Subic Bay Freeport Zone - The Location for Business & Pleasure: Have you ever been to the Subic Bay Freeport Zone? Have you ever even heard of the place? You should – this Special Economic Zone may be one of the most exciting places to be in right now, not only in the Philippines but maybe throughout Asia as well. HISTORY OF SUBIC BAY -The Subic Bay Freeport Zone in Subic Bay , Philippines (which spans a total of 13,800.60 hectares) used to be the site of the biggest overseas military base of the United States of America . The Americans were forced to pull out their forces after the nearby volcano Mt. Pinatubo erupted in 1991. SUBIC TODAY - Nowadays, the Subic Bay Freeport Zone’s biggest economic draw is the deep water natural harbor of Subic Bay , where over 7000 workers man a high-end ship building facility valued at over $1 billion. Aside from the ship yard, more than 610 companies are based in the Subic Bay Freeport Zone, the sister Freeport Zone of the nearby Clark Freeport Zone. Subic Bay Freeport Zone is divided into four key investment areas, namely, the Central Business District, Subic Gateway, the Subic Bay Industrial Park , and the Subic Techno Park . Aside from ship-building, other commercial activities driving the Freeport Zone’s economic engine are manufacturing-related businesses, electronic communications technology, warehousing and transshipment, banking, and education. All development of the Subic Bay Freeport Zone falls under the jurisdiction of the Subic Bay Metropolitan Authority. TAX INCENTIVE FOR FOREIGN INVESTORS - The big deal about this particular Philippine Freeport Zone is that foreign companies that opt to relocate to the Subic Bay Freeport Zone stand to benefit from a competitive incentive package offered by the Philippine government. To avail of these incentives, such foreign companies should decide first whether to enlist as a Subic Bay Freeport (SBF) Enterprise or as a Subic Bay Regional (SBR) Enterprise . A company which opts for SBF status must first qualify as nationals and businesses of any country operating in any field of economic activity – excluded from this qualification are any entities who are restricted because of the Foreign Investments Negative List (under the Foreign Investments Act of 1991.) SBR status, on the other hand, may be granted to all multinational firms that aim to participate in regional and/or international trade or services, as well as engage in business activities, by locating their regional headquarters within the Subic Bay Freeport Zone. There are more tax incentives for SBR-designated Enterprises – such status merits them tax and duty free exemptions for various items. These items could be imported raw materials and supplies, capital equipment and even ordinary consumer products that are meant to be consumed within the Freeport Zone. Case in point - an imported passenger car that was purchased to be driven within Subic Bay is priced 50% less than the same kind of car bought outside. But the most dramatic savings for locators are generated through imported materials and equipment meant for daily production, meaning locators will be able to compete on a significant basis. Another tax incentive for SBR-designated Enterprises is the Income Tax Holiday which is granted to investors on project basis. Registered enterprises do not have to pay any kind of local and national tax (including franchise taxes, fee for the Mayor’s Permit, property tax, excise and ad valorem taxes, and value-added taxes.) TAX LIABILITY OF INVESTORS - So do investors have to shoulder any kind of tax liability at all? Actually, Enterprises are only required to declare a 5% final tax for the adjusted gross income they were able to produce from activities conducted within the Freeport . SBF Enterprises, in connection, are permitted certain deductions before they compute for the 5% final tax. SBR Enterprises, on the other hand, have to absorb a 5% final tax on gross income for their business activities with some or all countries located in the Asia-Pacific, and even with nations located elsewhere in the world (including the Philippines .) Those who have to pay this tax may also enjoy more deductions (including those on sales and marketing salaries, and losses from foreign exchange transactions.) Investors who wish to receive the Subic Special Investors Visa only need to funnel a minimum of US$250,000 in investment into the Subic Bay Freeport Zone. Otherwise, there is no minimum investment required from investors. COST OF LEASING PROPERTY - To lease industrial land in the Subic Bay Industrial Park will cost investors US$55 per square meter for properties measuring less than 2 hectares. For land surpassing 2 hectares, investors will have to shell out US$50 per square meter. In the Subic Techno-Park, leased industrial land costs US$75-80 per square meter but the lease only covers 50 years. Industrial land for lease in the Subic Bay Freeport is priced at US$0.50-4.00 per square meter. In the Central Business District, leasing office space amounts to US$3.50-10 per square meter. On the other hand, leasing factory space in the Subic Bay Freeport is tagged at US$2-20 per square meter. TRANSPORTATION INFRASTRUCTURE OF SUBIC - One great advantage of Subic Bay as a Special Economic Zone is the existence of an excellent transportation infrastructure – for one thing, the Freeport has a vast road network that links land areas within the Zone. The Subic Expressway is advantageous to use since it can reduce travel time from Subic to Manila by 30 minutes while eliminating the need to use the zig-zag road leading to Olongapo City . You only have to spend 5 minutes driving the 6-km. distance from the Industrial Park to the Subic Bay International Airport .