Government grants incentives to shipping industry

The government has granted incentives to the shipping industry to promote its development, ensure its continued viability and to encourage investments in domestic shipping.

The incentives are spelled out in Republic Act 9295, entitled "An Act Promoting the Development of Philippine Domestic Shipping, Shipbuilding, Ship Repair, Ordaining Reforms in Government Policies Towards Shipping in the Philippines and for Other Purposes."

The incentives, which are given to qualified domestic ship operators, include an exemption from value added tax (VAT) on the importation and local purchase of passenger and or cargo vessels of 150 tons and above, including engine and spare parts, provided that the vessels comply with the age limit. For passengers or cargo vessels, 15 years, while for tankers, 10 years.

The exemption to the value added tax is subject to the enumerated conditions, which are: that the articles are not manufactured locally in sufficient quantity of comparable quality, the articles are directly imported by a MARINA registered domestic shipping operator, and that the approval of MARINA was obtained prior to the importation.

Any sale, transfer or disposition of articles covered under the provision of the Act to another registered shipping operator enjoying similar incentives shall require prior approval of MARINA. If not sanctioned by MARINA, both the vendor and the transferee or assignee shall be liable to pay twice the amount of value added tax exemption given him.

A net operating loss in any taxable year preceding the current taxable year, which had not been previously offset as a deduction from gross income shall be carried over the next three consecutive taxable years immediately following the year of such loss subject to the pertinent provisions of the National Internal Revenue Code of 1997, as amended.