Shipping lines support PH review of common carriers tax on cargo carriers

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The Association of International Shipping Lines (AISL) supports the Department of Finance review of the common carriers tax (CCT) levied on international sea and air carriers.

Under the present tax regime in the Philippines, AISL general manager Atty Max Cruz pointed out that for the transport of cargoes from the Philippines, international sea and air carriers actually have to pay a total of 5.5% tax broken down into 2.5% tax on gross Philippine billings (or 1.5% if covered by international treaty) as well as 3% CCT.

He told PortCalls the CCT “should be carefully looked into”, noting that the Philippines “is the only country in the world that levies a 3% CCT on top of the income (or freight tax) paid by international carriers on the transport of outbound cargoes.”

The association described the tax as an “onerous burden” on carriers “as it increases the cost of doing business in the Philippines. It negatively impacts on the competitiveness of the Philippines as a preferred port/airport of choice in this part of the Asian region.”

AISL also took note of Republic Act No. 10378, signed into law by former President Benigno Aquino III on March 07, 2013, which limits the removal of the 3% CCT to passengers of international carriers to protect and promote the country’s tourism industry.

The association said the “law was selective and discriminatory in application when it left out cargoes of international carriers from its coverage. As mentioned, the continuous exposure of international carriers to the 3% Common Carriers Tax every time they carry cargoes from the Philippines restricts the country’s ability to compete with other foreign ports/airports. They need a level playing field.”

During a recent meeting with Danish officials, Finance Secretary Carlos Dominguez III said DOF is studying legislation governing the CCT and how it is being currently implemented.

“We are seriously reviewing this and again the goal is to make it fair to everyone and to make it a level playing field for all participating in the business,” Dominguez said during the meeting.

“We are going to review the BIR (Bureau of Internal Revenue) issuances,” he added.

Dominguez gave this assurance after Denmark’s Minister of Industry, Business and Financial Affairs Brian Mikkelsen raised the issue during the meeting. – Roumina Pablo