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TEV Guidelines
AFAB guidelines for the admission of duty free and tax exempt motor vehicles
Your Browser Doesn't Support Canvas. Showing the Text Content of the PDF Instead: MEMORANDUM
TO:
ALL LOCATORS
FROM:
THE OFFICE OF T HE CHAIRMAN ANO ADMINISTRATOR
RE:
POLICY GUIDELINES ON THE ADMISSION OF DUTY- FREE
AND TAX-EXEMPT MOTOR VEHICLES
DATE:
OS November 2013
POLICY GUIDELINES ON THE ADMISSION OF
DlITY- FREE AND TAX-EXEMPT MOTOR VEHICLES
WHEREAS, under Section 4 (e) of Republic Act No. 9728, the Freeport Area of
Bataan (FAB, for brevity) shall be operated and managed as a sepa rate customs
territory ensuring f~ee flow or movement of goods and capital within, into and
exported out of Hs territory, as well as, provide, incentives such as tax and duty-free
importations of raw materials, capital and equipment;
WHEREAS, under Section 11 of Republic Act No. 9728, the Authority of the
Freeport Area of Bataan {AFAB, for brevity) is the corporate body created to manage
and operate the Freeport Area of Bataan (FAB);
WHEREAS, there is a need to formuJate r uJ es and regulations pertaining to
the duty free and tax-exempt admission privilege of motor vehicles by FAB
Registered business enterprise to prevent abuse and circumventing the law;
WHEREAS, there is a need to support the domestic car ind ustry by
encouraging locators to patronize local car dealers and for them to avajJ of their zero
rated value added tax incentive provided by law on any local purchase of motor
vehjcles;
WHEREAS, pursuant to the AFAB's Board Resolution No. 2013-034 dated 10
June 2013 whereby the AFAB Board of Directors approved to temporarily adopt the
Subic-Cla rk PoLicy Guidelines on Tax-Exempt Vehicles pending the creation of its
own, and to coordinate with the Land Transportation Office (LTO), Bureau of
Customs (BOC), Investment Promotion Agencies (IP As), and other Government
Agencies to come out with the recommendation for the AFAB Gu idelines on TaxExempt Motor Vehicles;
'•
The Aulhorily of lhe Freepol1 Area of Balaan
AFAB Adminislralion Bldg . Freepot1 Area of Ba1aan. Mariveles. Balaan 2106
Tnl No 1+6347'9354004
NOW THEREFORE, for and in consideration of the foregoi ng premises, the
fo U
owing guidelines are hereby promulgated on the admission, registration and
monitoring of duty-free and tax-exempt motor vehicles (TEV, for brevity), as
fo lJows:
I. COVERAGE
These Policy Guidelines shall cover the admission into the FAB of any vehicle
propeUed by any power other than muscular power using the public highways,
except road rollers, trolley cars, etc., classified as fo llows:
1. UTILITY-SERVICE VEHICLES - vehicles whjch are indispensable in th e
conduct and operations of the FAB - registered authorized business 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-o.r iented industries, such as hotels, resort and
leisure estates, theme parks and casinos to be utilized actually, rurectly and
exclusively for the purpose of transporting tourist in tourism related activities.
3. COMPANY-SERVICE VEHICLES - vehicles that are to be used as service
vehicles of FAB Registered Enterprise and residents, its expatriates, or executives.
No luxury motor vehicles intended to be utilized as a company-service
vehicle shall be admitted tax-free and duty-free into the FAB, unless it is a "green
vehicle", or if the official stature of the end-user requires the same, such as the
President, Chairman and Members of the Board of Directors of a FAB Registered
Ente.rprise, which shall be on a strictly one-lo-one official to luxury vehicle
assignment. In the said event, admission of these tax-exempt vehicles shall be subject
to the criteria set herein and should be with the approval of the FAB Board of
Directors.
The following are considered as luxury motor vehicles under these
guidelines: AcUia, Alfa Rom eo, Aston Martin, Audi, Bentley, BMW, Bristol Cars,
Buick, Bugatti, Cadillac, Chrysler, Ferrari, Lnfiniti, Jaguar, Lamborghini, Lancia,
Land Rover, Lexus, Lincoln, Lotus, Maserati, Maybach, Mercedes-Benz, Porsche,
RolJs-Royce, Range Rover, Saab, Spyker and Volvo. The aforestated list shall be
au tomatically updated whenever new luxury vehicle productions are created.
A "green vehicle" is defined as a vehicle that is considered to be more
"environmentally friendly than traditional all-petroleum internal combustion engine
vehicles (APICEVs), w hich includes, among others, hy brid gas, solar vehk les,
hyd rogen vehicles and electric veh.icles.
