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Filipino Businesses Call For Aviation Fuel Tax Repeal

by Mary Swire,, Hong Kong

18 February 2014

The Joint Foreign Chambers (JFC) of the Philippines has requested that the Government cut the excise tax on aviation fuel for international carriers following a Supreme Court (SC) decision to cancel refunds, which had led to a higher tax burden.

Last year, the Government removed the tax on Gross Philippine Billings, if such treatment was reciprocated by other countries, and the 3 percent Common Carrier's Tax (CCT) on all revenues, passengers, cargoes and excess baggage leaving the Philippines. The CCT, in particular, was said to have caused a total withdrawal of foreign airlines from providing direct flights to Manila, even though the Government has deemed tourism a priority in national development.

However, the JFC has pointed out that, despite the CCT cancellation, new taxes have now been imposed by the SC decision to refuse to allow Pilipinas Shell to claim a refund of excise taxes on fuel supplies to foreign carriers. It has been ruled that the exemption from excise tax payments on petroleum products under the Philippines tax code does not apply to manufacturers.

"Due to the Supreme Court's decision," the JFC states, "fuel suppliers are not permitted to recover excise taxes directly from the Government. Instead, the suppliers will be forced to increase their fuel rate to recover their own tax costs. The airlines ultimately bear the additional expense, to be passed on to passengers."

It believes that the additional taxation will threaten growth in the tourist sector, as well as business and government travel, with Manila now being called "the most expensive place in Asia to fuel an aircraft."

TAGS: court | compliance | tax | business | tax compliance | energy | law | aviation | Philippines | excise duty | manufacturing | Tax

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