CEBU City-based shipping vessel Trans-Asia Shipping Lines Inc. has been granted tax incentives for its new roll-on-roll-off (RoRo) passenger and cargo operations that will ply the Cebu-Cagayan de Oro (CDO) route.
The Fiscal Incentives Review Board (FIRB) said the approved tax incentives for the operations were for the proposed P1.5 billion shipping vessel. This includes four years of income tax holiday, five years of enhanced deductions and 11 years of duty exemption on importations.
On March 17, 2022, Trans-Asia received the Board of Investments (BOI) notice of approval dated March 16.
The new shipping vessel, Trans-Asia 21, will sail the CDO 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, the Department of Finance said in a statement.
Trans-Asia Shipping Lines Inc.’s is a wholly owned subsidiary of Chelsea Logistics and Infrastructure Holdings Corp.
Trans-Asia 21 is a newly-built steel hulled RoRo vessel. The acquisition of which is aligned with the domestic shipping industry modernization program of the Maritime Industry Authority.
Finance Secretary and FIRB Chairman Carlos Dominguez III said the tax incentive approval for the transportation player “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 supports the approval as 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 said there are limited shipping lines serving the Cebu-CDO-Cebu route; thus, the entry of a new player will contribute to enhancing the competitiveness of the region’s water transport with focus on passenger safety, welfare, and comfort.”
According to Trade undersecretary and BOI managing head Ceferino Rodolfo, the potential benefits from the project are estimated to outweigh the cost of granting incentives, which are 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 a higher flow of goods and services between the cities of Cebu and Cagayan de Oro, Rodolfo said.
It will also stimulate industry linkages and agricultural trade between Central Visayas and Northern Mindanao.
In 2021, the FIRB approved the tax incentive applications of five big-ticket projects, involving manufacturing activities and the construction of mass housing units, with a combined investment capital of P119.5 billion.