The Fiscal Incentives Review Board (FIRB) approved the tax incentives for the operations of a proposed P1.5-billion Cebu City-based shipping vessel, specializing in roll on roll off (RoRo) passenger and cargo operations. The grant includes four years of income tax holiday, five years of enhanced deductions, and 11 years of duty exemption on importations.
The new shipping vessel sails the Cebu-Cagayan de Oro route on a reduced travel time and still comparable rate, setting itself apart in the market as a convenient, cost-friendly, and competitive inter-island vessel in the country.
Finance Secretary and FIRB Chairman Carlos Dominguez III emphasized that the tax incentive approval for the transportation player “aligns with the national government’s aim to modernize transportation and to increase competition in the shipping industry in the Philippines.”
Trade Secretary and FIRB co-chair Ramon Lopez also supports the approval as the project “will continue generating revenues for the government even after the incentive period which is a substantial economic benefit the FIRB considers in granting tax incentive applications.”
It was also noted by Lopez that there are limited shipping lines serving the Cebu-CDO-Cebu route; thus, the entry of a new player will contribute to enhancing the competitiveness of the region’s water transport with focus on passenger safety, welfare, and comfort.”
According to Trade Undersecretary and BOI Managing Head Ceferino Rodolfo, the potential benefits from the project are estimated to outweigh the cost of granting incentives, which are primarily driven by additional revenues from the activity and substantial domestic spending on direct materials.
With increased access to sea transportation, the project is expected to stimulate a higher flow of goods and services between the cities of Cebu and Cagayan de Oro, Rodolfo said.
Apart from an increase in productivity and efficiency of the transport of goods and services, the new shipping vessel also seeks to stimulate industry linkages and agricultural trade between Central Visayas and Northern Mindanao.
In 2021, the FIRB approved the tax incentives applications of five big-ticket projects, involving manufacturing activities and the construction of mass housing units, with a combined investment capital of P119.5 billion.