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Business

Tax perks for rehab of Hanjin shipyard

Elijah Felice Rosales - The Philippine Star

MANILA, Philippines — The rehabilitation of the former Hanjin shipyard in Subic Bay Freeport Zone has received a set of tax incentives from the government for its economic and employment impact in the area.

The Cabinet-level Fiscal Incentives Review Board (FIRB) yesterday said it approved the grant of preferential taxes for Project Agila, the redevelopment operations of the former Hanjin facility in Subic.

Finance Secretary and FIRB chairman Carlos Dominguez said the government extended tax perks to Project Agila, which has an estimated cost of P17 billion, for the economic potential that it can unleash due to its proximity to the West Philippine Sea.

Dominguez said the FIRB authorized Project Agila to pay only the special corporate income tax (SCIT) of five percent, instead of the regular rate of 25 percent. Under the Corporate Recovery and Tax Incentives for Enterprises Act, the SCIT can be availed of for up to 10 years.

Further, Dominguez said Project Agila was provided with VAT exemption for its imports and VAT zero-rating for its local purchases. Also, it secured duty exemption for the importation of capital equipment, raw materials, and spare parts.

Dominguez said the FIRB, in exchange, expects the rehabilitation of the former Hanjin shipyard to boost economic activities and generate employment opportunities in its nearby communities.

“We expect the project to create jobs in the adjacent communities, increase economic activity, as well as support the national government’s economic recovery efforts,” the finance chief said.

“The resumption of operations in the shipyard will also prompt development and productivity in the area, which can attract more investment opportunities into the country,” he said.

Likewise, Dominguez turns to Project Agila to cater to the needs of both the Philippine Navy and future locators.

Upon completion, the redeveloped facility will allocate a naval base for the Navy that can be used as a dock for its fleet patrolling the West Philippine Sea.

In April New York-based Cerberus Frontier concluded its buyout of the former Hanjin shipyard in Subic.

Dominguez said the transaction serves as a win-win solution for all stakeholders involved in the takeover, especially the five domestic banks which will book a profit from writing off loans to bankrupt Hanjin Heavy Industries and Construction Philippines.

When Hanjin filed for bankruptcy in 2019, it left $412 million in outstanding loans to five banks in the Philippines and another $900 million to financial institutions in South Korea.

Dominguez said the Cerberus takeover of the Subic shipyard would create an average of 300 jobs every year from locators and subcontractors, which will benefit from new activities in the economic zone.

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