Gglc Investor

GLOBAL GATEWAY LOGISTICS CITY

Clark is It!

Your Gateway to the World and Your Home Away from Home

LOCATOR AND INVESTOR GUIDE

WHAT IS GLOBAL GATEWAY LOGISTICS CITY? Global Gateway Logistics City is a modern, state-of-the-art, 177 hectare master planned mixed use Logistics and Business Center of Excellence. Global Gateway is located at the crossroads of Southeast Asia in the central plains of Luzon, just 60 minutes north of Manila, in the Province of Pampanga, Philippines. Global Gateway offers the perfect blend of prime real estate and facilities for all your business needs. It is divided into four zones, the LOGISTICS PARK catering to all your warehousing, distribution and light manufacturing operations, the BUSINESS PARK for all your office requirements, the AERO PARK home to research and development, modeling and simulation, IT and centers of higher learning, and the TOWN CENTER to support your retail and shopping needs.

C

lark is It!

WHY INVEST IN THE PHILIPPINES? • • • • • • • • • • • • • • •

•

Archipelago of 7,107 Islands: 102 Million – 12th most populous Capital: Manila – 11 Million Languages: Filipino & English – 4th largest English speaking country Religions: Catholic, Muslim, Iglesia ni Cristo, Evangelical, Christian, Buddhist and Protestant Currency: Philippine Peso ($1.00/PHP 42.60) Literacy Rate: 92.6% Central Luzon/Clark & Subic – 7 million with 30,000 graduates per year. Labor Force: Participation Rate 63.6% – World’s 15th Largest 8.5 Million Filipinos working abroad $17 Billion per year OFW Remittances GDP: 4.9% (1st Quarter of 2011 est.) Inflation: 5.2% (June 2011 est.) Exports: US$ 4,104.45 (in million dollars, May 2011 est.) Imports: US$ 4,888.29 (in million dollars, May 2011 est.) Country of Exports: (May 2011 est.) US 17.1% ; Japan 15.2% ; China 11.9% ; Singapore 9.2% ; Hong Kong 7.8% ; Korea 4.9% ; Taiwan 4.9% ; Thailand 4.3% ; Germany 3.6% ; Netherlands 3.0% Country of Imports: (May 2011 est.) US 13.5% ; China 10.6% ; Japan 9.7% ; Singapore 8.9% ; Korea 7.3% ; Taiwan 7.1% ; Thailand 7.1% ; Saudi Arabia 5.5% ; Malaysia 4.6% ; Indonesia 3.7%

Source: CIA World Fact Book, NSO, NSCB, BSP, BLES, CHED III

Bottom Line: The Philippines is located at the crossroads of the Pacific, it possesses an abundant supply of inexpensive, well trained, english speaking work force, low operating costs and poised on the door step of China (soon to be the world’s largest economy) - - providing unmatched markets and opportunities.

GLOBAL GATEWAY LOGISTICS CITY Logistics Park Projected Construction Area - 72 hectares

Aero Park Projected Construction Area - 27 hectares

• • • • • •

• • • • • •

Aviation Support Activities Logistics Operations Distribution Centers Warehousing Operations Multi-model Transport Hub Light Manufacturing

Business Park Projected Construction Area - 58 hectares • • • • • •

Airport Support Activities Aviation and Airline Offices Corporate Centers General and Mixed Use Offices Intermodal Transport Hub BPO and Call Centers

Research and Development Modeling and Simulation Centers Flight and Air Crew Training Animation and IT Based Activities Academic Vo-Tech Facilities Health Care Complexes

Town Center Projected Construction Area - 21 hectares • Commercial Center • Hotel/Convention Center • Restaurants • Retail Shops & Boutiques • Residential/Condominium • Pocket and Linear Parks

Bottom Line: The most advanced master-planned Logistics and Business Center of Excellence.

WHY GLOBAL GATEWAY LOGISTICS CITY?

The Best Access Through...

The Global Gateway Logistics City (GGLC) is located adjacent to Diosdado Macapagal • Newest and most modern fully integrated Logistics and Business Hub in Southeast Asia International Airport (DMIA) with daily flights to major Asia Pacific cities. It is the home of • 177 Hectares of Prime Greenfield Land UPS and is a short 10 minute drive from any location within the confines of GGLC. • Adjacent to Major International Airport - - Diosdado Macapagal International Airport • Adjacent to New Planned Railroad - - North Rail • Located at the Interchange of Two major Toll Roads - - Subic–Clark–Tarlac and North Luzon Expressways (SCTEX and NLEX) • Geographic crossroad of Southeast Asia • 60 minutes from Metro Manila • 30 minutes to deep water container port - - Subic Bay

LAND

• State-of-the-Art IT and Telecom Infrastructure • Highly skilled and abundant supply of well educated and English speaking workforce • World class and western management of facilities • 24x7 Physical Security • Tax, Customs and Duty Incentives - - Located within the Clark Freeport Zone • Favorable Trade Agreements with ASEAN - - 10 nations comprised of 450 million people • Best multi-model Hub in the Pacific

GGLC is located just 30 minutes, on a new high speed toll road from the deep water container port at Subic Bay, the primary alternative port to the busy Manila Bay ports, making the movement of heavy cargo efficient and fast.

AIR GGLC is conveniently located at the interchange of two major toll roads, the NLEX and SCTEX, with the on and off ramps located right within the park. Once off the toll road, GGLC and Clark enjoy the best network of primary and secondary roads in the Philippines, all built to international standards. A planned north-south railroad is projected to open within GGLC in 2013.

SEA

No other location in the Philippines, and few in all of Southeast Asia, can boast such unfettered and convenient access to all three modes of transportation making all your logistics and travel requirements fast, friendly and accessible.

Bottom Line: Location, Location, Location

THE CROSSROADS OF THE PACIFIC Global Gateway is located at the center of the Pacific’s best inter-modal transportation and logistics hub. It is located at the intersection of the north-south Pacific shipping lanes in the South China Sea connecting the industrialized nations of Japan, Korea and Taiwan in the north with Singapore and Australia in the south. It also sits on the east-west shipping lanes with the traffic transiting the Straits of Malacca connecting the western ports in the United States and the Panama canal with Asia while facing the entire eastern seaboard of China. It is 90 minutes by air from Taiwan, Hong Kong, Macau and the eastern provinces of mainland China and three hours to Japan, Bangkok or Singapore.

Bottom Line: The Heart of South East Asia

AREA AMENITIES AND QUALITY OF LIFE

El Kabayo

Mimosa Golf

Fontana

SM Clark and Marquee Mall

• • • • • • • •

Superior Quality of life Clean Air and No Congestion Scenic, Lush-Green Park-like setting Controlled access Patrolled Security Teleconference centers Meeting rooms Retail shopping and dining arcades

• • • •

Banking and office supply stores 24x7 facility maintenance Sites available for build to lease Improved infrastructure, backup power and high speed communications • Long-term, flexible leases available up to 50 years plus options

Subic Bay

Churches - School - Wholesome Family Community

Bottom Line: The best place to live - work - play

BUSINESS UTOPIA GGLC is the answer to all your business needs. It is a perfect blend of modern, state-ofthe-art offices and commercial space to highly efficient warehousing and light industrial facilities. GGLC embraces a modern, sophisticated and fully integrated live-work-play environment to help you enjoy a high quality of life for the work-force. Lots are ideally sized at 3,600 square meters for corporate and business offices, guaranteeing a large 2,200 square meter building footprint and generous 10,000 square meter lots for warehousing and light industrial facilities. Let GGLC become

Your Home Away From Home… BENCHMARKS Vatican City Laguna Techno Park Global Gateway Logistics City Kuwait Free Trade Zone Makati Central Business District Hongkong Disneyland Fort Bonifacio Northgate Cyberzone

4.4 Million m2 3.87 Million m2 1.77 Million m2 1.7 Million m2 1.2 Million m2 1.2 Million m2 1.10 Million m2 0.20 Million m2

Bottom Line: Optimally Sized to meet all your Business Needs

INTERNATIONAL AIRPORT AND FACILITIES The Diosdado Macapagal International Airport (DMIA) is conveniently located at the heart of the Clark Freeport Zone (CFZ). It is the country’s premier international gateway that boasts of two 3.2 kilometer long parallel runways capable of accommodating widebodied aircrafts with a world class passenger terminal and modern cargo facilities that provide the necessary airside and landside amenities. Among the facilities and equipment in place are the following: airfield ground lighting systems, navigational aids, communications equipment, meteorological equipment and emergency services. The airport has a 4E airport classification and meets the International Civil Aviation Organization (ICAO) standards for Category I precision-approach runway. It also has a Category IX Crash, Fire and Rescue capability.

