PROVIDING FOR INCENTIVES TO THE SHIPBUILDING AND SHIP REPAIR INDUSTRY

• Number: Presidential Decree No. 666
• Sections: 6

Preamble

WHEREAS, shipping plays a vital role in the economic

development and growth of the country;

WHEREAS, the promotion and maintenance of an adequate

Philippine merchant fleet depend upon the adequacy of supporting

shipbuilding and ship repair facilities;

WHEREAS, the absence of adequate investment incentives has

deterred the expansion and modernization of existing shipyards and/or

the development of new shipyard facilities;

WHEREAS, to accelerate the development of shipbuilding and

ship repair industry such incentives are imperative and necessary;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers in me vested by the Constitution,

do hereby order and decree as follows:

Section 1

SECTION 1. Shipbuilding and ship repair yards duly

registered with the Maritime Industry Authority shall be entitled to the

following incentive benefits:

Exemption from import duties and taxes.—The importation

of machinery, equipment and materials for shipbuilding, ship repair and

or alteration, including indirect import, as well as replacement and

spare parts for the repair and overhaul of vessels such as steel plates,

electrical machinery and electronics parts, shall be exempt from the

payment of customs duty and compensating tax: Provided, however,

That the Maritime Industry Authority certifies that the item or items

imported are not produced locally in sufficient quantity and acceptable

quality at reasonable prices, and that the importation is directly and

actually needed and will be used exclusively for the construction,

repair, alteration, or overhaul of merchant vessels and other

watercrafts; Provided, further, That if the above machinery,

equipment, materials and spare parts are sold to non-tax exempt persons

or entities, the corresponding duties and taxes shall be paid by the

original importer; Provided, finally, That local dealers and/or

agents who sell machinery, equipment, materials and accessories to

shipyards for shipbuilding and ship repair are entitled to tax credits,

subject to approval by the Maritime Industry Authority, equivalent to

the total tariff duties and compensating taxes paid for said machinery,

equipment, materials and accessories.

Accelerated, depreciation.—Industrial plant and

equipment may, at the option of the shipbuilder and ship repairer, be

depreciated for any number of years between five years and the expected

economic life.

Exemption from contractor's percentage tax.—The gross

receipts derived by shipbuilders and ship repairers from shipbuilding

and ship repairing activities shall be exempt from the Contractor's Tax

provided in Section 91 of the National Internal Revenue Code during the

first ten years from registration with the Maritime Industry Authority,

provided that such registration is effected not later than the

year 1990; Provided, That any and all amounts which would

otherwise have been paid as con tractor's tax shall be set aside as a

separate fund, to be known as "Shipyard Development Fund", by the

contractor for the purpose of expansion, modernization and/or

improvement of the contractor's own shipbuilding or ship repairing

facilities; Provided, That, for the this purpose, the

contractor shall submit an annual statement of its receipts to the

Maritime Industry Authority; and Provided, further, That any

disbursements from such fund for any of the purposes hereinabove stated

shall be subject to approval by the Maritime Industry Authority.

Registration required but not as Public Utility.— The

business of constructing and repairing vessels or parts

thereof shall not be considered a public utility and no Certificate

of Public Convenience shall be required therefor. However,

no shipyard, graving dock, marine railway or marine repair shop and

no person or enterprise shall engage in the construction and/or

repair of any vessel, or any phase or part thereof, without a valid

Certificate of Registration and license for this purpose from the

Maritime Industry Authority, except those owned or operated by the Armed

Forces of the Philippine or by foreign governments pursuant to a treaty

or agreement.

Section 2

SEC. 2. The Maritime Industry Authority shall, in

consultation with the Board of Investments and the Department of

Finance, promulgate rules and regulations together with the procedures

and guidelines for the proper and efficient implementation of the above

provisions.

Section 3

SEC. 3. Any violation of the tax exemption privileges or

incentives provided for in this Decree, as well as the terms and

conditions for the grant thereof, shall result in forfeiture of all the

tax exemptions and incentives granted herein and the shipbuilder, ship

repairer, contractor or importer shall be subject to two hundred percent

of all the taxes affected by the particular violation.

Section 4

SEC. 4. Any provision of law, decree, executive order

or rules and regulations inconsistent with this Decree is hereby

repealed or modified accordingly.

Section 5

SEC. 5. This Decree shall take effect immediately.

Done in the City of Manila, this 5th day of March, in the year

of Our Lord, nineteen hundred and seventy-five.

(Sgd.)

FERDINAND E. MARCOS

President

Republic of the Philippines

By the President:

(Sgd.)

ALEJANDRO MELCHOR

Executive Secretary