Tourism Boost Seen After Signing of Law Scrapping Foreign Carriers' Tax

Tourism in the Philippines is expected to get a big boost after President Benigno Aquino III signed Republic Act 10374, a new law exempting foreign air and shipping carriers from paying the Common Carriers Tax (CCT) on passenger traffic in Davao on March 7, 2013, during his Team Pnoy sortie. 

RA 10374 provides for the exemption of international carriers from paying 2.5 percent Gross Philippine Billings Tax (GPBT) for carriage of persons and their excess baggage. The law also exempts international carriers from paying the 3 percent common carriers’ tax (CCT) imposed on passengers and their excess baggage. The measure also includes the transport of passengers by international carriers in the list of transactions exempt from the 12-percent value-added tax. RA 10374 will also reduce the prices of tickets, bring more tourists to the Philippines and generate significant job-creating activity for the tourism industry.

The Department of Finance has estimated that the government stands to lose about P1.6 billion in revenues from the removal of the common carrier tax, but the government believes the increase in tourism arrivals would more than compensate for it. The law provides a tremendous boost to the Department of Tourism (DOT)’s efforts to improve international air access and encourage more foreign carriers to fly to the country’s established and emerging tourist destinations. 

This will certainly help improve and enhance the country’s competitiveness in the international travel arena. This will serve as an invitation to international air carriers, especially those covering long-haul routes, to make the Philippines a part of their primary route offering to the world and one of their major and exciting destinations since most of them were discourage because of the tax. This will lead in further economic growth and encourage investors particularly the tourism industries to invest in the Philippines.  Many Filipinos also may be given a job and establish a business in the country. The gains of the services, hotels and businesses from the tourist destination will also increase because of the increase of the tourists who visits cause by the cheaper tickets and excess baggage payment. Therefore, since there is a higher gain or income it will also result to a higher GDP because all of its income will be recorded in the Philippine GDP and this will result to a positive outcome which is also an increase of it. 

Sources: 

http://www.gmanetwork.com/news/story/298328/economy/business/tourism-boost-seen-after-signing-of-law-scrapping-foreign-carriers-tax

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