Biz group urges gov’t to implement reciprocity rules on foreign carriers

MANILA, Philippines - Foreign business groups in the country are calling on the Philippine government to implement reciprocity rules under international agreements covering foreign carriers to enable the country to be more competitive and achieve tourism targets.

The Joint Foreign Chambers (JFC) said while the government has made progress to protect the Philippine tourism industry through the exemption of the carriage of passengers of international sea and air carriers from the tax on Gross Philippine Billings on the basis of reciprocity, and at the same time, removal of the three percent common carriers tax, the country’s higher tourist arrivals goal is again being threatened by the Supreme Court’s (SC) move which effectively imposed new taxes on aviation fuel suppliers.

In a recent decision, the SC denied Shell’s claim for refund of excise tax for jet fuel sold to international carriers.

The Court of Tax Appeals had earlier ruled in favor of Shell but the Bureau of Internal Revenue brought the case to the High Court.

As a result of the SC’s decision, fuel suppliers are not permitted to recover excise taxes directly from the government and suppliers will be forced to increase their fuel rate to recover their own tax costs.

The JFC said airlines which would ultimately bear the additional expense would then pass on the cost to passengers once their fuel surcharge is approved.

Such, it added, would negatively affect the tourism industry as well as business and government travel.

It noted that the Board of Airline Representatives warmed earlier that Manila is now the most expensive place in Asia to fuel an aircraft.

The Board of Airline Representatives also said the new taxes are meant to avoid the Philippines’ own laws and obligations under international agreements intended to provide tax relief to international carriers.

“To relieve foreign carriers of the excise tax burden amounting to (US$) 32 cents, we strongly urge that laws be amended to implement the reciprocity rules under existing international agreement,” the JFC said.

The JFC appealed to the Aquino administration to effect the changes in order to make the Philippines more competitive and achieve the goal of attracting more foreign tourists.

The government wants to attract 10 million foreign tourists to the country by 2016.

Last year, international tourist arrivals to the country reached 4.7 million, higher than the 4.3 million in 2012.

The JFC is composed of the American, Australia-New Zealand, Canadian, European, Japanese and Korean foreign chambers along with the Philippine Association of Multinational Companies Regional Headquarters.