United Parcel Service has made the Philippines through DMIA (formerly the largest U.S. Air Force Base outside the United States) its Intra-Asia hub. International and local airline carriers operate out of DMIA providing for more convenient travel to major destinations in Asia with connecting flights to the other parts of the globe. Among the carriers are Asiana Airlines, Tiger Airways, Cebu Pacific and Air Asia. Today you can fly daily non-stop flights to Singapore, Hong Kong, Macau, Seoul, Kota Kinabalu and Kuala Lumpur. Many other destinations, with an ever increasing frequency, include Thailand, Taiwan, and other locations. Other local airlines like Seair and Zest Air provide daily flights to major cities in the Philippines including daily flights to and from Metro Manila in 25 minutes travel time. In 2009, agreements were reached with Qatar, Emirates, Etihad and Kuwait Airlines out of the Middle East to commence up to 70 new weekly flights in and out of DMIA.

Bottom Line: Adjacent to the Philippines’ largest and best International Airport with easy access for International Travel

CLARK INFRASTRUCTURE, SUPPORT AND CLARK FREEPORT ZONE ADVANTAGES Power Abundant supply of refined, uninterrupted power, available today to meet the needs of the airport complex and the expected influx of commercial and industrial projects at the Clark Freeport Zone.

Clark, a former US Air Force base, was the largest in the world outside the United States with 33,000 hectares of prime land located in Central Luzon, Philippines. It is situated 80 kilometers north of Manila and 60 kilometers east of Subic Bay, a former US naval facility that has also been redeveloped into a major Freeport. The Diosdado Macapagal International Airport (DMIA) located in the Clark Freeport Zone brings added value to locators that want to be located near a major International Airport.

Telecommunications A dual fiber optic backbone and digital exchange system provide advanced telephone, cellular and other communication services. Key Advantages: • Ideally suited for commercial, light industrial, logistics, manufacturing and business Water & Sewerage • Multi-nodal value added processing point with abundant labor Existing water supply facilities consist of deep wells with a total capacity of 5,000 gpm. • Clean, reliable and dependable power Storage is through nine tanks with a total capacity of 3.75 million gallons. The sewerage • World class solid waste and sewerage management system system consists of four pumping stations, concrete industrial waste pipelines, oxidizing • Park like setting and environment ponds, and a modern sewerage treatment plant. • Customs, duty and tax incentives

Bottom Line: Built to International Standards

Clark Freeport Zone Advantages

as of August 5, 2011

CLARK FREEPORT ZONE ADVANTAGES 1. TAX ADVANTAGES AND OTHER GOVERNMENT INCENTIVES

2. TRANSPORTATION SYSTEM

Preferenial Tax Treatment of Clark Freeport Zone (CFZ) - Registered Enterprises • Clark Freeport Zone (CFZ) registered enterprises are entitled to preferential tax of five percent (5%) of Gross Income Earned (GIE) in lieu of the customary national and local taxes. (See Inserts for Comparison of Incentives and Benefits)

Global Gateway Logistics City (GGLC) is conveniently located at the interchange of two major toll roads, the NorthLuzon Expressway (NLEX) and Subic-Clark Tarlac Expressway (SCTEX) with both the on and off ramps located right within the park. Once off the toll road, GGLC and Clark enjoy the best network of primary and secondary roads in the Philippines, all built to international standards. A planned north-south railroad is projected to open within GGLC in 2013.

Foreign Investment Incentives

Travel time from Metro Manila to Clark going to Global Gateway Logistics City will only take about 60 minutes.

Board of Investments (BOI) - Incentives Any enterprise registered with the BOI pursuant to the 1987 Omnibus Investments Code (EO-226) is entitled to, among others, the following incentives ***subject to certain terms and conditions:

GGLC is located just 30 minutes, on a new high speed toll road from deep water container port at Subic Bay, the primary alternative port to the busy Manila Bay ports, making the movement of cargo efficient and fast.

Fiscal incentives Income Tax Holiday (ITH) for six years for pioneer firms and generally four years for non-pioneer firms. If a nonpioneer firm is located in a less developed area, it shall generally be entitled to 6 years ITH. Firms locating within Metro Manila are in general not granted ITH. Tax credit on raw materials, supplies and semi-manufactured products. Additional deduction from taxable income for labor expense cannot be simultaneously enjoyed with the ITH incentive). Duty-free importation of capital equipment, spare parts and supplies for both export and domestic-oriented enterprises until June 6, 2009 or June 6, 2011, depending on the type of equipment. Additional deduction from taxable income for necessary and major infrastructure works (cannot be simultaneously enjoyed with the ITH incentive). Non-fiscal Incentives • Employment of foreign nationals. • Guaranteed 100% repatriation of foreign investments and earnings. • Importation of consigned equipment for an unlimited period subject to posting of re-export bond.

No other location in the Philippines, and few in all of Southeast Asia, can boost such unfettered and convenient access to all modes of transportation making all your logistics and travel requirement fast, friendly and accessible. 3. TELECOMMUNICATIONS Telecommunication facilities are kept at the highest efficiency level by creating liberal business environment open to telecom providers that can extend the best information communication services including dual fiber optic backbone and digital exchange system for advanced telephony, cellular and internet connectivity. Our service providers have an extensive network infrastructure, connecting more than 200 countries and territories worldwide through their international gateway facilities and major cable systems.

Telecom rates: Commercial Residential National International Source: PLDT Clark (as of May 27, 2011)

Php 936.41/month Php 542.19/month Php 3.75/min. US$ .36/min.

4. POWER Clark’s power supply is sourced directly from National Power Corporation (NAPOCOR/NPC) Independent Power Producers (IPP) via National Grid Corporation of the Philippines (NGCP) substation in Mexico, Pampanga. Two (2) Parallel lines at 69KV with the capacity of 80MW each. Clark’s peak demand as of March 2010 is about 46.704MW.

Average Rate:

Php 5.47/kwh Source: CEDC (as of May 27, 2011)

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

as of August 5, 2011

CLARK FREEPORT ZONE ADVANTAGES 5. WATER & SEWERAGE SYSTEM

7. MANPOWER RATES

Existing water supply facilities consist of water wells with a total capacity of 25,400 cu. m./day. Storage is through 5 tanks with a total capacity of 10,985 cu. m. The sewerage system consists of two (2) lift stations, and a 126km industrial waste pipeline, oxidizing pond for sewerage treatment. The water and sewerage system will be expanded to accommodate future requirements of Clark Freeport Zone.

For non-agricultural firms (Manufacturing Firms, Duty-Free Shops, Hotels and Recreational-related).

Water rates: Industrial/Commercial: First 0-10 cu. m. Next 11-20 cu. m. Next 21-30 cu. m. Above 31 cu. m.

