A bill has been filed in the Philippine Senate seeking to include the transport of cargoes in the exemption from payment of the Gross Philippine Billings Tax (GPBT) and common carriers tax (CCT) granted to international air carriers.
Senator Sergio Osmeña III filed Senate Bill No. 2123, which proposes to amend the National Internal Revenue Code (NIRC) of 1997 to also exempt foreign carriers’ transport of cargoes from GPBT and CCT payment. The NIRC granted the exemption in 2013 to the transport of passengers only.
The NIRC, or Republic Act No. 10378, was approved by President Benigno Aquino on March 7, 2013. The Bureau of Internal Revenue issued implementing rules and regulations in September 2013.
In his explanatory note, Osmeña said the exemption “will provide necessary impetus to promote trade and investment in the Philippines” and encourage sea and air carriers “keep the supply chain flowing and uninterrupted” at a time when the Association of Southeast Asian nations (ASEAN) Economic Integration in 2015 draws near.
Osmeña noted the support of the Joint Foreign Chambers of the Philippines for the exemption given the country’s international commitment to the World Trade Organization and the International Civil Aviation Organization.
The Association of International Shipping Lines, in a letter dated August 15, 2013, sought the endorsement of chairman of the House Committee on Ways and Means, Rep. Romero Federico Quimbo, of the AISL’s position paper seeking the inclusion of transport of cargoes in the exemption under RA 10378.
AISL said the Philippines is the only country that imposes a CCT on all foreign carriers calling at Philippine ports.
The group said for 2012, its member carriers calling at Philippine ports had shelled out roughly P750 million in CCT, an amount that could have “constituted substantial savings for member lines had they skipped the Philippines and called other foreign ports instead.”
AISL is proposing that Section 118 of the NIRC imposing the 3% CCT should be deleted, and the act to be amended to apply the reciprocity principle to both passenger and cargoes.
The carriers said removing the CCT and including transport of cargoes in the reciprocity principle of the GPTB “will open wider opportunities for investments as the international sea carriers begin to expand their services and networks in the Philippines.”
As of February 2014, the Senate Committee on Ways and Means was seeking comments from the Trade and Industry Secretary regarding the bill. – Roumina M. Pablo
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