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SIXTEENTH CONGRESS OF THE REPUBLIC )

OF THE PHILIPPINES ) one, 02 JUN 2044 '
we G0
First Regular Session ) : Hap
House BILL No_4550

Introduced by ANGKLA Partylist Representative JESULITO A. MANALO.

AN ACT AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT
NO. 7471 AS AMENDED BY REPUBLIC ACT NO. 9301, ENTITLED
"AN ACT TO PROMOTE THE DEVELOPMENT OF THE
PHILIPPINE OVERSEAS SHIPPING" AND FOR OTHER PURPOSES

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

EXPLANATORY NOTE

On 5 May 1992, Republic Act (RA) 7471, otherwise known as the
Philippine Overseas Shipping Development Act was enacted. ‘The said
law, among others, granted income tax exemption to Philippine
shipping enterprises for a period of ten (10) years from its enactment,
subject to certain conditions, particularly that the income subject of the
exemption will be used for the construction, purchase, or acquisition of
vessels and related equipment and/or in the improvement of
modernization of its vessels and related equipment.

On 27 July 2004, RA 7471 was amended by RA 9301, extending the
said income tax exemption for a similar period of ten (10) years, which
period is to expire this year. The extension was sought after a strict
interpretation of the definition of “Philippine overseas shipping”



disqualified Philippine overseas shipping companies from availing of
incentives.

RA 7471, as amended, undoubtedly supports the government's
national policy in promoting the development of Philippine overseas
shipping. The government must not lose sight of this policy, now, more
than ever. Indeed, the Philippines, being an archipelagic state, stands to
benefit more if the overseas shipping industry is further improved and
expanded, Unfortunately though, there are merely about 129 registered
overseas vessels flying the Philippine flag at present.

The shipping sector needs to show and impress investors and
business of longer stability. For instance, ship mortgage loans taken by
ship owners usually have a 25 year payment scheme. Hence, it is
necessary that assistance extended to these ship owners through
incentives, perks and privileges be granted for a longer and more liberal
period of time. This way, the present ship owners can enjoy the benefits
of the law, recoup their investments, and be enticed to further expand
their shipping business and operations. This, in turn, will most likely
attract more investors to go into Philippine overseas shipping.
Extension of R.A. 9301 will also enable the present Filipino ship owners
and operators in the overseas trade to be competitive with the
Philippines’ neighboring countries if and when the Asian connectivity
and free trade arrangements come into force in the near future.

Additionally, for the Philippine ship registry to be able to compete
with the other ship registries like Panama and Liberia, the incentives
given should be institutionalized as they do in these other ship
registries. Ship owners in these registries do not pay income tax but
instead pay tonnage tax.

The further extension of the income tax exemption granted to the
Philippine ship enterprise is one of the many ways that the government
can help boost the constant growth and development of the shipping
industry.


The proposed bill will definitely allow Filipino ship owners to
modernize the country’s merchant fleet and provide stable employment
to Filipino seafarers, generate foreign exchange and contribute to the
country’s economy in the form of common carrier's taxes and the
bareboat charter taxes paid to the government, not to mention the huge
foreign exchange remittances of its seafarers.

Likewise, this amendment is expected to encourage investment in
ships and generate more employment for seafarers, as our Filipino ship
owners will have increased capabilities to employ more people for its
operations. Government will save on foreign currency spending in
transporting foreign trade (99% of the Philippines’ foreign trade is
carried by foreign flag ships) as more Filipino ship owners will be able
to become more competitive and efficient due to the fiscal incentives
given their way. Foreign exchange earnings will rise as more Philippine
flag ships will employ Filipino seafarers. The government will generate
more revenues by way of taxes, fees and charges (i.e. common carriers
tax and bareboat tax). Ancillary businesses like ship manning, ship
management, ship chandling, cargo handling, ship agency and other
businesses engaged in the maritime industry.

With these amendments, it is hoped that the Philippine Shipping,
Industry would have enough resources to improve its services and
ensure safer and more efficient operation.

a

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JESULITO A. MANALO
Partylist Representative
ANGKLA


SIXTEENTH CONGRESS OF THE REPUBLIC )
OF THE PHILIPPINES )

First Regular Session )

HOUSE OF REPRESENTATIVES
HOUSE BILL NO._45580

Introduced by ANGKLA Partylist Representative JESULITO A. MANALO

AN ACT AMENDING CERTAIN PROVISIONS OF REPUBLIC ACT
NO. 7471 AS AMENDED BY REPUBLIC ACT NO. 9301, ENTITLED
"AN ACT TO PROMOTE THE DEVELOPMENT OF THE
PHILIPPINE OVERSEAS SHIPPING" AND FOR OTHER PURPOSES

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

Section 1. Sec 7 of Republic Act No. 7471, as amended by Republic Act
No. 9301 shall be read as follows:

"Sec, 7. Exemption from Income Tax. ~- A Philippine
shipping enterprise shall be exempt from payment of income tax on
income derived from Philippine overseas shipping from the date of
approval of this Act: Provided, That: The entire net income, after
deducting not more than fifteen percent (15%) thereof for distribution
of profits or declaration of dividends, which would otherwise be taxable
under the provisions of Title II of the National Internal Revenue Code, is
reinvested for the construction, purchase, or acquisition of vessels and
related equipment and/or in the improvement or modernization of its
vessels and related equipment in accordance with the regulations; and


Section 2. Repealing Clause. - All laws, decrees, executive orders or
rules and regulations inconsistent with this Act are hereby repealed,
amended or modified accordingly.

Section 3. Effectivity. - This Act shall take effect after fifteen (15) days
following its publication in at least two (2) newspapers of general

circulation.

Approved,