11. POLICY ON DUTY FREE AND TAX-EXEMPT ADMISSION
1. THE FOLLOWING ARE QUALIFIED TO APPLY FOR ADMISSION OF DUTY
FREE AND TAX EXEMPT MOTOR VEH1CLE (TEV):
FAB Registered Enterprise wi th a va lid FAB Certi ficate of Registration may
apply fo r admission authority into the F AB tax-exempt vehk les necessary for the
conduct a nd operations of their registered business activity, s ubject to the
criteria/limitations set fo rth herein; Provided, however, that FAB reserves the rig ht to
disapprove or limit the admission of TEVs' w hen, in i ts judgment, it becomes
necessary to avert a violation of any or any of its rules and reguJations, o r to enforce
a regulatory o r administrative measure.
2. CRITERIA TO AV AIL OF THE DUTY FREE AND TAX EXEMPT ADMISSION
PRIVILEGE
2.1. For Tourist-Related and Service Vehicles Only
a) Amount of Investment:
An applican t FAB Registered Enterp rise mus t have an investment of at least
TWO HUNDRED FIFTY THOUSAND US DOLLARS (US$250,000.00) or its
equjvalent in peso for every vehicle to be admi tted at the time of the
application. Additional TEVs can be availed of with every TWO HUNDRED
FIFTY THOUSAND US DOLLARS (US$250,000.00) or its equivalent in peso
investment. The te rm ''investment" refers and is limited to inves tment made
on capital equipment and develo pment of land and structure onJy.
OR
b) N umber of Regular Employees:
An a pplicant FA B Registered Enterprise musl have at least fifty (50) regu la r
employees for every vehicle to be admitted at the time of application.
Additional TEVs can be availed of with every adclitionaJ forty (40) regular
employees.
2.2. For Utility Vehicles Considered as Capital Equipment
/
Notwithstandj ng the criteria mentioned in Item 2, a FAB Registered
Enterprise involved in transportation, travel and tours, and the like are
entitled lo the admission of utility vehjcles as capital eqwpment vis-a-vis its
FAB registered business activity and oper~tions, but subject to the
endorsement of the Deputy Adm irustrator for O perations_and approved by
AFAB Board of Directors.
3. NUMBER OF ALLOWABLE MOTOR VEHICLES TO BE ADMITTED
Uti.Lity Vehicles - Maximum of 10 units
Tourist Vehicles -Maximum of 6 units
Company Vehicles-Maxim um of 6 un its
In no case sha U a FAB Registered Enterprise be a llowed to admH more than a
combined number of fifteen (15) vehicles w i thin the term of its Lease Agreement,
except if required by its operations and approved by AFAB Board of Directors.
4. PERIOD TO EXERCISE THE PRIVILEG E
The applicant FAB Registered En terprise must have been o perating for at
least one (1) year at the time of the application fo r 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 approval of AFAB Board of Directors.
5. LIMITATIONS ON THE TAX-EXEMPT AND DUTY-FREE ADMISSION
PRIVILEGE
A. The privilege is personal and non-tra nsferable.
B. The applicant-FAS Registered Enterprise must have no o utstanding
financiaJ o bligations with AFAB unless he can show an approved payment
scheme covering the obligation and the fact tha l it has not defa ul ted on the
said payment scheme agreement.
C. Applicant FAB Registered Enterprise must show proof or justification of
the necessity of the vehicle(s) to be admitted in its business operations.
D. No Admission Authority shall be issued until and unless the previously
admitted duty-free and tax exempt motor vehicle has been presented fo r
inspection.
E. The duty-free and lax-exempt motor vehicle must be registered with the
LTO under its "Registration for Tax-Exemption" and with the AFAB's
Enterprise Assistance Division (EAD, for brevity) upon arrival.
F. Special AFAB blue plates sha ll be issued by ttie LTO for the TEV.
G. Subject to the exemptions here in provided, al l TEVs shall be for use inside
the Freeport Area only.
H . Within five (5) years from registration with the LTO, no duty-free and taxexempt vehicles shall be sold, transferred or assigned by a FAB Registered
Enterprise.
J. Once the registered owner ceases to be a bona.fide FAB Registered
Enterprise, he must:
1. FOR TEVs admitted as BRAND NEW vehicles and those 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) The owner should pay the corresponding taxes and duties;
OR
b) Sell, assign or convey the sam e to a qualified FABRegistered Enterprise.
