Travel agencies welcome passage of bill exempting foreign airline from taxes

MANILA, Philippines - Travel agencies welcomed the passage of a bill exempting foreign carriers from several taxes saying it has a potential to strengthen the tourism industry. At the same time, however, they urged the government to address other concerns in the industry.

The House of Representatives has passed on third and final reading House Bill 6022 which exempts foreign airlines from paying the 2.5 percent gross billings tax, which is derived from the carriage of persons, excess baggage, cargo, and mail; as well as the three percent tax on their quarterly gross receipts.

European carriers such as Air France-KLM, Lufthansa and Scandinavian Airlines have stopped their direct flights between Manila and Europe because of heavy taxes. 

The country’s counterparts in Southeast Asia such as Indonesia, Singapore and Thailand continue to have direct flights to Europe.

In a phone interview, Philippine Travel Agencies Association (PTAA) of the Philippines president Aileen Clemente believes the passage of the bill into law would encourage foreign carriers to continue operations in the country. 

“Most of those who have lessened frequencies before such as European carriers and other long haul carriers will significantly be brought back by this,” she said. “We currently have a good strategy for short-haul and low-cost carriers but this is strategic for long-haul.”

Easing the tax burden of foreign carriers is expected to increase tourist arrivals to the Philippines because of enhanced connectivity. Encouraging their operations in the Philippines would also positively affect other aspects of the tourism industry because of increased employment and product demand.

“All aspects of the tourism industry will be affected but mostly employment related to airport and aviation. But the influx of tourist arrivals via new connectivities that may be potentially gained by the passage of the bill will exemplify the multiplier effect of tourism,” said Clemente.

Clemente said that while the easing of the tax burden of foreign carriers will help the tourism industry, the government should also study the granting of incentives to foreign and national carriers.