Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL NO. 2597

Introduced by REP. NATHANIEL “ATTY. NAT” M. ODUCADO

EXPLANATORY NOTE

By geography and by tradition, the Philippines is a maritime nation. At present, we are the
leading supplier of seafarers to the global fleet, with over 578,000 Filipino seafarers deployed
worldwide.’ But aside from leading the world in being home to quality seafarers, we also
possess the potential to lead the world in ship and boat building and ship repair and recycling.
In 2024, the country ranked among the world’s top shipbuilders, with an output of 805,938
gross tonnage (GT) of vessels.”

Despite this, the domestic shipbuilding and ship repair (SBSR) industry remains
underappreciated as a driver of industrial development and trade competitiveness. This reality
places a significant constraint on our national growth potential. The SBSR industry touches a
wide array of economic sectors—from metalworking and logistics to electrical equipment and
construction. Unfortunately, it has long suffered from inconsistent policy support, lack of
capital incentives, and insufficient modernization programs.

The Shipbuilding and Ship Repair (SBSR) Fiscal Incentives Act of 2025 seeks to change that.
This proposed legislation offers a focused, long-term fiscal framework to transform SBSR into
a major contributor to industrial output, jobs, and regional development.

The bill is a package of strategic incentives designed to spur private sector investment: an
exemption from Value-Added Tax (VAT) and Income Tax Holidays (ITH) for the exp

and upgrading of SBSR facilities and shipyard operations; Tax Credit on domestic capital
equipment and materials; and Tax incentives for Green Projects, among others.

This Bill is a catalyst for industrial deepening, job creation, and economic diversification. It is
a chance to lay the economic foundation for a modern, job-rich, and globally competitive
Philippines. It is a chance to maximize our potential as a nation of seafarers, not just by sending
our workers to the world, but by building the vessels they sail on here on our shores.

It is time to bring this industry home. Full speed ahead.

' MARINA, SBSR Development Bill Presentation, 2024, p. 6.
2 UNCTAD, Review of Maritime Transport 2024, as cited in MARINA, SBSR Development Bill Presentation,
2024, p. 6.


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

TWENTIETH CONGRESS
First Regular Session

HOUSE BILL No._2997

Introduced by REP. NATHANIEL “ATTY. NAT” M. ODUCADO

AN ACT ESTABLISHING TAX INCENTIVES FOR THE REHABILITATION,
MODERNIZATION, AND EXPANSION OF PHILIPPINE SHIPYARDS AND THE
CREATION OF JOBS THEREIN, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Short Title. — This Act shall be known as the “SHIPYARD FISCAL
INCENTIVES ACT OF 2025.”

SECTION 2. Declaration of Policy. - \t is hereby declared the policy of the State to:

(a) Accelerate the development of Philippine Shipbuilding and Ship Repair, Boatbuilding and
Ship Recycling Industries to promote economic growth, job creation, skills development,
innovation, and competitiveness therein;

(b) Encourage sustainability and compliance with environmental laws in pursuit of maritime
industrial development;

(©) Promote the participation of the private sector as among the primary drivers of such
development;

(d) Recognize the utility of fiscal incentives in motivating actors to make decisions in line with

the public good;and

(©) Establish the necessary mechanisms to carry out the mandates specified in this Act and
other existing laws.

SECTION 3. Incentives to MARINA-registered SBSR E ies. — To promote
investments and to ensure the development of a viable shipbuilding and ship repair, boatbuilding
and ship recycling industries in the Philippines, the following incentives shall be made available to
qualified MARINA-registered SBSR Entities:

(@) Exemption from Value-Added Tax (VAT). — On the purchase and/or importation of
capital equipment, machinery, spare parts, life-saving and navigational equipment, raw
materials such as stee! plates and other metal plates including marine-grade aluminum
plates or steel or other technologically improved hull material to be used in the construction,
repair, renovation, alteration, modification, conversion or maintenance of the hull of any
ship. Unless the purchase and/or importation of capital equipment, machinery, spare parts,
life-saving and navigational equipment and/or raw materials are to be used in the


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construction, repair, renovation, alteration, modification, conversion, or maintenance of the
hull of any ship, or the construction, repair, expansion, renovation, alteration, modification
or rehabilitation of its shipyard facilities, such exemption from VAT shall be availed of
within ten (10) years from the effectivity of this Act.

