Investment Incentives.
SEC. 4. Investment Incentives. — To ensure the continued viability of domestic shipping, and to encourage investments in the domestic shipping industry, the following incentives shall be granted to qualified domestic ship operators:
(a) Exemption from value-added tax on the importation and local purchase of passenger and/or cargo vessels of one hundred fifty (150) tons and above, including engine and spare parts of said vessels: Provided, That the vessels to be imported shall comply with the age limit requirement, at the time of acquisition counted from the date of the vessel's original commissioning, as follows: 1) For passenger and/or cargo vessels, the age limit is fifteen (15) years old 2) For tankers, the age limit is ten (10) years old, and 3) For high-speed passenger crafts, the age limit is five (5) years old; and
(b) Exemption from value-added tax on the importation of life-saving equipment, safety and rescue equipment and communication and navigational safety equipment, steel plates and other metal plates including marine-grade aluminum plates, used for transport operations.
The importation of the articles under Section 4(a) and (b) of the Act shall be granted exemption from value-added lax subject to the following conditions: (1) That said articles are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices; (2) That said articles are directly imported by a MARINA-registered domestic shipping operator; (3) That said articles are reasonably-needed and will be used exclusively by the registered domestic shipping operator in its transport operations; (4) That the approval of MARINA was obtained prior to the importation of said articles; and (5) That exemption from value-added tax on the importation of said articles shall be granted to all domestic shipping operators within a period of ten (10) years from the effectivity of this Act.
Any sale, transfer or disposition of articles covered under Section 4(a) and (b) within ten (10) years from the effectivity of this Act to another registered shipping operator enjoying similar incentives shall require prior approval of MARINA. If the sale, transfer or disposition was made without prior without approval of MARINA, both the vendor and the transferee or assignee shall be liable to pay twice the amount of value-added tax exemption given him: Provided, further, That if the sale, transfer or disposition was made to nonexempt entity or to a party other than a registered domestic ship operator within ten (10) years from the effectivity of this Act, both the vendor and the transferee or assignee shall be solidarily liable to pay twice the amount of the value-added tax waived: Provided, finally, That the sale, transfer or disposition made after ten (10) years from the effectivity of this Act shall be made by informing MARINA in writing. The purchasers, transferees or recipients shall be considered the importers thereof, who shall be liable for any internal revenue tax on such importation. The tax due on such importation shall constitute a lien on the article itself, and such lien shall be superior to all charges or liens on the goods, irrespective of the processor thereof. The Bureau of Internal Revenue (BIR) shall be furnished with the notice of actions taken by the MARINA.
(c) Net operating loss carry over. A net operating loss in any taxable year immediately preceding the current taxable year, which had not been previously offset as a deduction from gross income shall be carried over for the next three (3) consecutive taxable years immediately following the year of such loss subject to the pertinent provisions of the National Internal Revenue Code of 1997, as amended.
(d) Accelerated depreciation. Fixed assets may be depreciated as follows:
To the extent of not more than twice as fast as the normal rate of depreciation or depreciated at normal rate of depreciation if the expected, life is ten (10) years or less; or
Depreciation over any number of years between five (5) years and the expected life if the latter is more than ten (10) years, and the depreciation thereon allowed as deduction from taxable income: Provided, That the domestic shipping operator notifies the BIR at the beginning of the depreciation period which depreciation rate allowed by this section will be used.
CHAPTER IIIDEREGULATION OF THE DOMESTIC SHIPPING INDUSTRY-AUTHORITY OF THE MARITIME INDUSTRY AUTHORITY
Authority to Operate.
SEC. 5. Authority to Operate. — No franchise, certificate or any other form of authorization for the carriage of cargo or passenger, or both, in the domestic trade, shall be granted except to domestic ship owners or operators.
Foreign Vessels Engaged in Trade and Commerce in Philippine Territorial Waters.
SEC. 6. Foreign Vessels Engaged in Trade and Commerce in Philippine Territorial Waters. — No foreign vessel shall be allowed to transport passengers or cargo between ports or places within the Philippine territorial waters, except upon the grant of Special Permit by the MARINA when no domestic vessel is available or suitable to provide the needed shipping service and public interest warrants the same.