Minimum of P294.50 or US$ 6.66 per day for those employed in establishments with total assets of less than P30 Million, plus P14.00 Cost of Living Allowance (COLA).

Php 218.21 Php 23.49 Php 24.88 Php 26.26

For retail/service establishments (Small Firms Only) Minimum of P291.00 or US$ 6.57 per day for those employed in establishments with 16 or more employees. Minimum of P277.00 or US$ 6.26 per day for those employed in establishments with less than 16 employees.

Residential: First 0-10 cu. m. Php 109.11 Next 11-20 cu. m. Php 11.78 Next 21-30 cu. m. Php 12.44 Above 31 cu. m. Php 13.09 Sewer charges - 40% of total water bill Source: CWC (as of May 27, 2011)

Reference Rate : US$ 1.00 = Php 44.23 Brief Summary of Philippine Labor Standards Foreign investors shall abide by the Philippine Labor Code and Labor Standards. A brief summary of Philippine Labor Standards are as follows:

6. WASTE DISPOSAL SYSTEM The Clark Development Corporation (CDC), through a service contract with the Metro Clark Waste Management Corp., manages and operates the Clark Integrated Solid Waste Management Facility for CFZ. The project is the first and only real sanitary landfill in the Philippines to date. All investors in Clark are assured of proper management and safe disposal of their garbage and can boast of full compliance to the national environmental regulatory and international certification requirements.

Garbage Fees: Medium and Small volume waste generators Per bag (standard 30”x36”x0.02mm) Large volume waste generators Php 360/m3 x 32 m3 (1 bin)

Minimum of P302.00 or US$ 6.83 per day for those employed in establishments with total assets of P30 Million or more, plus P14.00 Cost of Living Allowance (COLA).

1.

Working Hours



•

Normal hours of work per day is 8 hours (not including 1 hour break for meals)



•

Normal number of workdays per week is 6 days (24 hours rest required after 6 consecutive workdays)



•

Compulsory overtime / rest day work is allowed under certain circumstances (ex. non-hazardous work, work with perishable goods, etc.)

Php 20.00 Php 11,520.00

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

Clark Schedule of Business Registration

CLARK SCHEDULE OF BUSINESS REGISTRATION

as of August 5, 2011

ONE-TIME FEES

US$ 500,001 and above

1.

3. TEMPORARY TRANSFER (Customs Bonded Warehouse/Non-Customs Bonded Warehouse)

PROCESSING FEE FOR NEW/RENEWAL LEASE AGREEMENT (ONE TIME PAYMENT) LETTER OF APPROVAL (ONE TIME PAYMENT) Application Fee Certification of Registration and Tax Exemption Permit to Operate (Annually) Temporary Permit to Operate (Monthly)

P 2,000.00 P 2,000.00 P 1,000.00 P 500.00

P 700.00

Farm-out of raw materials/equipment for processing/repair P 50.00 4. BRING-IN PERMITS Commercial (for Trading) Non-Commercial (for Company Use)

P 200.00 P 50.00

2. PROCESSING AND ISSUANCE OF ENVIRONMENTAL COMPLIANCE CERTIFICATE (DENR)

5. SALE/TRANSFER OF ARTICLES TO CUSTOMS TERRITORY (Bring-Out Local/Imported Articles)

For critical projects For non-critical projects

P 3,000.00 P 300.00

Certificate of Environmental Compliance Special Exit Pass (Hazardous Waste)

P 500.00 P 500.00



REGULAR FEES 1.

EXPORT PERMITS/TALLY Direct Constructive US$ 10,000 and below Above US$ 10,000

Free P 200.00 P 300.00

2.

IMPORT PERMITS No Commercial Value With Commercial Value Up to US$1,000 US$ 1,001 to US$ 10,000 US$ 10,001 to US$ 50,000 US$ 50,001 to US$ 100,000 US$ 100,001 to US$ 500,000

P 50.00 P 100.00 P 150.00 P 300.00 P 350.00 P 500.00

No Commercial Value (Local Articles Only) US$ 10,000 below Above US$ 10,000 Scrap/Waste (Per Permit)

P 50.00 P 500.00 P 1,000.00 P 200.00

6. PERMIT TO BRING-OUT IMPORTED VEHICLE

P 50.00

7.

FEES (RELATED TO WORKING VISA OF EXPATS) Alien Employment Permit (AEP) Endorsement to DOLE Special Clark Working Visa (SCWV) Endorsement to Bureau of Immigration (BI) Special Working Permit (SWP) Special Clark Investor’s Visa (SCIV) Provisional Permit to Work (PPW)

US$ 10.00 US$ 50.00 US$ 20.00 US$ 50.00 US$ 10.00

8.

MISCELLANEOUS FEES Accountable Forms CDC Container Zeal Zone Vehicle Sticker

P 250.00 P 20.00 P 150.00

Note: CFZ Locators Association Fees shall also be charged to cover expenses for security, road lighting, garbage collection, etc. All rates are representatives of historical values.

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

Payment of Taxes

as of August 5, 2011

PAYMENT OF TAXES I.

The special 5% Tax on Gross Income Earned (GIE)

a. The rules of the implementation of the special 5% tax on GIE, in lieu of national and local taxes, granted to Freeport Enterprises in CFZ are as follows: 1. GIE shall refer to gross sales or gross revenue derived from business activities within the subject Ecozone or Freeport, net of sales discounts, sales returns and allowances minus cost of sales or direct costs but before any deduction for administrative, marketing, selling, and/or operating expenses or incidental losses during a given taxable year. In the case of financial enterprises within Freeports, gross income shall include interest income, gains from sales, and other income, net of costs of funds. 2. Only the following cost of sales/direct cost shall be allowed as deductions for purposes of calculating the GIE earned for the following Freeport enterprises in CFZ, to wit: i. Trading Enterprises

iv. Financial Institutions - None b. The 5% tax on GIE, in lieu of national and local taxes, granted to PEZA Ecozone Enterprises in CFZ, shall be subject to the relevant provisions of R.A. No. 7916, its Implementing Rules and Regulations, Circulars, Memoranda of Agreement with other government agencies, and all other relevant issuances of PEZA and of other government agencies relative to the implementation of the tax incentives under RA 7916. II. Payment and Remittance of the 5% Tax on GIE A. The 5% Tax on GIE shall be paid and remitted by Freeport Enterprises in CFZ that are registered with the Clark Development Corporation (CDC), as follows: • •

3% to the National Government; 2% to the local government units (LGUs) through the Treasurer’s Office of the Municipality or City where the Freeport Enterprise is located.

Costs of Sales (beginning inventory plus purchases, minus ending inventory of goods).

