The Maritime Industry Authority (Marina) has adopted guidelines for Philippine domestic shipping owners and operators to follow when applying for an endorsement from the Department of Finance (DOF) that will allow them to avail of value-added tax (VAT) exemption under the National Internal Revenue Code (NIRC).
Marina administrator Marcial Quirico Amaro III, in Marina Advisory (M.A.) No. 2017-17, said the guidelines were adopted “in the interest of the service and after consultation with the Department of Finance, to ensure that only qualified domestic ship owner/operator may avail of the incentives granted under RA (Republic Act) 9337, particularly the exemption from the payment of value-added tax (VAT) on the sale, importation or lease of passenger or cargo vessels, including engine, equipment and spare parts thereof for domestic or international transport operations.”
M.A. 2017-17 states that only Marina-accredited domestic ship owners and operators may avail of the VAT exemption under R.A. 9337, or NIRC.
VAT exemption may be granted to qualified ship owners and operators for several transactions. These include the sale, importation, or lease of passenger vessels of 500 gross tons (GT) and above and not more than 15 years old at the time of acquisition, counted from the date of the vessel’s original commissioning; and the sale, importation, or lease of cargo vessels of 150 GT and above and not more than 15 years old at the time of acquisition, counted from the date of the vessel’s original commissioning.
VAT exemption may also be availed on the sale, importation, or lease of tanker vessels not more than 10 years old and high-speed passenger vessels not more than five years old; and the sale and importation of engine, equipment, and spare parts for passenger or cargo ships for domestic or international transport operations.
All applications for issuance of the DOF endorsement for VAT exemption on the sale, importation, or lease of passenger or cargo vessels, including engine, equipment, and spare parts should be filed with the Domestic Shipping Service of the MARINA Central Office.
The application for DOF endorsement and Qualification Certificate must be filed simultaneously with that for the issuance of Authority to Import.
Once Marina is satisfied with the requirements submitted and determines that the applicant is entitled to incentives under R.A. 9337, the agency will issue a Qualification Certificate attesting that the applicant possesses the qualifications for availment of VAT-exemption and will endorse the application with the DOF.
Philippine Inter-Island Shipping Association (PISA) executive director Atty. Pedro Aguilar in a forum last February said domestic shipping owners and operators pay 12% VAT and 3% duties when importing vessels, and pay 12% VAT on imported steel plates, spare parts, and other supplies.
Aguilar said PISA members usually don’t take advantage of the VAT exemption under R.A. 9337 because of the difficulty in securing the exemption.
During a public consultation on the draft advisory called by Marina, Aguilar cited several reasons why the Marina advisory is flawed.
For one, Aguilar said, Marina is tying up the VAT exemption under R.A. 9337 to incentives, when the law expressly grants the exemption on the purchase of vessels/aircraft, spare parts, and others for domestic or international trade.
For another, the advisory provides for an age cap on vessels that is different from the requirement under R.A. 9337. The age caps in M.A. 2017-07, he noted, are the ones provided under R.A. 9295, or Domestic Shipping Act of 2004, for availment of the incentives.
Aguilar said that linking the VAT exemption under R.A. 9337 with the incentives for ships under R.A. 9295 is the same mistake made by the BIR when it first issued the regulation on implementing this VAT exemption. He said the specific provision of R.A. 9337 granting VAT exemption is very clear and does not provide for any qualifications.
Aguilar, in an email to PortCalls, said PISA has yet to issue a position on M.A. 2017-07. – Roumina Pablo
Image courtesy of Stuart Miles at FreeDigitalPhotos.net
