WHEREAS, the Philippine Maritime Industry is a major
contributor to the growth of the Philippine economy;
WHEREAS, ocean-going vessels of the industry are a source of
foreign exchange earnings for the country;
WHEREAS, the income tax exemption granted to the overseas
shipping business under Republic Act No. 1407 is about to expire at a
time when the government is currently engaged in the maritime fleet
expansion program;
WHEREAS, it is desirable that the said tax exemption be
extended to help boost the industry which is vital to the national
economy.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution,
do hereby decree that Section 2 of Republic Act No. 1407 as amended be
further amended to read as follows:
"SEC. 2. In the pursuance of the above-declared policy,
any citizen of the Philippines, or any association or corporation
organized under the laws of the Philippines, at least sixty per cent of
the capital of which is owned by citizens of the Philippines, engaged or
which shall engage exclusively in overseas shipping business or in the
construction of modern boats for overseas service shall be exempt from
the payment of income tax on income derived from his or its overseas
shipping business for a period of thirty years from the date of approval
of this Act or until September nine, nineteen hundred and eighty-five; Provided,
That they shall invest the entire net income, after deducting not more
than ten per cent thereof for distribution to the stockholders or
partners, realized during the period of exemption, which would otherwise
have been taxable under the provisions of Title II of the National
Internal Revenue Code, in the construction, purchase or acquisition of
vessels and equipment and/or in the improvement of its vessels and
equipment. The amount so invested shall not be withdrawn for a period of
thirty years after the expiration of the period of income tax exemption
or until after the vessels and equipment so acquired had been fully
paid for. Any amount withdrawn before the end of this period shall be
subject to the corresponding income tax, including surcharges
and interests.
All such laws, decrees, orders, rules or regulations or any part
thereof as are inconsistent with this Decree are hereby repealed or
modified accordingly.
This Decree shall take effect upon its
approval.
Done in the City of Manila, this 7th day of August, 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