Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

972

House Bill No.

Introduced by REP. AUGUSTO BOBOY SYJUCO

EXPLANATORY NOTE

Shipbuilding and ship repair are a major base for employment. Shipyards
originally catered to wooden hulled vessels. With the advancement in technology and
the use of steel, a shift was made by our shipyards and improved capabilities allowed
them to build and repair steel! hulled vessels.

Our shipyards presently have the capacity to build new vessels. In recent years,
vessels built by our shipyards have been exported to foreign markets. Regular dry-
docking and other repair requirements of vessels operating in the domestic trade are
ably served by our local shipyards. Work done meets international class requirements
and passes standards set by the international clarification societies.

A re-fleeting and replacement plan centered on a vessel modernization program
will help develop and enhance our shipbuilding and ship capabilities. It will also create a
viable ship breaking industry that can be used as a base for developing iron and steel
industry.

A sustained and comprehensive incentives program is required by the industry to
encourage the inflow of investments. Affordable financing is also needed so that it can
have access to materials and equipment needed for its business.

In view hereof, immediate passage of this measure is earnestly sought.
oe
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AUGUSTO BOBOY SYJUCO
2” District, Province of Iloilo


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

FIFTEENTH CONGRESS
First Regular Session

ay.
House Bill No. 972

Introduced by REP. AUGUSTO BOBOY SYJUCO

AN ACT
GRANTING INCENTIVES TO THE SHIPBUILIDNG AND SHIP REPAIR INDUSTRY
AND FOR OTHER PURPOSES

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

SECTION 1. Short Title — This Act shall be known as the “Shipbuilding and Ship
Repair Industry Incentives Act of 2010”

SECTION 2. Declaration of Policy —To ensure that the shipbuilding and ship
repair industry shall become a potent force in accelerating the growth and development
of the economy, it is hereby declared policy of the State to provided incentives to the
shipbuilding and ship repair industry, with the end view of promoting industrialization
and full employment.

SECTION 3. Incentives. — Shipbuilding and ship repair yards duly registered
with the Maritime Industry Authority (MARINA) shall b e entitled to the following
incentives:

a.) Exemption from import duties and taxes. P The importation of machinery,
equipment and materials for shipbuilding and/or ship repair, as well as
replacement and spare parts for the repair‘and overhaul of vessels such as
‘steel plates, electrical machinery and electronic parts shall be exempted from
the payment of custom duties: Provided, however, That the MARINA certifies
that the item or items are not produced locally in sufficient quantity and that
the importation is directly and actually needed in the construction, repair,
alteration or overhaul or merchant vessels and other watercrafts: Provided,
further, That if the above-machinery, equipment, materials and spare parts
are resold to non-tax exempt persons or entities, the corresponding duties
and taxes shall be paid by the original importer; and -

b.) Exemption from Value Added Tax. - The gross receipts derived by
shipbuilders and those involved in ship repair in the ordinary course of
business shall be exempt from the Value Added Tax as provided in Section
102 of the National Internal Revenue Code, during the effectivity of their
registration with the MARINA

SECTION 4. Implementing Rules and Regulations. — The MARINA shall hold
consultations with the Board of Investments, the Department of Finance and the
associations or groups of shipbuilders and those involved in ship repair for the purpose


of promulgating rules and regulations to ensure the proper and efficient implementation
of this Act

SECTION 5. Penalty for Violation. —- Any violation of the tax exemption
privileges and incentives provided for in this Act, as well as the terms and conditions for
grant thereof, shall result in the forfeiture of all tax exemptions and incentives granted
herein, and the shipbuilder, those involved in ship repair, or the original importer shall
be subject to a three hundred percent (300%) surcharge of all the taxes affected by the —
particular violation.

SECTION 6. SEPARABILITY CLAUSE. - If any provision of this Act is declared
unconstitutional, the remaining provisions shall remain in force and effect.

SECTION 7. REPEALING CLAUSE. - All laws, decrees, executive orders, rules
and regulations, or parts thereof, inconsistent herewith are hereby repealed or modified
accordingly

SECTION 8. EFFECTIVITY. - This Act shall take effect fifteen (15) days after its
Publication in any two (2) newspapers of general circulation.

Approved,