Publishing Presidential Decree No. 1355, Dated April 21, 1978

May 9, 1978 REVENUE MEMORANDUM CIRCULAR NO. 033-78 SUBJECT : Publishing Presidential Decree No. 13 55, Dated April 21, 1978, Amending Section 24(b)(2) of the National Internal Revenue Co de to Provide Statutory Definition of the Term "Gross Philippine Billings" TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, published hereunder is the full text of Presidential Decree No. 1355, viz: "MALACAANG Manila PRESI DENTIAL DECREE NO. 13 55 "AMENDING SECTION 24(b)(2) OF THE NATIONAL INTERNAL REVENUE CODE TO PROVIDE A STATUTORY DEFINITION OF THE TERM "GROSS PHILIPPINE BILLINGS" "WHEREAS, the open skies policy in the operations of international airline companies in the Philippines has proliferated chartered flights to and from the country; "WHEREAS, international airline companies with scheduled flights to the Philippines are taxed on their incoming and outgoing business arising from passage documents sold in the country; "WHEREAS, fares of chartered flights are not subject to any income tax under existing internal revenue laws and regulations; "WHEREAS, there is a need to equalize the income tax burden and promote healthy competition among the international airline companies; "NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree: "SECTION 1. Section 24(b)(2) of the National Internal Revenue Code is hereby amended by adding a definition of the term "gross Philippine billings" as follows: ". . . "Gross Philippine billings" includes gross revenue realized from uplifts anywhere in the world by any international carrier doing business in the Philippines of passage documents sold therein, whether for passenger, excess baggage or mail, provided the cargo or mail originates from the Philippines. The gross revenue realized from the said cargo or mail shall include the gross freight charge up to final destination. Gross revenues from chartered flights originating from the Philippines shall likewise form part of "gross Philippine billings" regardless of the place of sale or payment of the passage documents. For purposes of determining the taxability of revenues from chartered flights, the term "originating from the Philippines" shall include flight of passengers who stay in the Philippines for more than forty-eight (48) hours prior to embarkation." "SECTION 2. This Decree shall take effect upon approval. "DONE in the City of Manila, this 21st day of April in the year of our Lord, nineteen hundred and seventy-eight. aisa dc "(SGD.) FERDINAND E. MARCOS President of the Philippines By the President: "(SGD.) JACOBO C. CLAVE Presidential Executive Assistant Features of the Amendment Under the present law, revenues realized by international carriers out of chartered flights to and from the Philippines are not subject to Philippine income tax because the passage documents are generally sold outside the Philippines. The fares of chartered flights are much lower than the fares collected by scheduled flights so that with the adoption of the open skies policy in the international airline operations, the number of chartered flights and volume of traffic handled tremendously increased to the disadvantage of scheduled flights which are subject to tax. To help promote healthy competition between chartered and scheduled flight operations which are equally benefitted by the open skies policy and to generate government revenues from chartered flights, the law on the taxation of international carriers doing business in the Philippines has been amended to include chartered flights originating from the Philippines regardless of the place of sale or payment of the passage document. All internal revenue officers and others concerned with the enforcement of internal revenue laws are hereby enjoined to be guided accordingly and to give the decree a wide publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8