Trans-Asia Shipping gets tax perks for P1.5B vessel

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MV Trans-Asia 21, Trans-Asia Shipping Lines’ new and biggest RoPax vessel. Photo from Trans-Asia Shipping Lines.
  • The Fiscal Incentives Review Board approved incentives for Trans-Asia Shipping for the proposed operation of a P1.5-billion Cebu-based ship
  • The grant includes four years of income tax holiday, five years of enhanced deductions, and 11 years of duty exemption on importations
  • The new ship will sail the Cebu-Cagayan de Oro route

The Fiscal Incentives Review Board (FIRB) has approved a set of tax incentives for Trans-Asia Shipping Lines, Inc for its proposed operation of a P1.5-billion Cebu-based ship.

The grant includes four years of income tax holiday, five years of enhanced deductions, and 11 years of duty exemption on importations, FIRB said in a statement.

Trans-Asia is a Cebu-based shipping company that engages in transporting passengers and cargo using its roll-on/roll-off passenger ferries and cargo vessels. The shipping line was acquired in 2019 by Chelsea Logistics and Infrastructure Holdings Inc.

READ: PCC clears way for Chelsea acquisition of Trans-Asia

In a regulatory disclosure on March 16, Chelsea Logistics said it has “not yet received the formal communication or correspondence from the Board of Investments regarding the approval of its application for incentives for the vessel Trans-Asia 21.”

MV Trans-Asia 21 is a newly-built steel hulled roll-on/roll-off vessel delivered last year and was acquired in line with the domestic shipping industry modernization program of the Maritime Industry Authority.

“The new shipping vessel sails the Cebu-Cagayan de Oro route on a reduced travel time and still comparable rate, setting itself apart in the market as a convenient, cost-friendly, and competitive inter-island vessel in the country,” FIRB said.

Finance Secretary and FIRB chairman Carlos Dominguez III said the tax incentive approval “aligns with the national government’s aim to modernize transportation and to increase competition in the shipping industry in the Philippines.”

Trade Secretary and FIRB co-chair Ramon Lopez also supported the approval, saying the project “will continue generating revenues for the government even after the incentive period, which is a substantial economic benefit the FIRB considers in granting tax incentive applications.”

Lopez noted there are limited shipping lines serving the Cebu-Cagayan De Oro-Cebu route, “thus, the entry of a new player will contribute to enhancing the competitiveness of the region’s water transport with a focus on passenger safety, welfare, and comfort.”

According to Trade undersecretary and Board of Investments managing head Ceferino Rodolfo, potential benefits from the project will outweigh the cost of granting the incentives, primarily driven by additional revenues from the activity and substantial domestic spending on direct materials.

With increased access to sea transportation, the project is expected to stimulate higher flow of goods and services between the cities of Cebu and Cagayan de Oro, Rodolfo said.

Apart from an increase in productivity and efficiency of the transport of goods and services, the new shipping vessel also seeks to stimulate industry linkages and agricultural trade between Central Visayas and Northern Mindanao, according to FIRB.