Aquino inks law exempting int’l airline firms from tax

By EJ Dominic Fernandez
FOREIGN air and shipping companies are now exempt from paying certain Philippine taxes after President Simeon Benigno Aquino III signed Republic Act 10374 during the Meetings, Incentives, Conventions, Events/Exhibition Conference (MICECon) 2013, at SMX Convention Center, SM Lanang Tuesday.
The law was authored by Davao City Congressman Isidro T. Ungab and two other members the House of Representatives and Senator Franklin Drilon in the Senate.
A government briefer on the new law says international carriers and shippers are mandated to pay the Gross Philippine Billings Tax (GPBT) and common carriers’ tax (CCT) under the Philippine Tax Code, but with RA 10374 where National Internal Revenue Code of 1997 Section 28 (A) (3) (a-b), Section 109, and Section 118 are amended, carriers will be exempt from paying the 2.5 percent GPBT and three percent CCT.
This will be granted to foreign carriers provided that the same exemption is granted by the carrier’s own country to the Philippines, according to the law.
When asked about the significance of the law, Ungab, who is also credited with having been one of the House author of the socalled Sin Tax law, said that the reciprocal agreements under the new law hopes to at least double the number of tourist arrivals.
“It also hopes to bring back to the Philippines foreign airlines that have left the country like KLM, Cathy Pacific, Qatar and others. Aside from this, our local airline industry will be assisted in penetrating the tourism industry of other countries,” Ungab said.
The briefer states that this will “boost the attainment of the tourism industry’s target of 10 million international visitors by 2016,” adding, “These visitors are expected to contribute about P50 billion in tax revenues from their expenses by 2016.”
In Aquino’s opening speech at the MICECon, he said, “This will actually mean an initial revenue loss for us, but it is ultimately a strategic move, airlines have long asked for this measure since it will only bring in more traffic and facilitate connectivity among other countries.”
“With this law, everybody wins, from the aviation industry, to the tourism industry, and the millions of our people who will have greater freedom in planning their trips,” the president added.
Aquino signed the law in the presence of House Speaker Feliciano Belmonte Jr., Rep. Ungab, the principal sponsor of the bill, Jerry Treñas representative from the lone district of Iloilo City, principal author, Rep. Mylene Garcia-Albano of Davao City’s 2nd district, 1st district Rep. Maria Carmen Zamora of Compostela Valley,  Davao del Norte 1st district Rep. Anthony del Rosario, 1st district Western Samar Rep. Mel Senen Sarmiento, Wesley Gatchalian of Alay Buhay, Senator Drilon, the principal author and sponsor of the law in the Senate, and Tourism Secretary Ramon Jimenez as witnesses.