B. Returns and payment of the 5% Tax on GIE shall be governed by the following:

ii. Manufacturing Enterprises

1. Quarterly and Final Adjustment Tax Returns:

• • • • • • •

a. Every Freeport Enterprise subject to the 5% Tax on GIE shall file a quarterly and final adjustment income tax return showing, among others: i. the GIE for such period; ii. the amount representing 5% of the tax on said GIE; iii. the amount representing the 3% share of the National Government; and iv. the amount representing the 2% of the city/municipality;

• •

Direct salaries, wages, or labor expenses, inclusive of training directly related to the registered activity; Production supervision salaries; Raw materials used in the manufacture of products; Decrease in goods in process account (intermediate goods); Decrease in finished goods account; Supplies and fuels used in production; Depreciation of machinery and equipment used in production, and of that portion of the building owned or constructed by the registered enterprise that is used exclusively in the production of goods; Rent and utility charges associated with building, equipment and warehouses used in production; and Financing charges associated with fixed assets used in production, the amount of which were not previously capitalized.

iii. Service Enterprises • • • • • •

Direct salaries, wages, or labor expenses, inclusive of training directly related to the registered activity; Service supervision salaries; Direct materials, supplies used; Depreciation of machinery, equipment used in the rendition of registered services, and of that portion of the building owned or constructed by the registered enterprise that is used exclusively in the rendition of the registered service; Rent and utility charges for buildings and capital equipment used in the rendition of registered services; Financing charges associated with fixed assets used in the registered service business the amount of which were not previously capitalized.

b. The quarterly income tax return shall be filed within 60 days after the close of each of the first three (3) quarters and a final adjustment income tax return covering the entire taxable year, not later than the 15th day of the fourth month following the close of its taxable year, whether a calendar or a fiscal year accounting period. A Freeport Enterprise shall prepare and accomplish at least six (6) copies thereof for filing, as follows: i. Original and duplicate original copies thereof for filing with the duly authorized representative of the Commissioner of Internal Revenue, for the purpose of payment of the aforementioned 3% share of the National Government; ii. Two duplicate copies for the purpose of payment of the aforesaid 2% share of the city/municipality; iii. One copy thereof for the file of the said registered enterprise. If two or more cities/municipalities are entitled to a share in the 2% tax share of cities/municipalities, as many copies shall be accomplished for the purpose of filing at least two copies thereof with the concerned cities/municipalities; and iv. One copy thereof for filing with the CDC, within 30 days from date of filing of the income tax return.

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

as of August 5, 2011

PAYMENT OF TAXES 2. Filing Procedure a. The Freeport Enterprise shall present and submit its tax return to the Authorized Agent Bank (AAB) of the Revenue District Office (RDO) having jurisdiction of the CFZ; b. After payment of the 3% tax share of the National Government, all copies of the income tax return shall be stamped received by the AAB; and c. The remaining copies of the income tax return shall be returned to the Freeport Enterprise, one (1) copy thereof for its file, and the rest, duly stamped received by the AAB shall be submitted to the Zone Management Authority for the remittance of the 2% share of the LGU/s. d. Within 30 days from date of filing of the income tax return, one copy thereof shall be filed with the CDC. 3. Additional Attachment a. i. ii. iii. iv.

The Freeport Enterprise shall submit with its quarterly income tax return a separate schedule showing: the GIE for the quarter without, however, showing the details on how the same has been computed; the 5% special tax due thereon; the 3% tax share of the National Government; and the share of each city/municipality from the 2% tax share of cities and municipalities.

b. The same schedule, in addition to the duly audited financial statements of the Freeport Enterprise, shall be submitted with the annual final adjustment return. For this purpose, said schedule shall show the details how its Gross Income Earned has been computed. All Freeport Enterprises shall secure, on an annual basis, a certification from the CDC that: i. The enterprise is duly registered and entitled to the 5% special tax on gross income; and ii. Whenever, applicable, the percentage allocation of the 2% share in the case of overlapping cities/municipalities.

Refund/Credit for Erroneously Paid 5% Special Income Tax — The BIR shall make the appropriate refund and/ or issue the corresponding credit, for any and all erroneous payments pertaining to the National Government’s stated 3% share in taxes paid by Ecozone Enterprises, while the concerned city/municipality shall be responsible for making said refund and/or tax credit as regards the 2% share pertaining to them.

III. Other Tax and Fiscal Obligations A. Ecozone or Freeport Enterprise availing of the incentives under the 5% special tax regime may generate income from sources outside the Ecozone or Freeport Zone or within the Customs territory of up to 30% of its total income from all sources. However, if the income of an Ecozone or Freeport Enterprise exceeds said 30% threshold, then all of its income whether from the Zone or the Customs Territory shall be subject to the relevant internal revenue taxes under the National Internal Revenue Code of 1997, as amended. B. An Ecozone or Freeport Enterprise shall be constituted as a withholding agent for the government, in the following instances: 1. If it acts as an employer and its employees receive compensation income subject to the withholding tax under Sec. 72 (a), Chapter X, Title II of the Tax Code of 1997, as amended, as currently implemented by RR 2-98, as amended; 2. If it makes income payments to individuals or corporations subject to the expanded withholding tax pursuant to Sec. 50 (b) of the Tax Code of 1997, as amended, and as implemented by RR 2-98, as amended; and/or 3. If it makes payment/remittance of certain income subject to the final withholding tax under Sec. 50 (a), in relation to Sec. 51 of the Tax Code of 1997, as amended. C. The 5% preferential tax rate shall not apply to interest income received or earned by an Ecozone or Freeport Enterprise from any Philippine currency bank deposit and yield or any other monetary benefit from deposit substitutes, and from trust funds and similar arrangements, which shall still be subject to the corresponding internal revenue taxes under the Tax Code. (SOURCE: DEPARTMENT ORDER NO. 3-08 RULES AND REGULATIONS TO IMPLEMENT RA 9400, “AN ACT AMENDING RA 7227 OTHERWISE KNOWN AS THE BASES CONVERSION AND DEVELOPMENT ACT OF 1992, AND FOR OTHER PURPOSES” OF THE DEPARTMENT OF FINANCE)

c. Returns and payment of the 5% Tax on GIE of PEZA Enterprises shall be governed by the Rules and Regulations of RA 7916 and related issuances of the DOF/BIR. d. Ecozone or Freeport Enterprises availing tax incentives provided for under RA 9400 shall secure from the concerned Incentives Administration Authority (i.e., CDC or PEZA) on an annual basis a certification that the enterprise is a bona fide registered enterprise entitled to incentives provided under RA 9400, and to attach the said certification to their annual Income Tax Return upon filing thereof.

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

Special Clark Investor’s Visa (SCIV) and Special Clark Working Visa (SCWV)

as of August 5, 2011

SPECIAL CLARK INVESTOR’S VISA (SCIV) AND SPECIAL CLARK WORKING VISA (SCWV)

The Special Clark Investor’s Visa (SCIV) and Special Clark Working Visa (SCWV) are visas (2) Two (2) years maximum validity period (renewable thereafter), subject to the pursuant to Republic Act No. 7227, Section 5 of Executive Order No. 80, and Executive Order validity period of the Alien Employment Permit (AEP) as approved by the Department 464 and Memorandum of Agreement between Clark Development Corporation (CDC) and of Labor and Employment (DOLE). the Bureau of Immigration (BI). These visas shall apply to foreigners who shall perform line functions or assume jobs and responsibilities necessary to operate the business of a ALIEN EMPLOYMENT PERMIT registered enterprise in the Clark Freeport Zone (CFZ). An Alien Employment Permit (AEP) and an investor’s or working visa are the general VISA FEATURES AND INCENTIVES requirements for Aliens seeking admission to the Philippines, specifically in the Clark Special Economic Zone, for the purpose of employment. SPECIAL CLARK INVESTOR’S VISA (SCIV) The Department of Labor and Employment (DOLE) Alien Employment Permit (AEP) shall serve as one of the prerequisites in the application for either a Special Clark Working Visa The Special Clark Investor’s Visa (SCIV) has the following features: (SCWV) or Special Clark Investor’s Visa (SCIV). The AEP therefore is not a sufficient document to allow the legitimate employment of any foreign national here in the Philippines. (1) multiple entry privilege with exemption from: • Exit Clearance Certificate, • Re-entry Permit and 1 An alien assuming a line function in an enterprise or is receiving any form of remuneration from the same is deemed to • Special Return Certificate.

(2) Indefinite validity period, unless sooner revoked and subject to the condition of the grantee’s continuing investment within the CFZ is equivalent to not less than Two Hundred Fifty Thousand US Dollars (US$250,000.00).

be an employee of that enterprise regardless of the source of compensation and duration of employment , whether the employment is temporary or part-time

SPECIAL CLARK WORKING VISA (SCWV)

The Special Clark Working Visa (SCWV) has the following features:



(1) multiple entry privilege with exemption from: • Exit Clearance Certificate, • Re-entry Permit and • Special Return Certificate.