To be considered "BRAND NEW", the motor vehicle shall be of:
a) current advance year model in the country of origi n and/or
manufacture; OR
b) year model immed iately preceding year in the country of
origin and/or ma nufacture provided that:
(i) lhe motor veh icle has a mileage of not more than two
hundred (200) kilometers; AND
(ti) the motor vehicle has been acquired by the importer from
the deale r as first owner.
2. Fo r TEVs admitted as USED VEHICLES, the vehicles should be:
a) SoJd to a qua lified FAB Registered Enterprise a nd for use
only within the Freeport Area; OR
b) Re-exported to other countries.
"USED VEHICLES" sha ll refer onJy to those used vehides coming
from lhe country of origin of the requesting FAB Registered
Enterprise or was owned by the parent company or affiliate of the
requesting FAB Registered Enterprise. ~
K Request fo r extensi.o n or amendment of the Admission Authority shall be
granted only if the request is made within its valiclity period.
6. REQUIREMENTS FOR THE ADMISSION OF DUTY-FREE AND TAXEXEMPT MOTOR VEHICLES
a) Letter of intent justifying the request for the admission of the motor
vehicle addressed to the Depu ty Administrator for Operations;
b) AccompLished Application Form;
c)
Original Copy of the Secretary's Certificate of the FAB Registered
representative;
Enterprise'·s
d) Vali d FAB Certificate of Registration;
e) lf a pplicable, Certified True Copy of the Commercial Sales invoice (for
brand new motor vehicles);
f) If applicable, Certified True Copy of the Certificate of Ownership (for used
trucks, buses and heavy and/or agricultural eqllipment);
g) Agreement/undertaking on conditions for admjssion of motor vehkle,
attached to its accomplished Application Form, duly agreed to and signed
by the applicant;
h) Certification from the F AB Enterprise Department on the amount of
investment or Certification from the Labor Center on the number of
regular employees;
i) Certificate of "No Outstanding Finandal Obligations" from the Finance
Department";
j) Notarized certification from the applicant that the loadi ng of the subject
motor vehicle at the port of origin has not been effected, which must be
submi tted before the issuance of an Admission Authority; and
7.
k) Certification of Inspection from the EAD of previously adm itted duty-free
and tax-exempt motor vehicles.
111. SUBSEQUENT SALE, T RANSFER OR ASSIGNMENT OF DUTY-FREE AND
TAX-EXEMPT MOTOR VEHICLES
1.) Sale, transfer or assignment of duly-free and tax-exempt motor vehicles
within the fi ve (5) yea r period is prohibited.
2.) After the five (5) yea r prohibitory period:
A. For TEVs admitted as brand new vehicles and those used trucks. buses
and heavy and/or agricultural equipmenl referred to in Sections 3. 1.1
to 3.1.5 of Executive Order No. 156
a.) The TEV can be sold, assigned or transferred without
payment of the required tax and duties on the motor vehicle,
provided:
i.) Vendee, assignee or transferee is also a qualified FAB-
registered;
ii. ) Vendee, assignee or transferee has not used up or availed
of its admission privi lege;
iii.)The type of vehicle and activ ity of the vend ee, assignee,
or transferee allows the sale, assigrunent or transfer
thereof; and
iv.)The TEV can be used outside of the Freeport Zone upon
issuance of the conduction pass.
OR
b.) The TEV can be sold, assigned or transferred upon payment
of the corresponding taxes and duties to:
i.) Any entity upon payment of the correspond ing taxes and
duties; and
ii.) The TEV can be used outside the Freeport Area.
B. For TE Vs admitted as used vehicles
a.) Lt can be sold, transferred or assigned subject to
requirements mentioned under Paragraph IJJ A(a)(i) to (iij).
However, it cannot be used o~utside the Freeport Area. Jt
cannot be aJso sold, assigned or transferred as in Paragraph
A(b )(i) to (ii).
3.) There can be no sale, transfer or assignment of duty-free and tax-exempt
motor vehicl es without prior written clearance from the AFAB EAO.
4.) A payment of one percent (1%) transfer fee to AFAB based on the amount
of gross sales and/or compensation received in consideration of the sale,
assign ment or transfer of any TEV or US$ 200.00, whichever is higher.
IV. CONDITIONS FOR THE USE OF DUTY-FREE AND TAX-EXEMPT MOTOR
VEHICLES
A. Within the Freeport Area
AJI motor vehicles admitted as tax-exem pt and duty-free by a FAB
Registered Enterprise shall be used only within the Freeport Area.
