An Act Recognizing the Principle of Reciprocity as Basis for the Grant of Income Tax Exemptions to International Carriers and Rationalizing other Taxes Imposed thereon by Amending Sections 28(A)(3)(A), 109, 118 and 236 of the National Internal Revenue Code (NIRC), as Amended, and for Other Purposes
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An Act Recognizing the Principle of Reciprocity as Basis for the Grant of Income Tax Exemptions to International Carriers and Rationalizing other Taxes Imposed thereon by Amending Sections 28(A)(3)(A), 109, 118 and 236 of the National Internal Revenue Code (NIRC), as Amended, and for Other Purposes
Republic Act No. 10378
March 7, 2013
Case Overview and Summary
Summary of Republic Act No. 10378Recognizing the Principle of Reciprocity for Income Tax Exemptions to International Carriers and Rationalizing Other Taxes
• Amends Sections 28(A)(3)(a), 109, 118, and 236 of the National Internal Revenue Code (NIRC)
Section 28(A)(3)(a) [International Air Carrier]:
- Defines "Gross Philippine Billings" for international air carriers as the gross revenue derived from carriage of persons, excess baggage, cargo, and mail originating from the Philippines in a continuous and uninterrupted flight. [Sec. 1]
- Provides for a preferential rate or exemption from the 2.5% tax on Gross Philippine Billings based on an applicable tax treaty, international agreement, or reciprocity. [Sec. 1]
Section 109 [Exempt Transactions from Value-Added Tax]:
- Exempts the transport of passengers by international carriers from value-added tax. [Sec. 2]
- Exempts the sale, importation, or lease of passenger or cargo vessels and aircraft, including engine, equipment, and spare parts for domestic or international transport operations. [Sec. 2]
- Exempts the importation of fuel, goods, and supplies by persons engaged in international shipping or air transport operations. [Sec. 2]
Section 118 [Percentage Tax on International Carriers]:
- Imposes a 3% tax on the quarterly gross receipts of international air carriers derived from the transport of cargo from the Philippines to another country. [Sec. 3]
- Imposes a 3% tax on the quarterly gross receipts of international shipping carriers derived from the transport of cargo from the Philippines to another country. [Sec. 3]
Section 236 [Registration Requirements]:
- Requires persons whose gross sales or receipts, other than those exempt under Section 109(A) to (V), have exceeded or will exceed One million five hundred thousand pesos (P1,500,000) in a 12-month period to register for value-added tax. [Sec. 4]
Other Provisions:
- The Secretary of Finance shall promulgate the necessary rules and regulations for effective implementation within 30 days of the Act's effectivity. [Sec. 5]
- The Department of Finance, in coordination with the Department of Foreign Affairs, shall oversee the exchange of notes between the Philippines and concerned countries for facilitating the availment of reciprocal exemptions. [Sec. 5]
- Includes a separability clause, repealing clause, and effectivity clause. [Sec. 6, 7, 8]
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An Act Recognizing the Principle of Reciprocity as Basis for the Grant of Income Tax Exemptions to International Carriers and Rationalizing other Taxes Imposed thereon by Amending Sections 28(A)(3)(A), 109, 118 and 236 of the National Internal Revenue Code (NIRC), as Amended, and for Other Purposes
Republic Act No. 10378
•March 7, 2013
Republic of the PhilippinesCONGRESS OF THE PHILIPPINESMetro Manila
Fifteenth CongressThird Regular Session
Begun and held in Metro Manila, on Monday, the twenty-third day of July, two thousand twelve.
REPUBLIC ACT No. 10378
AN ACT RECOGNIZING THE PRINCIPLE OF RECIPROCITY AS BASIS FOR THE GRANT OF INCOME TAX EXEMPTIONS TO INTERNATIONAL CARRIERS AND RATIONALIZING OTHER TAXES IMPOSED THEREON BY AMENDING SECTIONS 28(A)(3)(a), 109, 118 AND 236 OF THE NATIONAL INTERNAL REVENUE CODE (NIRC), AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Section 28(A)(3)(a) of Republic Act No. 8424, otherwise known as the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:
"SEC. 28. Rates of Income Tax on Foreign Corporations. —
"(A) Tax on Resident Foreign Corporations. —
"(1) xxx
"(2) xxx
"(3). International – Carrier. — An international carrier doing business in the Philippines shall pay a tax of two and one-half percent (21/2 %) on its ‘Gross Philippine Billings’ as defined...
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