OVERSEAS shipping operators expressed approval over Republic Act 9301 or the new Philippine Overseas Shipping Development Act signed last week by President Gloria Macapagal-Arroyo.
An official from the Filipino Shipowners Association (FSA) who requested anonymity said RA 9301, which amended certain provisions of the Philippine Overseas Shipping Development Act (RA 7471), would play a big part in the development of the overseas shipping industry, particularly in the modernization of the overseas fleet. The source said incentives under by the new law – including a ten-year income tax exemption for overseas operators – may prod ship owners to import new ships which will, in turn, generate greater employment, increase foreign remittances, and boost social benefits for Filipino seafarers.
A medium-sized general cargo vessel costs at least $50 million.
The source also lauded the broader definition of overseas shipping under RA 9301. “Now, it encompasses all aspects of shipping, including the sale and purchase of a vessel,” he said.
The Maritime Industry Authority (MARINA) said the new law will give incentives for vessel acquisition and ownership and revise ownership requirements for vessels engaged in overseas trade.
The old Philippine Overseas Shipping Development Act provided shipping companies engaged in overseas shipping exemption from income taxes and import duties and taxes on vessels and spare part, as well as machinery, equipment and materials to be used for shipbuilding and ship repair of vessels owned by these companies.
The same law allowed less stringent conditions as to source/mode of financing vessel acquisitions vis-a-vis existing regulations on such transactions.
But MARINA said due to the Bureau of Internal Revenue’s “limited” interpretation of overseas shipping, RA 7471 seemingly failed to encourage and promote ship owning among overseas shipping companies. In a primer, the Philippine Interisland Shipping Association said the revised act will allow the Philippines to create a dynamic service export industry that can stand side by side with Hong Kong and Singapore.
