President Aquino signs Common Carriers Tax Act into law

March 7, 2013

DAVAO CITY – President Benigno S. Aquino III signed on Thursday Republic Act No. 10374, otherwise known as the Common Carriers Tax Act, which rationalizes the taxes paid by international carriers in the country.

In ceremonies held at the SMX Convention Center of the SM Lanang Premiere shopping mall here, President Aquino signed the consolidated versions of House Bill No. 6022 and Senate Bill No. 3343 now known as An Act Recognizing the Principle of Reciprocity as Basis for the Grant of Income Tax Exemptions to International Carriers and Rationalizing Other Taxes Imposed Thereon by Amending Sections 28(A)(3)(a), 109, 11 and 236 of the National Internal Revenue Code, as Amended, and For Other Purposes.

Under the new legislation, foreign carriers – both air and shipping – are exempted from paying the three percent Common Carriers Tax (CCT) imposed on passenger traffic only. Carriers will also be VAT (value added tax) exempt for the transport of passengers.

The removal of CCT takes away the primary constraint on foreign carriers’ capacity growth and places the Philippines on an almost level playing field with that of other countries.

In his speech, the President said that the passage of this law “will only bring in more traffic, and facilitate connectivity among our countries.”

“Today, you also witnessed the signing into law of Senate Bill No. 3343 or House Bill No. 6022. Once it takes effect, this law will exempt all international and shipping carriers from paying the three percent common carriers tax on receipts and income derived from transporting passengers. The carriers are also exempted from paying tax on the gross revenue derived from the carriage of passengers, cargo, or mail—provided that the same exemption is granted by the carrier’s home country to the Philippines,” the President said.

“With this bill, everybody wins from our aviation industries, to our tourism industries, to the millions of our peoples who will have greater freedom in planning their trips,” he added.