The Philippine Senate recently ratified the bill scrapping the gross Philippines billings tax (GPBT) and common carriers tax (CCT) slapped on foreign airlines.
The 2.5% GPBT and 3% CCT will be waived provided the measure is reciprocated by the home country of foreign airlines.
“The removal of these taxes will improve the present situation where our tax policies seem to directly contravene our tourism goals,” Senator Franklin Drilon said in a recent statement.
“The bill, once enacted into law, would result in increased tourist arrival and lower and more affordable fares. We hope to spur capacity growth of the passengers’ traffic in our country both in international air transport and sea transport.”
The bill is expected to boost international arrivals to 5.55 million in 2013, 6.75 million in 2014, 8.126 million in 2015 and 10 million in 2016.
The Philippines stands to lose about P2.5 billion in revenues with the scrapping of the GPBT and CCT but government is optimistic it can recoup losses through increased tourist arrivals and more flights from foreign carriers.
The International Air Transport Association has earlier called on the Philippines to junk the taxes to allow for potential gains of $78 million.
The Board of Airline Representatives has said the scrapping of CCT and GPBT will increase foreign investments and rapidly develop secondary gateways.
The levies have discouraged foreign airlines from mounting direct flight to the Philippines. KLM stopped its direct Amsterdam-to-Manila service, citing the taxes. No foreign airline currently maintains a direct service from Europe to the Philippines.
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