Friday, March 17, 2017

Who Gets Exempted from Ph Travel Tax?

Every Filipino international traveler leaving the Philippines has at one point complained about paying for travel tax and I’ve joined the lamentation several times myself.

While the Philippines is not the country with most expensive departure fee, the P2,700 ($54) and P1,620 ($33) travel tax for first class and economy passengers, respectively, can be quite an additional price to pay for a vacation or a business trip abroad.

Traveling, especially without planning, is already costly and the extra fee that has to be paid pre-departure at designated travel tax offices in airports, malls, and Department of Tourism offices or online can make a dent in the travel budget, or become an otherwise unexpected expense.

The collection of travel tax traces its beginnings to 1939 with the approval of Commonwealth Act 446.  Section 228 imposed the collection of documentary stamp tax from every ticket or fare paid by a person or vessel that did not belong to either the Philippine or US government.

When the Board of Travel and Tourist Industry was created through Republic Act (RA) 1478 in 1956, Section 3 specified taxing the fares of passengers coming in and leaving the country “to carry out the aims and purpose” of the Act.

In 1977, Presidential Decree 1183 detailed the manner of travel tax collection and listed several exclusions. It is also under this decree that it was clarified “all citizens of the Philippines, permanent resident aliens and non-immigrant aliens who have stayed in the Philippines for a period of not less than one year” would pay such dues.

A decade later, the Executive Order 283 that contains most of the travel exemptions currently being applied, would be signed into law.  

The Travel Tax Exemption Certificate (TTEC) is shown upon checkin in order to get exemption from paying travel tax. (Photo sourced from the website of the Embassy of the Philippines in Berlin)

Below is the list of exemptions including the requirements for exemption indicated by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA).

1.  Foreign diplomatic and consular officials, their staff, immediate family members, and members of their domestic household provided they are authorized by the Philippine government.

Requirement: Original copy of certification from the Office of Protocol at the Department of Foreign Affairs (DFA) or from Embassy/Consulate

2.  United Nations organization/agency officials, consultants, experts and employees including those that may be covered under an international agreement and treaty. UN dependents are also exempted if they are paid for and certified by the organization.

Requirement: UN passport or original copy of the certificate of employment from UN office or agency; original certification and proof for dependents.

3.  US military personnel and US nationals traveling with their dependents and whose trips the US government sponsors. This includes Filipinos working in the US military and their dependents and Filipino employees of the US government and US State Department visitor-grantees traveling on official business.

Requirement/s: Original certification from the US Embassy that the trip is US government -sponsored or original Government Transport Request for a plane ticket.

    4.  Filipino Overseas Contract Workers (OCWs). Under Republic Act 10022, the beneficiaries of OCW remittances are also exempted as long as they can show proof.  Additionally, OCWs are also entitled to terminal fee refund.

Requirement/s: If the OCW is heading back to his/her country of employment and is hired through the Philippine Overseas Employment Agency (POEA), the requirement is the original Overseas Employment Certificate (OEC).

For OCWs directly hired abroad, the original certificate of employment from the Philippine Embassy/Consulate at the country of employment or the original Philippine Embassy/Consulate-authenticated employment contract.

5.   Ship and airplane crewmembers who are leaving to resume work

Requirement: For airplane crewmembers, the original certificate from the Civil Aeronautics Board.

 6.  Filipino citizens who are permanent residents abroad and have not stayed in the Philippines for more than a year

Requirements: Aside from the original copy of proof of permanent residence abroad (such as the green card for US residents and the Aufenthaltstitel for Germany residents), a copy of the passport identification page and stamp of the most recent entry into the country.

If foreign country does not issue permanent resident cards, the original certification of residence issued by the Philippine Embassy/Consulate in the country of residence shall be used.

7.   Philippine foreign service members working abroad and their dependents

Requirement: Original certification from the DFA

8.   Philippine officials and employees on official business

Requirement: Original certified true copy of travel authority or travel order from the Department Secretary of the concerned official/employee.

9.   Recipients of grants of foreign governments that maintain diplomatic relations with the Philippines

Requirement: Original proof that shows travel is sponsored by foreign government

10. Students who have received more than 1 year of scholarship, which is approved by appropriate government agency

Requirement:  Original certification from the concerned government agency

11. Infants who are aged 2 or less

Requirement: Original passport or birth certificate

12. Multinational company personnel and their dependents provided their companies have regional headquarters but are not doing business in the Philippines

Requirement: Original Board of Investments certification

13. Travelers authorized by the Philippine president for “reasons of national interest.

Requirement: Original copy of the authorization letter from the Office of the President stating that passenger is entitled to travel tax exemption

14. Balikbayans whose stay in the Philippines was less than a year

Requirements: Passport stamp of entry and airline ticket of last entry to the Philippines

15. Immediate family members of former Filipinos who are traveling with them

Requirements:  Evidence of former citizenship such as passport and birth certificate for the children, and marriage certificate for spouse

Although the TIEZA website does not mention these, RA 6847 also exempts the Philippine Sports Commission, delegates and representative athletes and coaches attending conventions, meetings and competitions from any travel tax including the departure tax and terminal fee. If traveling by air and sea from Mindanao and Palawan to Brunei, Indonesia and Malaysia, passengers are also exempted from travel tax until October 2017 as per Memorandum Order 73.

Through EO 589, exporters who are bound to international trade fares, exhibits, negotiations and conferences can also seek travel tax exemption from the Export Development Council (EDC).

To be fair, 50 percent of the collected travel tax funds the operation of TIEZA whose mandate includes the designation, regulation, and supervision of the Tourism Enterprise Zones and the development, management and supervision of tourism infrastructure projects. Another 40 percent of the collection goes to the Commission on Higher Education (CHED) development fund while the remaining 10 percent is allocated to the National Commission on Culture and Arts. #



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