You are here

MARINA to seek additional tax incentives for domestic shipping

MARINA to seek additional tax incentives for domestic shipping
Roumina Pablo February 7, 2024

The Maritime Industry Authority (MARINA) will push for the revision of laws in order to provide tax incentives, including exemption from fuel tax, to the domestic shipping industry, according to administrator Sonia Malaluan.

“For the domestic shipping, we will endeavor to provide incentives through the revision or amendment of RA (Republic Act) 9295 (Domestic Shipping Development Act of 2004) and the TRAIN (Tax Reform for Acceleration and Inclusion) Law,” Malaluan said in a presentation during the Department of Transportation’s (DOTr) Bagong Pilipinas town hall meeting for the maritime sector on February 6.

MARINA is an attached agency of DOTr.

The initiative is part of the programs under MARINA’s updated Maritime Industry Development Plan (MIDP) 2028, specifically under Core Program 1 or the modernization and expansion of the Philippine domestic shipping industry.

The MIDP, initially launched in 2017 and updated in 2023, is a roadmap aimed at accelerating the development of a nationally-integrated and globally competitive Philippine maritime industry.

One of the projects under the MIDP’s Core Program 1 is the provision of enhanced tax incentives for the domestic shipping industry as part of efforts to ensure the continued viability and further encourage investments in domestic shipping operations. This entails pushing for amendment of RA No. 10963, or the TRAIN Law, to exempt excise tax on fuel used by domestic shipping companies.

A study on the impact of fuel cost, including the current excise tax and 12% VAT, to shipowners will also be conducted.

According to the MIDP, the imposition of a 6% excise tax on fuel under the TRAIN Law, in addition to 12% VAT on industrial bunker fuel used by domestic ships “is excessive and is a major cost which ultimately cuts into the margin of operators and results in higher passenger and cargo fares.”

Fuel is a major cost driver for domestic shipping operators, who have for years been asking for exemption on fuel taxes.

Transport Secretary Jaime Bautista, during the same event, noted that the exemption from excise tax for fuel used by domestic shipping operators was one of the topics discussed during MARINA’s presentation of the MIDP to President Ferdinand Marcos, Jr. last month.

Bautista said he told Mr. Marcos one of the reasons for the high cost of domestic shipping is due to the excise tax on fuel.

Another project under the MIDP is the amendment of RA 9295 to push for the extension of investment incentives, which have already expired after 10 years of effectivity in 2014.

Malaluan said MARINA will be drafting the bill for the amendment of the TRAIN Law but that it may not be submitted until the 21st Congress in 2028.

Malaluan explained that they wanted to include this in their legislative agenda for the 20th Congress, which will start in 2025, but pushed the target to the 21 st Congress after they noted that their proposed bills in the current 19th Congress “haven’t seen any much progress at all” in terms of getting passed into law.

The MARINA chief, however, assured the agency’s commitment to complete the study on the impact of fuel costs to shipowners and the draft bill amending the TRAIN Law in time for the start of the 21st Congress in 2028.