Issuance of Authority to Operate.
SEC. 7. Issuance of Authority to Operate. — The MARINA shall have the power and authority to issue certificates of public convenience to qualified domestic ship operators, taking into consideration the economic and beneficial effect which the proposed service shall have to the port, province or region which it proposes to serve, and the financial capacity of the domestic ship operator to provide and sustain safe, reliable, adequate, efficient and economic service in accordance with the standards set by the government regulation.
Every domestic ship operator shall state in its application the route it proposes to serve, and the service it proposes to offer, Domestic ship operators who do not intend to operate in a fixed route shall nevertheless state in its application the service it proposes to offer.
Deregulation of the Domestic Shipping Industry.
SEC. 8. Deregulation of the Domestic Shipping Industry. — In order to encourage investments in the domestic shipping industry by existing domestic ship operators and attract new investment from new operators and investors, domestic ship operators are hereby authorized to establish their own domestic shipping rates: Provided, That effective competition is fostered and public interest is served.
The MARINA shall monitor all shipping operations and exercise regulatory intervention where it is established, after due process that public interest needs to be protected and safeguarded.
Safety Standards.
SEC. 9. Safety Standards. — All vessels operated by domestic ship operators shall at all times be in seaworthy condition, properly equipped with adequate life-saving, communication, safety and other equipment, operated and maintained in accordance with the standards set by MARINA, and manned by duly licensed and competent vessel crew.
The MARINA shall have the power to inspect vessels and all equipment on board vessels to ensure compliance with safety standards.
Jurisdiction; Powers; and Duties of MARINA.
SEC. 10. Jurisdiction; Powers; and Duties of MARINA. — The MARINA shall have the power and authority to:
Register vessels;
Issue certificates of public convenience, or any extensions or amendments thereto, authorizing the operation of all kinds, classes and types of vessels in domestic shipping: Provided, That no such certificate shall be valid for period of more than twenty-five (25) years;
Modify, suspend or revoke at any time, upon notice and hearing, any certificate, license or accreditation it may have issued to any domestic ship operator;
Establish and prescribe routes, zones or areas of operations of domestic ship operators;
Require any domestic ship operator to provide shipping services to any coastal area, island or region in the country where such services are necessary for the development of the area, to meet emergency sealift requirements, or when public interest so requires;
Set safety standards for vessels in accordance with applicable conventions and regulations;
Require all domestic ship operators to comply with operational and safety standards for vessels set by applicable conventions and regulations, maintain its vessels in safe and serviceable condition, meet the standards of safety of life at sea and safe manning requirements, and furnish safe, adequate, efficient, reliable and proper service at all times;
Inspect all vessels to ensure and enforce compliance with safety standards and other regulations;
Ensure that all domestic ship operation shall have the financial capacity to provide and sustain safe, reliable, efficient and economic passenger or cargo service, or both;
Determine the impact which any new service shall have to the locality it will serve;
Adopt and enforce such rules and regulations which will ensure compliance by every domestic ship operator with required safety standards and other rules and regulations on vessel safety;
Adopt such rules and regulations which ensure the reasonable stability of passengers and freight rates and, if necessary, to intervene in order to protect public interest;
Hear and adjudicate any complaint made in writing involving any violation of this law or the rules and regulations of the Authority;
Impose such fines and penalties on, including the revocation of licenses of, any domestic ship operator who shall fail to maintain its vessels in safe and serviceable condition, or who shall violate or fail to comply with safety regulations;
Investigate any complaint made in writing against any domestic ship operator, or any shipper, or any group of shippers regarding any matter involving violations of the provisions of this Act;
Upon notice and hearing, impose such fines, suspend or revoke certificates of public convenience or other license issued, or otherwise penalize any ship operator, shipper or group of shippers found violating the provisions of this Act; and
Issue such rules and regulations necessary to implement the provisions of this Act: Provided, That such rules and regulations cannot change or in any way amend or be contrary to the intent and purposes of this Act.
CHAPTER IVRATES
Source: Official Gazette of the Republic of the Philippines — Philippine laws are public documents (works of the government).