Approval by the MARINA shall be required prior to the purchase and/or importation of
articles under this Section and exemption from VAT shall be subject to the following
conditions:

(i) _ exemption shall be granted to MARINA-registered SBSR entities;

(ii) articles are not manufactured domestically in sufficient quantity of comparable
quality;

(iii) articles are directly imported by MARINA-registered SBSR entities; and

(iv) articles are reasonably needed and will be used exclusively by the MARTNA-
registered SBSR entities in its shipyard operations.

(b) Income Tax Holiday (ITH) for the Expansion/ Upgrading of SBSR Facilities and
shipyard operations. — A new MARINA-registered SBSR entity or existing SBSR entity
intending to expand/upgrade its facilities and/or operations shall be granted an ITH for four
(4) to ten (10) years. Provided, that in case of expansion/upgrading or modernization of
shipyard facilities, the entity shall show proof that there is an increase in the number of its
personnel and investment subject to such guidelines as may be prescribed by the MARINA.

(©) Tax Credit on Domestic Capital Equipment and Materials. — A tax credit equivalent to
one hundred percent (100%) of the value of the national internal revenue taxes and customs
duties that would have been waived on machinery, equipment, and spare parts, had these
items been imported shall be given to the new and/or expanding/upgrading MARINA-
registered SBSR entity which purchases machinery, equipment and spare parts from a
domestic manufacturer.

‘The purchase of machinery, equipment, and spare parts shall be granted tax credit subject
to the condition that said equipment, machinery, and spare parts are reasonably needed and
will be used exclusively by a MARINA-registered SBSR entity in the manufacturing of its
products, wherein the purchase is made within ten (10) years from the date of effectivity of
this Act. If the MARINA-registered SBSR entity sells, transfers, or disposes of these
machinery, equipment, and spare parts, the disposition shall comply with the guidelines
prescribed by the MARINA.

(@) Tax and Duty Exemption on Imported Capital Equipment and Materials. — The
importation of machinery, equipment, and materials for shipbuilding, ship repair and/or
construction of shipyard facilities, including capital equipment that would be used directly
and exclusively to promote green jobs, green ships, and green shipyards, as well as
replacement and spare parts for the repair and overhaul of ships such as steel plates,
electrical machinery and electronics parts including shipyards facilities, shall be exempt
from the payment of customs duty and compensating tax, Provided that:

(i) MARINA certifies that the item or items imported are not produced locally in
sufficient quantity and acceptable quality at reasonable prices and that the
importation is directly and actually needed and will be used exclusively for the
construction, repair, alteration, or overhaul of merchant ships and other watercraft;


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(ii) if the above machinery, equipment, materials, and spare parts are sold to non-tax-
exempt persons or entities, the corresponding duties and taxes shall be paid by the
original importer:

local dealers and/or agents who sell machinery, equipment. materials, and
accessories to shipyards for shipbuilding and ship repair are entitled to tax credits,
subject to approval by the MARINA, equivalent to the total tariff duties and
compensating tax paid for said machinery, equipment, materials, and accessories.

(©) Tax incentives for green projects. MARINA-registered SBSR entities shall be entitled to
tax deduction equivalent to 50% of the total cost for skills training and research and
development for green jobs creation in conserving and preserving the environment as per
RA 10771 or the Green Job Act.

SECTION 4. Fines and Penalties. - Any violation of the tax exemption privileges or
incentives provided for in this Act, as well as the terms and conditions for the grant thereof, shall
result in forfeiture of all the tax exemptions and incentives granted herein, and the shipbuilder, ship
repairer, contractor or importer shall be subject to a fine in an amount equivalent to two hundred
(200) percent of all the taxes affected.

SECTION 5. Separability Clause. — If for any reason, any section, subsection, sentence,
clause or term of this Act is held to be illegal, invalid or unconstitutional, such parts not affected
by such declaration shall remain in full force and effect.

SECTION 6. Repealing Clause. — Any law, presidential decree or issuance, executive
order, letter of instruction, administrative rule or regulation contrary to or inconsistent with the
provisions of this Act is hereby repealed, modified or amended accordingly.

SECTION 7. Effeetivity Clause. ~ This Act shall take effect after 15 days following its
publication in at least two (2) newspapers of general circulation.

Approved,