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

Flowchart of Procedures on How To Apply for an Alien Employment Permit (AEP), Special Clark Working Visa (SCWV)

as of August 5, 2011

FLOWCHART OF PROCEDURES ON HOW TO APPLY FOR AN ALIEN EMPLOYMENT PERMIT (AEP), SPECIAL CLARK WORKING VISA (SCWV) TYPE OF TRANSACTION

(New or Renewal)

FEES AND CHARGES (payable in Phil. Peso at current exchange rate cash or cheque) US$ 10.00

WORKING VISA PROCESSING FEE (New or Renewal) INVESTOR’S VISA PROCESSING FEE (New or Renewal)

START Alien applies for CDC Endorsement for ALIEN EMPLOYMENT PERMIT (AEP) application by submitting AEP requirements to CDC

US$ 50.00 US$ 30.00

ADD: NOTARIAL FEES FOR APPLICATION AND OTHER FORMS

DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) FEES AND CHARGES (CASH ONLY AND PAID DIRECTLY TO DOLE) All transactions are covered by official receipts BUREAU OF IMMIGRATION (BI) FEES AND CHARGES (CASH ONLY AND PAID DIRECTLY TO DOLE) All transactions are covered by official receipts

CDC Customer Service Dept evaluates application, interviews alien and issues Visa Endorsement to alien Alien submits CDC Visa Endorsement and AEP requirements to Department of Labor and Employment DOLE-III issues AEP Alien Alien submits AEP card, NBI Clearance and other TYPE OF TRANSACTION requirements indicated on the Special Clark Working Visa (SCWV) CDC issues Visa Endorsement to Alien

REMINDER: • To help save time, a non-Filipino national (i.e., the alien) may apply and secure a Clearance from the National Bureau of Investigation while completing all the requirements for an Alien Employment Permit (AEP) and Special Clark Working Visa (SCWV). The processing of the AEP and the SCWV usually takes about 45 days.

Alien submits Visa Endorsement and other requirements to Bureau of Immigration Bureau of Immigration-Clark stamps and issues visa, Alien Certificate of Registration (ACR)

Disclaimer informational purposes only, and should This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for loss, International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

Diosdado Macapagal International Airport Flight Schedule

as of August 5, 2011

DIOSDADO MACAPAGAL INTERNATIONAL AIRPORT FLIGHT SCHEDULE FLIGHT SCHEDULE

DOMESTIC PASSENGER OPERATIONS AIRLINE

SEAIR

12x per week ( Clark-Caticlan)

AIR ASIA

Cebu Pacific

4x per week (Clark-Cebu)

ASIANA AIRLINES CEBU PACIFIC AIR

INTERNATIONAL PASSENGER OPERATIONS 60 flights per week Asiana Airlines 10x per week ( Clark-Incheon) Tiger Airways

2x Daily Flights(Clark-Singapore)

Air Asia Berhad Daily Flights (Clark-Kuala Lumpur) Daily Flights (Clark-Kota Kinabalu) Cebu Pacific

SEAIR

Daily Flights (Clark-Singapore) 5 per week (Clark- Hong Kong) x 6 per week (Clark-Macau) x 3 per week (Clark-Bangkok) x

UPCOMING INTERNATIONAL FLIGHTS Spirit of Manila Airlines

Flights to Taipei, Taiwan and the Middle East

Korean Airlines

3x per week to Incheon South Korea

JIN AIR SOMA

DESTINATION Kuala Lumpur Kota Kinabalu Incheon* Bangkok Hong Kong Macau Singapore

DEPARTURE FROM CLARK 11:45 AM Daily 06:00 PM Daily 12:55 AM Daily 08:45 PM T-Th 07:05 AM M-W-F-Sa-Su 07:00 PM M-W-F-Su 12:10 PM M-W-F-Su

Cebu Singapore Hong Kong Macau

08:30 PM 06:05 AM 07:15 PM 01:25 PM

M-W-F Daily Daily Daily

Caticlan Incheon Macau Taipei

06:00 AM 01:40 AM 04:05 AM 07:00 AM

Th-F-Sa M-T-Th-F-Sa M-F Daily

*with connecting flights to US, Japan and China AIR ASIA Effective 27 March until 29 October 2011 Air Asia Berhad flights be scheduled as follows: AK 662/663 KUL-CRK-KUL 1140H-1205H AK 6264/6265 BKI-CRK-BKI 1535H-1600H CEBU PACIFIC Cebu Pacific 5J-149/150 HKG-CRK-HKG effective 02 November 2010 (daily) Cebu Pacific 5J-538/537 effective 02 November 2010 (daily) Timing Adjustment and change in days of Operation of flight 5J-371 (MFM-CRK) effective 21 January 2011 JIN AIR Jin Air effective 27 March until 29 October 2011 LJ 003/004 (ICN-CRK-ICN) Jin Air extra schedule effective 21 July until 28 August 2011 LJ 603/604 (ICN-ICN) every Friday and Monday SEAIR SEAIR effective 01-31 July 2011 DG 7792/7793 (CRK-SIN-CRK) Daily SEAIR effective 01-31 July 2011 (CRK-HKG-CRK) Daily SEAIR effective 01-31 July 2011 (CRK-MFM-CRK) Daily SEAIR (Domestic) effective 01 July until 15 October 2011 (CRK-MPH-CRK) Corporate Office Building, Civil Aviation Complex, Clark Freeport Zone, Philippines 2023 (+63) 45 + 599-2888 or 599-2896 to 97 www.clarkairport.com

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

as of August 5, 2011

DIOSDADO MACAPAGAL INTERNATIONAL AIRPORT AIR TALKS 2008

2009

COUNTRY MACAU

DATE 24-25 APRIL

VENUE MACAU

CANADA CAMBODIA HONG KONG

13-15 MAY 19-20 JUNE 25-26 JUNE

CANADA MANILA CLARK

NETHERLANDS THAILAND IRAN FINLAND KUWAIT MALAYSIA JAPAN

10-11 JULY 24-25 JULY 4-5 AUGUST 29-30 SEPT 22-23 OCT 29-30 OCT 26-27 NOV

MANILA THAILAND MANILA FINLAND CLARK CLARK MANILA

RUSSIA YEMEN

10-11 DEC 17-18 DEC

MANILA MANILA

CAPACITY CARGO 6300 SEATS (CLARK NO RESTRICTION & SUBIC) ON CAPACITY AND AIRCRAFT 7 FREQ 32 FREQ 6300 SEATS 1400 TONS (CLARK (CLARK) & SUBIC) 7 FREQ (CLARK) 700 TONS 8700 SEATS 700 TONS 7 FREQ 700 TONS 7 FREQ 700 TONS PENDING 9000 SEATS 700 TONS 14 freq (Clark & Subic) * additional 6 coefficients (ClarkOsaka and/or Nagoya v.v.) * 28 coefficients points in RP (except Mla) – points in Japan (except Tokyo) PENDING PENDING

FLIGHTS 4 FLIGHTS/WEEK 5 FLIGHTS/WEEK 5 FLIGHTS/WEEK 14 FLIGHTS/WEEK -

SPAIN

COUNTRY

DATE 19-21 MAY

VENUE MADRID

CAPACITY 14 FREQ (per week)

UNITED KINGDOM

7-9 JULY

LONDON

LIBYA

21-22 OCT

MANILA

RUSSIA

30 NOV-01 DEC

MOSCOW

OMAN

13-15 DEC

MOSCAT

7 Frequencies per week (Roving point) 7 Frequencies for B-747 or 10 frequencies for smaller aircraft ASA signed but no frequency specified 7 FREQ (Passenger combination and/or all cargo services and aircraft except A380)

