February 13, 2014 VAT and Excise Tax on Jet Fuel for International Flights The Joint Foreign

Chambers of the Philippines (JFC) losely monitor the reform measures an! initiati"es ta#en by the Philippine go"ernment geare! to$ar!s impro"ing the ountry%s ompetiti"eness& 'n this onte(t, the JFC greatly appre iate! the )oint un!erta#ing by the *+uino *!ministration an! Congress to e(empt the arriage of passengers of international sea an! air arriers from the ta( on ,ross Philippine -illings (,P-) on the basis of re ipro ity, an! at the same time, remo"ing the 3. Common Carriers Ta(& This important reform in the 1/th Congress $as passe! to prote t the Philippine tourism in!ustry $hi h $as then seriously threatene! !ue to the in reasing number of $ith!ra$als of foreign airlines from Philippine operations& 0o$e"er, after this goo! ne$s omes some "ery ba! ne$s1 the 2upreme Court has effe ti"ely impose! ne$ ta(es on a"iation fuel suppliers in its re ent !e ision !enying 2hell%s laim for refun! of e( ise ta(& 2hell an! Petron file a laim for refun! of e( ise ta(es pai! for )et fuel sol! to international arriers (the Court of Ta( *ppeals rule! in fa"our of 2hell but the -'3 ele"ate! the ase to the 2upreme Court)& *s a result, a"iation fuel suppliers ha"e no hoi e but to pass on the higher osts to foreign arriers, in the pro ess ma#ing the Philippines the highest )et fuel lo ation in the region an! threatening the tourism targets of the *+uino *!ministration& The JFC fully support the re ent statement of the -oar! of *irline 3epresentati"es $hi h sai!1 45anila is no$ the most e(pensi"e pla e in *sia to fuel an air raft& The ne$ ta(es are a lear an! blatant attempt to a"oi! the Philippines% o$n la$s an! obligations un!er international agreements inten!e! to pro"i!e ta( relief to international arriers&% 6ue to the 2upreme Court%s !e ision, fuel suppliers are not permitte! to re o"er e( ise ta(es !ire tly from the go"ernment& 'nstea!, the suppliers $ill be for e! to in rease their per7gallon fuel rate to re o"er their o$n ta( osts8 the airlines ultimately bear the a!!itional e(pense, to be passe! on to passengers on e their fuel sur harge is appro"e!& This $ill negati"ely affe t the tourism in!ustry as $ell as business an! go"ernment tra"el& To relie"e foreign arriers of the e( ise ta( bur!en amounting to 92: 0&32 ents, $e strongly urge that la$s be amen!e! to implement the re ipro ity rules un!er e(isting international agreement&

The JFC appeals to the *+uino *!ministration to !ri"e those hanges in or!er to ma#e the Philippines more ompetiti"e an! a hie"e the tourism in!ustry targets set by 6;T 2e retary Jimene< an! the Presi!ent&