Travel Tax Exemption

Two committees in Congress have recently approved a resolution endorsing to the President the renewal of travel tax exemption (TTE) granted to travelers going to any focus areas of Brunei Darussalam, Indonesia, Malaysia Philippines East ASEAN Growth Area or BIMP-EAGA using Mindanao and Palawan gateways.   

Filed under Resolution 1270 by Davao del Sur Representative Mercedes Cagas, the house special committee on the EAGA affairs urges President Rodrigo Duterte to issue a directive that exempts air and sea passengers originating in Mindanao and Palawan from paying travel tax fee amounting to PhP 1,620.00.

Cagas says the exemption will encourage for more investors to look at Philippine-EAGA routes as potent connectivity and investment jump-off points, taking lead from the launch of the Davao- General Santos- Bitung, Indonesia shipping route earlier this year.

“It is imperative upon the national government to capture interest of travel service providers to invest in Philippine-EAGA routes by providing the necessary incentives, including, among others, the TTE for international travels from Mindanao to EAGA destinations,” she added.

The committee proposes that the exemption will be implemented for a period of three years within 2017-2025 wherein it can be subjected for review and impact analysis in terms of its effectiveness to generate revenue to the government.

In terms of foregone revenues, Cagas adds that these are considered “insignificant” especially when placed next to the “projected economic and social gains to Mindanao, Palawan, and the country as a whole” that the TTE policy will help usher.

Meanwhile, the House Committee on Tourism chaired by Leyte Representative Lucy Torres-Gomez has also approved and endorsed the travel tax exempt measure to the Office of the President, noting that it will help reduce the cost of travel to EAGA, and subsequently, increase tourism in Mindanao and Palawan.

The exemption was first implemented by former President Fidel Ramos in 1995 in support of the newly established BIMP-EAGA sub-regional cooperation. 

Since then, the policy has been renewed and extended six times and was lifted in 2008 which resulted to the closing of several international flights including Davao to Kota Kinabalu, Malaysia and Davao to Manado in Indonesia.

Currently, the Philippines is the only country in the BIMP-EAGA region that has a policy on collecting international travel tax charges.

With the renewed interest on the Philippines through the recent opening of flights from Davao to Kuala Lumpur (Air Asia) and Zamboanga to Sandakan (Cebu Pacific), Mindanao Development Authority Chairman Secretary Datu Hj. Abul Khary Alonto sees the renewal of the TTE policy as a step forward in sustaining and accelerating socio-economic development for the country, especially in Mindanao.

“As it is quite challenging for the Philippines to establish direct connection with the neighboring countries simply because our areas are separated by seas, the renewal of this policy will help bring the Mindanao and Palawan’s vast potential to the forefront as we work towards BIMP-EAGA’s greater goal of increasing trade, tourism, and investments,” Alonto added.
Launched in 1994, the BIMP-EAGA sub-regional cooperation is designed as a key strategy to accelerate social and economic development of less developed areas in participating countries. The travel tax exemption initiative is identified under the sub-region’s strategic pillar focusing on enhancing connectivity within and beyond BIMP-EAGA.

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