TURKEY

DATE 25-26 FEB

BAHRAIN SINGAPORE

29-30 MARCH 12-13 MAY

CHINA

23-24 NOV

VENUE 3 Frequencies with any aircraft (Delegation agreed to meet again in 2011 in order to increase the frequency to 7) 31 FREQ Additional 10,000 SEATS in each direction, bringing a total of 20,000 passenger seats 10,000 SEATS in 2004, additional 3,500 in 2010 per direction = 13,500 SEATS designated airline entitled to operate unlimited 3rd and 4th freedom with any aircraft type, except Manila, Beijing, Shanghai, and Guang Zhou

2010 COUNTRY

-

2009 QATAR

COUNTRY

DATE 14-15 JAN

VENUE MANILA

UAE KUWAIT BAHRAIN AUSTRALIA SINGAPORE

28-29 JAN 16-17 FEB 25-26 FEB 12-13 MARCH 6-7 MAY

ABU DHABI MANILA MANILA CANBERRA SINGAPORE

CAPACITY 14 FREQ (any aircraft except A380) 42 FREQ 14 FREQ 28 FREQ 4,000 SEATS (per week) 10,000 SEATS (per week) = 50 flights per week

CARGO 7 Frequencies per week with 5th freedom except USA and China

CARGO 400 TONS

14 FREQ 1,300 TONS May convert the passenger capacity to cargo- ratio of 4 seats: 1 Ton

CAPACITY

CARGO

200 TONS Maximum of 200 tons weekly without 5th freedom rights

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

Comparison of Incentives & Benefits

as of August 5, 2011

COMPARISON OF INCENTIVES & BENEFITS ITEM 1) Income Tax Holiday (ITH)

CFZ

PEZA

Generally, no income tax holidays for CFZ locators. However, PEZA enterprises in the PEZA Ecozone/s within CFZ shall be entitled to PEZA incentives, including the income tax holiday (please see comments under “PEZA”).

Export Manufacturing and Information Technology Enterprises: (a) Pioneer status- 6 years; (b) Non-pioneer status- 4 years; (c) Expansion Project- 3 years.

However, after the expiration of the ITH granted by the BOI, the registration with BOI must be cancelled, and the enterprise must register with the CFZ to avail of the 5% GIT regime. This is in line with the rule enforced in DOF Order No. 3-08 on the exclusivity of incentives for CFZ locators.

ITH is extendable up to 8 years if: (a) Net foreign exchange earnings or savings in the first three (3) years is at least USD500,000 annually; (b) Capital equipment to labor ratio does not exceed USD10,000 to 1 worker; and (c) 50% of raw materials used is considered indigenous

BOI

Projects under the Investments Priorities Plan: (a) Pioneer status- 6 years; (b) Non-pioneer status- 4 years; (c) Expansion project- 3 years; (d) Project located in less developed area- 6 years; and The rate of exemption of expansion projects is computed by dividing (e) Modernization project - 3 years. Also, ITH may be availed from the Board of Investments (BOI): Four (4) or six (6) years depending on the project and extendable up the incremental sales of the registered product by the total sales of the registered product. to eight (8) years.

Note: The BOI will only allow the registration of an enterprise that is not at the same time registered with the CFZ. An enterprise cannot Tourism, Medical Tourism & Agro-Industrial Enterprises: simultaneously enjoy the BOI and CFZ incentives. BOI-registered ITH is four (4) years. According to the PEZA, the ITH is extendable on a enterprises are entitled to the incentives under the BOI column. case-to-case basis under the conditions indicated above.

ITH is extendable up to 8 years if: (a) Net foreign exchange earnings or savings in the first 3 years is at least USD500,000 annually; (b) Capital equipment to labor ratio does not exceed USD10,000 to 1 worker; and (c) 50% of raw materials used is considered indigenous

Note: PEZA registered enterprises cannot register with CFZ, and simultaneously avail of CFZ incentives. 2) Tax on Gross Income

5% in lieu of all taxes, provided any income from the registered activity 5% in lieu of all taxes applicable only to the following enterprises: derived from the Customs Territory does not exceed 30% of income i) Export Manufacturing ii) Information Technology from all sources iii) Tourism If the income of a CFZ enterprise from the Customs Territory exceeds iv) Medical Tourism 30%, then all of its income, whether from the Zone or the Customs v) Agro-Industrial Territory, shall be subject to the normal income tax. (DOF Order No. vi) PEZA Zone Developer 3-08) vii) PEZA Zone Facility & Utility Enterprises

Not Applicable

In determining the amount of gross income that is subject to the tax, If the sales in the Customs Territory should exceed 30%, its income direct costs are allowed as deductions. For an enumeration of allowable derived from such excess sales shall be imposed with the normal deductions, please see DOF Order No. 3-08. income tax. (BIR Revenue Memorandum Circular No. 74-99) In determining the amount of gross income that is subject to the tax, direct costs are allowed as deductions. For an enumeration of allowable deductions, please see BIR Revenue Regulations No. 11-05. 3) Regular Income Tax

Exempt, provided any income from the registered activity derived from Exemption limited to the enterprises listed above After ITH, regular income tax of 30% on taxable income the Customs Territory does not exceed 30% of income from all sources. The enterprises not subject to ITH or 5% GIT are subject to regular corporate income tax.

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

as of August 5, 2011

COMPARISON OF INCENTIVES & BENEFITS ITEM 4.A.) VAT on Purchases

CFZ

PEZA

BOI

Zero-rated for purchases from suppliers in the Customs Territory; Zero-rated, if purchased from the Customs Territory; Exempt from VAT, if Taxable. But certain purchases by a VAT-registered supplier to a BOIExempt if pursuant to an intra-ecozone purchase. purchased from a PEZA-registered enterprise. registered 100% exporter can automatically qualify for VAT zero-rating. Please see BIR Revenue Memorandum Order No. 9-00 Zero-rated, if export sales; taxable, if local sales Exempt from VAT

Exempt, If under the 5% GIT; Also, an intra-ecozone sale is exempt from VAT. Zero-rated, if under the ITH, and transaction is an export sale.

Exempt

Depends on the tax regime of the enterprise and not the type of Taxable enterprise: if entitled to ITH, subject to RPT.

4.B.) VAT on Sales 5) Real Property Tax (RPT)

However, machineries attached to real estate shall be exempt for the first 3 years of operation; If subject to 5% gross income tax, exempt from RPT , except RPT on land owned by PEZA Zone Developers; If subject to regular taxes but allowed duty and tax-free importation, RPT must be paid. 6) Local Government Unit (LGU) Taxes & Fees

Exempt

Exempt, while under the 5% GIT regime As a general rule, exempt from local taxes under the Local Government Exempt, while enjoying the ITH; the enterprise can claim exemption Code for four (4) years (non-pioneer) or six (6) years (pioneer) from the under Section 2 of PEZA Memorandum Circular No. 2004-024 dated 24 date of registration. September 2004. However, despite the Local Government Code provision, some LGUs will Under PEZA Memorandum Circular No. 2004-024, PEZA-registered still assess LGU taxes and fees. enterprises, regardless of tax regime (including those subject to regular national internal revenue and local taxes) are exempt from compliance with the business permit requirement. However, LGUs still require some PEZA firms to secure the business permit. For IT enterprises, it depends on the location of the enterprise. The Memorandum of Agreement between the PEZA and the particular city (e.g., Makati, Taguig, Pasay) will determine which LGU fees are applicable. The PEZA has entered into a Memorandum of Agreement with the BIR on 5 March 2007 (RMC No. 15-07) re information sharing between the PEZA and the BIR to effectively administer the grant of incentives to PEZA entities.

