Senate ratifies bill junking foreign carrier’s tax

SENATORS ratified Wednesday the bicameral conference committee report on a bill removing the Philippines as the only country that imposes taxes on international carriers and shippers.

Senator Franklin Drilon, former acting chair of ways and means committee, said the urgent measure will be effective by mid-February if the House of Representatives will also ratify it and an enrolled copy will be endorsed to President Benigno Aquino III for signing.

Drilon said the bill’s enactment will help establish the country as a tourism hub and elevate its status as a viable gateway to Asian neighbors.

He added that it will help increase the capacity of local and foreign carriers for tourists to 15 million seats from current six million seats.

At present, international carriers and shippers are required to pay 2.5 percent Gross Philippine Billings Tax (GPBT) and 3 percent common carriers' tax (CCT).

But under the proposed reciprocity clause, the GPBT will only be waived if home countries of foreign carriers likewise give a similar tax exemption to Philippine carriers.

For the CCT or the percentage tax, the bill proposes to exempt from the payment international carriers involved in the transport of passengers.

Also, the bill included the transport of passengers by international carriers in the list of transactions that are exempt from the payment of the value-added tax.

Drilon said this will translate to lower traveling costs for overseas Filipino workers who will be enjoying lower fares to the country and domestic carriers with foreign operations will post savings as long as the tax exemptions on their gross billings are reciprocated by other countries.

He said P2.5-billion foregone revenues can be easily recouped, if not surpassed, because of projected increases in tourist arrivals due to cheaper airline fares and the expected surge in the airline industry.

The Department of Tourism estimates that the increase in tourist arrivals will generate P455 billion in 2016 and will provide six million jobs. Last year, the country tallied 4.27 million visitors, up by 9 percent from 3.92 million in 2011.

A quarter of the total visitors came from South Korea with a total of one million arrivals. (Virgil Lopez/Sunnex)