WHEREAS,
shipping plays a vital role in the economic development and growth of
the country;chanroblesvirtualawlibrary
WHEREAS, the promotion and maintenance of an adequate Philippine
merchant fleet depend upon the adequacy of supporting shipbuilding and
ship repair facilities; chanroblesvirtualawlibrary
WHEREAS, the absence of adequate investment incentives has deterred the
expansion and modernization of existing shipyards and/or the
development of new shipyard facilities;chanroblesvirtualawlibrary
WHEREAS, to accelerate the development of shipbuilding and ship repair
industry such incentives are imperative and necessary;chanroblesvirtualawlibrary
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:cralaw:red
Section 1. Shipbuilding and ship repair yards duly
registered with the Maritime Industry Authority shall be entitled to
the following incentive benefits:cralaw:red
a) 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 quantity 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 tax paid for said machinery, equipment,
materials and accessories. chanroblesvirtualawlibrary
b) Accelerated depreciation. — Industrial plant and
equipment may, at the option of the shipbuilder and ship repair, be
depreciated for any number of years between five years and the expected
economic life.
c) 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 contractor'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 contractors own shipbuilding or ship
repairing facilities; Provided, That, for 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.
d) 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 railways 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 Philippines or by
foreign governments pursuant to a treaty or agreement.
Section 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. 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. Any provision of law, decree, executive
order, or rules and regulations inconsistent with this Decree is hereby
repealed or modified accordingly.
Section 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.
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