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

as of August 5, 2011

COMPARISON OF INCENTIVES & BENEFITS ITEM 7) Other Internal Revenue Taxes

CFZ

PEZA

BOI

Exempt

Depends on the tax regime of the enterprise: if subject to ITH or Taxable regular taxes, then subject to other internal revenue taxes, including However, despite the said exemption, the enterprise’s obligations as a documentary stamp taxes; withholding tax agent subsist. If subject to 5% GIT, then exempt from other internal revenue taxes. Income derived by an enterprise that is not related to its registered activity/ies shall be subject to the regular internal revenue taxes. Regardless of the tax regime, however, the enterprise’s obligations as a withholding tax agent subsist. Income derived by an enterprise that is not related to its registered activity/ies shall be subject to the regular internal revenue taxes.

8) Import Taxes/Duties on Raw Materials and Supplies

Tax and duty-free importation of raw materials, supplies and all other Tax and duty exemption is limited to the following enterprises: articles including finished goods. i) Export Manufacturing ii) Information Technology The sale of goods (i.e., merchandise) by a CFZ-registered enterprise to iii) Tourism a buyer from the Customs Territory (i.e., domestic sales) is considered a iv) Medical Tourism technical importation made by the buyer. Such buyer shall be treated v) Agro-Industrial as an importer thereof and shall be imposed with the corresponding vi) Logistics Services import taxes and duties. The sale of goods (i.e., merchandise) by a PEZA-registered enterprise to a buyer from the Customs Territory (i.e., domestic sales) is considered a technical importation made by the buyer. Such buyer shall be treated as an importer thereof and shall be imposed with the corresponding import taxes and duties.

9) Import Taxes/Duties on Capital Equipment, Spare Parts, Materials & Tax and duty-free importation of machinery, equipment, supplies and Tax and duty exemption is limited to the following enterprises: Supplies all other articles including finished goods. i) Export Manufacturing ii) Information Technology The sale of goods (i.e., merchandise) by a CFZ-registered enterprise to iii) Tourism a buyer from the Customs Territory (i.e., domestic sales) is considered a iv) Medical Tourism technical importation made by the buyer. Such buyer shall be treated v) Agro-Industrial as an importer thereof and shall be imposed with the corresponding vi) Logistics Services import taxes and duties.

Taxable, but allowed a tax credit on national internal revenue taxes, wharfage dues, and duties paid on imported raw materials, supplies used for exported products

Zero percent duty is imposed on imported capital equipment, supplies and spare parts for consigned equipment under certain conditions. Please see Section 2 of Executive Order No. 528 and its implementing rules and regulations (DTI-BOI Admin. Order No. 01-06) A registered enterprise with a bonded manufacturing warehouse shall be exempt from customs duties and national internal revenue taxes on its importation of required supplies/spare parts for consigned equipment or those imported with incentives.

The sale of goods (i.e., merchandise) by a PEZA-registered enterprise to a buyer from the Customs Territory (i.e., domestic sales) is considered a technical importation made by the buyer. Such buyer shall be treated as an importer thereof and shall be imposed with the corresponding import taxes and duties. 10) Branch Profit Remittance Tax of 15%

Exempt

Exempt

Taxable

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

as of August 5, 2011

COMPARISON OF INCENTIVES & BENEFITS ITEM 11) Other Key Considerations

CFZ

PEZA

BOI

One Stop Action Center (OSAC) for the following services: i) Clark Working VISA & Special Clark Investor’s VISA for foreign nationals and their families, ii) Prompt evaluation and approval within 30-day period, iii)One-stop and online processing center for all national and local government permits, iv) One-stop export documentation, and v) Fast and efficient electronic monitoring of movement of goods and services in and out of the zone (currently on pilot testing)

One Stop Shop for the following services: i) Special Non-Immigrant VISA for foreign nationals and their families ii) Building and occupancy permits, iii) Import and export permits, iv) Harmonized customs process, v) Automated import and export procedures

One Stop Action Center assists investors that do business in the Philippines. It offers the following services: (i) Conducts business counseling, (ii) Monitors the status of investors’ registration applications, (iii) Informs investors of the action taken on their application within the shortest possible time

Special Investor Resident VISA for a minimum investment of Other Benefits: i) Exemption from LGU business permits, ii) Simplified registration USD75,000.00 requirements and approval, iii) PEZA Board meets 2x a month ensuring approval within 2 weeks, iv) 24/7, fast and efficient service to locators A registered enterprise may be allowed to employ foreign nationals in supervisory, technical or advisory positions for five (5) years from the date of registration. Simplification of customs procedures for importation of equipment, spare parts, raw materials and supplies and exports of processed products. The privilege to operate a bonded manufacturing/trading warehouse.

*A zero-rated sale of goods, properties, and/or services (by a VAT-registered person) is a taxable transaction for VAT purposes under Sections 106(A)(2) and 108(B) of the Tax Code, but shall not result in any output tax. However, input tax on purchases of goods, properties or services (including lease of properties), and importation of goods or properties, related to such zero-rated sale shall be available as a tax credit or refund in accordance with existing regulations. Under this type of sale, no VAT shall be shifted or passed-on by VAT-registered sellers/suppliers from the Customs Territory on their sale, barter or exchange of goods, properties or services to the subject registered enterprise. On the other hand, a VAT-exempt transaction, refers to the sale of goods, properties or services or the use or lease of properties that is not subject to VAT (output tax) under Section 109 of the Tax Code and the seller/supplier is not allowed any tax credit of VAT (input tax) on purchases related to such exempt transaction.

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

CFZ vs. PEZA for Various Types of Enetrprises/ Locators

as of August 5, 2011

CFZ VS. PEZA FOR VARIOUS TYPES OF ENTERPRISES/LOCATORS

LEGEND Advantage Disadvantage Item

Economic Zone Owner/ Developer & Utilities/ Facilities Provider

Export Manufacturing CFZ

PEZA

Information & Communications Technology/BPO

CFZ

PEZA

CFZ

1) Income Tax Holiday (ITH) (Note 2)

None

None

2) Tax on Gross Income (Note 3)

5%

5%

5%

5% outright or 5% after ITH Period

5%

3) Income Tax

Exempt

Exempt

Exempt

Exempt

4)Value Added Tax (VAT) (on purchases and sales) (Note 4)

Zero-Rated or Exempt

Zero-Rated or Exempt

Zero-Rated or Exempt

Zero-Rated or Exempt

PEZA

Logistics

Tourism, Medical Tourism & AgroIndustrial

CFZ

PEZA

None

None

5% outright or 5% after ITH Period

5%

Not Applicable

5%

Exempt

Exempt

Exempt

Taxable

Zero-Rated or Exempt

Zero-Rated or Exempt

Zero-Rated or Exempt

Zero-rated or Exempt

None; but 4 or 6 yrs, up None; but 4 or 6 yrs, up may instead to 8 years may instead to 8 years register with register with BOI and BOI and enjoy ITH of enjoy ITH of 4 or 6 years, 4 or 6 years, up to 8 years up to 8 years

CFZ

PEZA

Commercial, Retail & Service Establishments (Note 1)

Residential Building Developer/Owner (Note 1)

CFZ

PEZA

CFZ

PEZA

None

None

None

None

5% outright or 5% after ITH Period

5%

Not Applicable

5%

Not Applicable

Exempt

Exempt

Exempt

Taxable

Exempt

Taxable

Zero-Rated or Exempt

Zero-Rated or Exempt

Zero-Rated or Exempt

Taxable

Zero-Rated or Exempt

Taxable

4 years , None; but may instead ITH may be register with increased BOI and enjoy ITH of 4 or 6 years, up to 8 years

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

as of August 5, 2011

CFZ VS. PEZA FOR VARIOUS TYPES OF ENTERPRISES/LOCATORS

LEGEND Advantage Disadvantage Item

Economic Zone Owner/Developer & Utilities/Facilities Provider

Export Manufacturing

Information & Communications Technology/BPO

Logistics

Tourism, Medical Tourism & AgroIndustrial

Commercial, Retail & Service Establishments (Note 1)

Residential Building Developer/Owner (Note 1)

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

5) Real Property Tax

Exempt

Taxable only with respect to land owned by developpers; other properties are exempt from RPT.

