacturing enterprises x x x;
2) Service enterprises x x x;
3) Financial Institutions x x x;
4) Subic Bay Regional Enterprise. — For purposes of this paragraph, the term "Gross income earned" refers to the gross sales or gross revenues derived from the business activity within the zone, net of sales discounts and sales returns and allowances and minus the costs of sales or direct costs and other costs that are material in the operations of the business and involves a significant amount in determining the profitability and viability of the business (but before any deduction for administrative expenses or incidental losses during a given taxable period). For financial enterprises, gross income shall include interest income, gains from sales, and other income, net of allowable deductions. The following deductions shall be allowable for the calculation of gross income earned for the following specific types of enterprises:
(a) Trading and manufacturing enterprises
Direct salaries
Production supervision salaries
Raw materials used in the manufacture of products
Goods in process (Intermediate goods)
Finished goods
Supplier and fuels used in production
Toll manufacturing fees
Commission expenses
Distribution expenses
Depreciation of machineries and equipment used in production and building owned and/or constructed by SBMA-registered enterprise
Equipment lease payments
Rent and utility charges associated with. building, equipment and warehouses, or handling of goods Financing charges associated with fixed assets
Corporate management salaries
Administrative salaries
Marketing and sales salaries
Advertising
Research & Development
Royalty Fees
Travel expense
Communication Expenses
Outside Professional Services
Interest & financial charges on working capital
Loss on foreign exchange translation
Loss on disposal of merchandise inventory
(b) Service enterprises
Direct salaries
Service supervision salaries
Direct Materials, supplies used or resold to
another SBMA registered enterprise
Depreciation of machineries, equipment and buildings owned and/or constructed
Equipment lease payments
Financing Charges associated with fixed assets
Rent and utility charges for buildings and capital Equipment
Corporate management salaries
Administrative salaries
Marketing and sales salaries
Advertising
Research & Development
Royalty Fees
Travel and Entertainment expenses
Communication expenses
Outside Professional Services
Interest & financial charges on working capital
Loss on foreign exchange translation
(c) Financial Services
Depreciation
Equipment lease payments
Financing Charges associated with fixed assets
Rent and Utility
Corporate management salaries
Administrative salaries
Marketing and sales salaries
Materials & supplies used
Advertising
Royalty Fees
Travel and Entertainment expenses
Communication expenses
Outside Professional Services
Insurance
Cost of securities
Bad debts actually ascertained to be worthless and written-off
Interest & financial charges
Loss on foreign exchange translation
(p) Registration of Subic Bay Regional Enterprises. — Any multinational company, whose purpose, as expressed in its organizational documents or by resolution of its Board of Directors or its equivalent, is to engage in regional and/or international trade/services and in business activities such as, but not limited to, manufacturing, including entering into toll and contract manufacturing arrangements, employing commission agents and/or distributors; trading, marketing, financial services and treasury, services may establish in the Subic Special Economic and Freeport Zone (SSEFZ) its seat of management and the situs of its business transactions, including the recording of its income, from some or all countries in the Asia-Pacific region and or other parts of the world, including the Philippines, by registering as a Subic Bay Regional Enterprise with the Subic Bay Metropolitan Authority.
The following minimum requirements shall, however, be complied with by the said multinational company:
(a) A certification from the appropriate government agency in the multinational company's home country that said multinational company is an entity engaged in regional and/or international trade/service in the Asia-Pacific Region and/or other parts of the world.
1. The Regional Enterprise is engaged in regional and/or international trade/services and in business activities such as, but not limited to manufacturing, including entering into toll and contract manufacturing arrangements, employing commission agents and/or distributors; trading, marketing, financial services and treasury services in some or all of the countries in the Asia-Pacific region and/or other parts of the world, including the Philippines.
2. The Regional Enterprise will establish in the SSEFZ its seat of management and the situs of its business transactions from some or all of the countries in the Asia-Pacific region and/or other parts of the world, including the Philippines.
(b) An undertaking that the multinational company will have an investment in the SSEFZ in an amount not less than US $250,000.00, an inward remittance of not less than US $250,000.00 and that it will employ at least twenty (20) direct employees.
(c) Any violation by the Subic Bay Regional Enterprise of any of the provisions of R A. No. 7227 or the Bases Conversion and Development Act or its implementing rules and regulations, or other terms and conditions of its registration, or any provision of existing laws, shall constitute sufficient cause for the cancellation of its license or registration.
f. x x xSECTION 5. Section 6 (b) of Revenue Regulations No. 1-95 is hereby amended, to read as follows:
f. 1. Subic Bay Regional Enterprise. —
(1) The Subic Bay Regional Enterprise shall pay a tax of 5% on Gross Income Earned from business transactions in some or all of the countries in the Asia Pacific region and/or other parts of the world, including the Philippines.
(2) The Subic Bay Regional Enterprise shall establish in the SSFEZ its seat of management and situs of its business transactions, including the recording of income, in some or all of the Asia-Pacific region and/or other parts of the world. The Regional Enterprise may engage the services of toll manufacturers, commission agents, and/or distributors in some or all of the countries in the Asia-Pacific region and/or other parts of the world.
(3) The Subic Bay Regional Enterprise may generate revenues from sources within the Customs Territory up to 50% of its total revenues. The income generated from the customs territory will be subject to the tax of 5% on gross income earned as defined under Sec. 3 (o)(4) of these Regulations; Provided, That, if the revenues derived from the customs territory exceed 50% of its total revenues, the excess of the income generated by the Regional Enterprise will be subject to the regular income tax rates in the customs territory.