The Department of Finance is reviewing the implementation of a law imposing a common carriers tax on international air and sea cargo vessels doing business in the Philippines to ensure a level playing field.
According to a statement issued Monday, finance Secretary Carlos Dominguez III gave this assurance during a recent meeting with Danish officials including Danish Ambassador Jan Top Christensen and Denmark’s Minister of Industry, Business and Financial Affairs Brian Mikkelsen.
Dominguez said his department is currently studying the legislation, particularly the revenue regulations, to improve the country's competitiveness in the global shipping and air cargo sectors.
“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. We are going to review the BIR (Bureau of Internal Revenue) issuances," Dominguez said.
Republic Act 10378, or an "Act Recognizing the Reciprocity Among Nations as Basis for Granting Income Tax Exemption to International Ships”, exempts international carriers from paying the 3-percent common carriers tax imposed on passengers but not on cargo.
The DOF said international carriers that want to be granted Philippine income tax exemption on the basis of reciprocity, may file for a confirmatory ruling for its exemption with the BIR’s International Tax Affairs Division.
Under RA 10378, reciprocity refers to “an applicable tax treaty or international agreement to which the Philippines is a signatory” or when the home country of an international carrier grants income tax exemption to Philippine carriers.