Aquino signs law rationalizing taxes by international carriers

DAVAO CITY, Philippines (Xinhua) - President Benigno S. Aquino III signed today a law that rationalizes the taxes paid by international carriers in the country.

Aquino signed the Republic Act No. 10374, otherwise known as the Common Carriers Tax Act, during the opening ceremonies for the 2013 Meetings, Incentive Travel, Conventions and Exhibitions/ Events Convention (MICECON) held here.

Under the new legislation, foreign carriers - both air and shipping - are exempted from paying the 3 percent Common Carriers Tax (CCT) imposed on passenger traffic only. Carriers will also be exempt from paying additional tax for the transport of passengers.

The removal of CCT takes away the primary constraint on foreign carriers'capacity growth and places the Philippines on an almost level playing field with that of other countries.

The president acknowledged that this new law will reduce revenues for the government, but he believes that it would be offset by earnings from higher tourist arrivals on back of increased air traffic and flight connectivity.

The government is targeting 10 million foreign tourist arrivals when Aquino's term ends in 2016. Last year, about 4.2 million foreign tourists visited the Philippines.

The new law was signed a month after the International Civil Aviation Organization (ICAO) sent a Coordinated Validation Mission to the country to review the efforts of the Civil Aviation Authority of the Philippines to comply with international safety standards and address previously identified safety concerns.

Aquino said the ICAO team was satisfied with the compliance of the Philippines and had lifted the Significant Safety Concerns previously issued to the Philippines.

"This gives all of us great confidence that, as we continue to improve our aviation industry, we may soon see our removal from the watch lists of the European Union and the United States. So, perhaps before I step down from office, we will see our own airlines flying to Rome, Paris, and other cities in Europe and North America - giving us greater access to these markets, and vice versa," he said.