Exempt

Taxable during the ITH Period (except for machineries installed and operated in the Zone for the 1st 3 years); Exempt when subject to 5% GIT.

Exempt

Taxable during the ITH Period (except for machineries installed and operated in the Zone for the 1st 3 years); Exempt when subject to 5% GIT.

Exempt

Taxable

Exempt

Taxable during the ITH Period (except for machineries installed and operated in the Zone for the 1st 3 years); Exempt when subject to 5% GIT

Exempt

Taxable

Exempt

Taxable

6) LGU Taxes & Fees

Exempt

Exempt

Exempt

Exempt while enjoying the ITH or 5% GIT.

Exempt

Exempt while enjoying the ITH or 5% GIT,

Exempt

Taxable/ Applicable

Exempt

Exempt while enjoying the ITH or 5% GIT.

Exempt

Taxable/ Applicable

Exempt

Taxable/ Applicable

If located in a city with a MOA with PEZA, some LGU fees may be assessed. Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

as of August 5, 2011

CFZ VS. PEZA FOR VARIOUS TYPES OF ENTERPRISES/LOCATORS

LEGEND Advantage Disadvantage Item

Economic Zone Owner/ Developer & Utilities/ Facilities Provider

Export Manufacturing

Information & Communications Technology/BPO

Logistics

Tourism, Medical Tourism & AgroIndustrial

Commercial, Retail & Service Establishments (Note 1)

Residential Building Developer/Owner (Note 1)

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

CFZ

PEZA

7) Import Taxes & Duties on Raw Materials & Supplies

Exempt

Taxable

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Taxable

Exempt

Taxable

8) Import Taxes & Duties on Capital Equipment & Spare Parts

Exempt

Taxable

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Taxable

Exempt

Taxable

9) Branch Profit Remittance Tax

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Exempt

Taxable

Exempt

Taxable

10) Other Internal Revenue Taxes (Note 5)

Exempt

Exempt

Exempt

Exempt when subject to 5% tax; taxable during ITH period.

Exempt

Exempt when subject to 5% tax; taxable during ITH period.

Exempt

Taxable

Exempt

Exempt when subject to 5% tax; taxable during ITH period.

Exempt

Taxable

Exempt

Taxable

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

CFZ VS. PEZA FOR VARIOUS TYPES OF ENTERPRISES/LOCATORS

as of August 5, 2011

Note 1: PEZA confirmed that residential housing activities cannot be registered with For CFZ-registered enterprises, the purchase of goods and services is exempt from VAT if the goods and services are purchased within the zone, while the purchase of goods and services from the PEZA, even if such enterprises may be located within a PEZA zone. Customs Territory (outside the zone) is subject to zero-rated VAT on the part of the seller. For Note 2: CFZ-registered enterprises cannot register with the BOI, and simultaneously PEZA-registered enterprises, the purchase of goods from other PEZA-registered enterprises is avail of BOI and CFZ incentives. Likewise, CFZ-registered enterprises cannot register with PEZA, exempt from VAT, while the purchase of goods from the Customs Territory is subject to zero-rated VAT. The purchase of services by PEZA-registered enterprises is subject to zero-rated VAT if the and simultaneously avail of BOI and CFZ benefits. services are purchased from the Customs Territory, or from PEZA-registered enterprises subject to As confirmed by PEZA, the PEZA economic zones/parks can only have specific locators, as follows: regular taxes, such as the Logistics Service companies, or ITH. On the other hand, the purchase of services by PEZA-registered enterprises is exempt from VAT if these are purchased from PEZAa. Export manufacturing zones - export manufacturers, IT firms and agro-industrial firms; registered enterprises subject to five percent 5% Gross Income tax (GIT) in lieu of national and local taxes. b. IT parks – IT firms; c. Tourism zones – tourism firms; Note 5: The exemption from other internal revenue taxes does not cover withholding d. Medical tourism zones – medical tourism firms; and e. Agro-industrial zones – agro-industrial firms. taxes. Also, enterprises under the ITH or the regular tax regime are liable to pay internal revenue taxes, such as the documentary stamp tax. Developers, logistics services companies, commercial and retail establishment and residential housing developers can be located in the foregoing zones. A BOI-registered enterprise can avail of ITH of 4 or 6 years, which can be extended up to 8 years. Note 3: The entire income of the CFZ-registered enterprise will be subject to national internal revenue taxes if their income from local sources outside the CFZ or PEZA territory exceeds 30% of their income from all sources. PEZA-registered enterprises whose income from local sources outside the PEZA will remain subject to PEZA tax incentive, but the income in excess of the threshold will be subject to national internal revenue taxes. (Department of Finance Order No. 3-08; BIR Revenue Memorandum Circular No. 74-99) Note 4: The sale of goods and services by CFZ-registered enterprises subject to five percent 5% Gross Income tax (GIT) is exempt from VAT. The sale of goods and services by PEZA-registered enterprises subject to ITH or regular taxes may be subject to zero-rated VAT if the transaction is an export sale or a transaction subject to zero-rated VAT under the Tax Code. The sale of goods and services by PEZA-registered enterprises subject to 5% gross income tax is exempt from VAT. Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.

RELATED LINKS The Official website of the Philippine Government http://www.gov.ph Board of Investments http://www.boi.gov.ph Philippine Economic Zone Authority http://www.peza.gov.ph Bureau of Internal Revenue http://www.bir.gov.ph Clark Freeport Zone http://www.clark.com.ph

Peregrine Development International Inc. http://www.peregrinedc.com KGL – Investment Company http://www.kglinvest.com ORGANIZATIONAL MEMBERSHIP Business Processing Association of the Philippines – BPA/P http://www.bpap.org Clark Investors and Locators Association - CILA http://www.cila.biz

Official Philippine Tourism http://www.tourism.gov.ph

Philippines Business Leaders Forum - PBLF http://www.philippinesforum.com

Clark Airport http://www.clarkairport.com

European Chamber of Commerce of the Philippines - ECCP http://www.eccp.com

Province of Pampanga http://pampangacapitol.com City of Angeles http://www.angelescity.gov.ph City of Mabalacat http://www.mabalacat.gov.ph

American Chamber of Commerce of the Philippines - AMCHAM http://www.amchamphilippines.com US - Asean Business Council Washington DC, USA http://www.us-asean.org

Spur Road 2, Industrial Estate 5, Clark Freeport Zone, Pampanga, Philippines 2023 Telephone: (63) 45 499 1100 Fax: (63) 45 499 1104

www.gglc.ph

Disclaimer This GGLC Locator and Investor Guide is for informational purposes only, and should not be relied upon as the sole source of information relating to its content. Neither does this Guide constitute, nor is it meant as a substitute for professional legal advice. Neither Global Gateway Development Corporation nor Peregrine Development International, Inc. shall be responsible for any loss, damage (whether special or consequential), liability, injury, claims, and/or any manner of inconvenience, arising out of, or in relation to the use of the information contained in this Guide. In other words, we encourage you to exercise due diligence in using any information in this Guide, and to obtain your required information from as many relevant sources as possible.