MARINA revises rules for imports of passenger ships by domestic operators

• The Maritime Industry Authority revised rules for the importation of passenger vessels by domestic shipping operators

• MARINA Memorandum Circular No. DS-2023-01 is in keeping with Republic Act No. 11659, which amends the Public Service Act and relaxes foreign ownership restrictions in certain industries, including domestic shipping

• Companies intending to import a passenger ship must secure an Authority to Import/Approval of Bareboat Charter from MARINA

The Maritime Industry Authority (MARINA) has revised its rules on the importation of passenger vessels by domestic shipping operators.

The change comes as a result of Republic Act (RA) No. 11659, which updates the Public Service Act and allows more foreign ownership in some industries, including domestic shipping.

MARINA Memorandum Circular (MC) No. DS-2023-01 takes effect 15 days after its publication on October 19.

Key provisions of the circular are as follows:

• Ships cannot be converted to passenger ships at any time, whether they are imported, bought locally, or built locally.
• Companies/entities intending to import a passenger ship (whether by direct purchase, lease or charter) must secure an Authority to Import/Approval of Bareboat Charter (ATI/ABC) from MARINA.
• Fastcrafts with less than 500 gross tonnage (GT) may be imported pending another policy for them from MARINA.
• Imported passenger ships must be in good condition, without any major problems, as shown in a recent survey report by a certified marine surveyor authorized by MARINA or the ship’s home country.

Some regulations remain:

• Passenger ships built for smooth water operation will still not be granted an ATI.
• Imports of passenger ships 500 GT or less continue to be prohibited.
• Second-hand passenger ships remain subject to ultrasonic thickness gauging by MARINA surveyors or recognized private surveyors before being registered in the Philippines.

MC DS-2023-01 also provides more details about ship classification:

• Passenger ships under 20 years old must have certification from a member of the International Association of Classification Societies (IACS) when they are imported.
• Passenger ships over 8,000 GT and older than 20 years may be imported if they have IACS certification at the time of importation and throughout their use in the domestic trade.

Qualification requirements remain the same, and chartered ships must have contracts lasting at least one year. Ending the lease or charter before one year will result in collection of taxes. The lessor or charterer is responsible for a 4.5% withholding tax on gross bareboat charter hire.

For tax benefits, applicants must comply with provisions in MC DS-2023-01 to get incentives from different government programs, such as those under Executive Order 226 (Omnibus Investment Code of 1987), Investment Priority Plans of the Board of Investments, and provisions of RA 9337.

MC DS-2023-01 also added some new documentation requirements, such as consent from the ship’s home country for temporary registration in the Philippines, certification for new ships from the classification society, and pictures of the ships.

The fees for processing the required approvals follow those laid out in MC 2015-05 and any changes made to it.

If a ship is brought into the country without ATI approval, a fine of up to P1 million for ships 1,000 gross tonnage (GT) and above, and P500,000 for ships less than 1,000 GT will be levied.

The new circular removes the punishment of perpetual disqualification from importing ships.

The penalty for not following approved conditions is P200,000 per condition. Submitting fake documents can result in a P1 million fine and being banned from importing ships. Criminal charges may also be filed. – Roumina Pablo