A ship carrying containers of Philippine products for export pulls away from the international container port in Manila in this September 11, 2012 photo. -- AFP

THE GOVERNMENT is reviewing the common carriers tax imposed on international air and sea cargo vessels in hopes of ensuring a level playing field and improving the country’s competitiveness in the sector, the Department of Finance (DoF) said in a statement on Monday.

The statement said this was a result of a meeting in Manila last month between Finance Secretary Carlos G. Dominguez III and Brian Mikkelsen, Denmark’s Minister of Industry, Business and Financial Affairs.

“They want to expand their business here. They want us to review the common carrier tax because they have a lot of cargo. One of their biggest companies doing business here is Maersk,” Mr. Dominguez told reporters in a mobile phone message yesterday.

“My impression is they wanted a lower rate. They just expressed it as ‘can you please review,’” he recalled.

“I said ‘yes, we will review’ but I did not make any promises. But we are in the process of reviewing it.”

Under Revenue Regulation 15-2013, which implements Republic Act No. 10378, the transport of cargo by international air and sea carriers doing business in the Philippines is subject to a three percent common carriers tax based on quarterly gross receipts.

Those transporting passengers are exempted.

“This is the one topic that gets us worried. We are very interested to know more about this,” DoF quoted Mr. Mikkelsen as telling Mr. Dominguez during their meeting.

“Looking at the shipping area, this is a very global business, therefore it is advisable to have a level playing field.”

Mr. Dominguez said: “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.”

He added that he will verify whether any change will still need legislation, which takes time. The government has been moving to ease restrictions on foreign investors, by executive action — which is faster — whenever possible while awaiting legislation, which makes reforms more permanent and less vulnerable to changes in political administration.

“I will check if the President can do it by himself. Some of the law kasi, the President has a leeway,” he said.

Also present in the meeting were Danish Ambassador Jan Top Christensen as well as Tine Nielsen Hertz, a division chief at the Ministry of Industry, Business and Financial Affairs.

Sought for comment, the European Chamber of Commerce of the Philippines President Guenter Taus welcomed the move.

“This remains a concern to some of our members, despite the positive effects of RA 10378 in eliminating the Common Carrier Tax (CCT) for air passengers and deeming the Gross Philippine Billings Tax subject to reciprocity,” Mr. Taus said in a mobile phone message.

“We welcome the DoF’s move to review the BIR regulations on CCT so as to ensure a level playing field for all and improve the country’s competitiveness in terms of said sectors.”

This article was originally published on June 12, 2018 on BusinessWorld.com »