B. Outside the Freeport Area
Only those TEVs admitted as bra nd new vehicles and those used
trucks, buses and heavy and/or agricultura l equipment referred to in Sections
3.1.1 to 3.l.5 of Executive Order No. 156 can be used outside the Freeport
Zone, subject to the following conditions:
a) Issuance of Conduction Pass upon physical presentation of the
subject vehicle, which is a prerequisi te for the use of tax-exempt and duty-free
motor vehkles outside the Freeport Zone.
b) Each TEV must be covered with a bond acceptable to the AFAB,
which may be in cash, irrevocable stand-by letter of credit/bank guarantee or
surety bond, equivalent to 100% of the amount of duties, taxes, and other
charges due on the subject vehicle and conditioned to the use of the subj ect
vehicle in accordance with these Policy Guidelines.
c) All TEVs cannot b e used outside of the Freeport Area for more than
three hundred thirty-six (336) hours or fourteen (14) days in a month. One
day shaU mean twen ty-four (24) hours. No succeeding Conduction Passes
shalJ be issued unJess the TEV is presen ted fo r inspection before the EAD.
d) The Conduction Pass shall be
present~d
a t the gate every lime lhe
motor vehicle is used outside of the Freeport Area with the following
information:
i) Name/s of the registered owner and driver/s;
ii) Plate number of the duty free and tax exempt motor vehicle;
iii) Date and time of departures; and
iv) Date and time of return.
e) No new Conduction Pass shall be issued unless the previously
issued conduction pass has been surrendered to the EAD.
V. PROCESSING FEE
All TEVs to b e admitted to FAB sha ll be assessed a processing fee of US$
100.00 per vehkle. However, applications for admission of "green vehicles" shall be
charged a processing fee of US$ 20.00 only.
VI. INVENTORY AND INSPECTION POLICY
1. Tax- exempt and duty-free motor vehicles shall be subject to periodic and
on-the-spot inspection or inventory.
2.
Duty-free and tax-exempt vehicles must be presented at least once a
month at the EAD or in the manner and/or such times as ma y be set by the
EAD.
3. Regi stry owner/s should report lo or nolify the EAD on the whereabouts of
duty-free and tax-exempt vehicles that f aiJ to return after the validity of
the pertinent trip ticket and musl present sufficient proof of justification
for said failure.
VII. FINES AND PENALTIES
Violations
Fines a nd Penalties
1. Admission of tax-exempt and duty-free
motor vehicles by non-qualified entity
US$ 5,000.00 and forfeiture of TEV
and suspension of VAT Zero Rating
Certification for three (3) months
2. Admission of tax-exempt motor vehicle
prior to Application for Admission Authority
First Offense
Second Offense
US$3,000.00
US$5,000.00 and forfeiture of TEV
3. Sale, transfer or assignment of TEV within
the five (5) year prohibitive period.
First offense
Second offense
privilege of
US$2,000.00 for both entities
of
the
admission
Suspension
both entities for two (2) years
4. Allowing the use of one's privilege or
one's Admission Authority
US$5,000.00 for both entities
and suspension of admission
privilege of both entities for
two (2)
years and forfeiture of TEV.
5. Sale, transfer or assignment of TEV
without prior clearance.
First offense
Second offense
US$1,000.00 for both entities
Suspension for two (2) years of the
admission privilege of both entities
6. Falsification of Trip Ticket/Conduction Pass
First offense
US$3,000.00 and suspension of
admission privilege for two (2) yea.rs
without prejudice to the filing of the
corresponding criminal action for the
falsification of documents
7. Failure to presenl TEV for inspection/inventory
y
First offense
US$ 1,000.00
Second offense
Suspension of admission privilege
for two (2) years
Filing of appropriate case and
recommendation for canceUation/
revoca tion of FAB Certificate of
Registration
Third offense
8. Use of duty free and tax-exempt vehicle
outside the Freeport Area longer than
US$100.00 per excess day and
FAB Registered Enterprise or loca tor
shall be given forty eight (48) hours
the approved limit of days from the
expiry date indicated on the
conduction pass to explain the nonreturn of the TEV; otherwise, the
presumption of smuggling arises.
After the lapse of the prescribed forty
eight (48) hours, recommendation for
suspension of business operations of
the FAB Registered Enterprise shall
be submitted to the AFAB Board of
Directors.
9. Any other act or omission tending to
circumvent these Policy Guidelines
Depending surrounding
circumstances,
penalties
may
range from a fine of US$100.00 to the
forfeiture of the TEV a nd suspension
or cancellation of future application
for admission of TEVs and of the
FAB Certificate of Registration
... •
7"
VIII. EFFECTIVITY
Herein Policy Guidelines shaJI take effect immediately and sha ll be applied in
prospective.
DEOGRACIAS G.P. CUSTODIO
Cha irman and Administrator
