Gross Philippine Billings Tax: How BIR Taxes International Airlines and Shipping Carriers

Gross Philippine Billings (GPB) tax is a special 2.5% income tax that BIR charges international air and shipping carriers under NIRC Section 28(A)(3), computed on gross revenue from passengers, cargo, and mail on flights or voyages that originate in the Philippines — regardless of where the ticket was sold. Republic Act No. 10378 lets a carrier reduce or eliminate that 2.5% through reciprocity or an applicable tax treaty.

This guide explains what counts as Gross Philippine Billings, how the 2.5% tax is computed, and when an international carrier can legally avoid it entirely.

What is Gross Philippine Billings tax? #

Gross Philippine Billings tax is a special income tax regime under NIRC Section 28(A)(3) that applies only to international air and shipping carriers doing business in the Philippines, in place of the regular corporate income tax on that transport revenue. Instead of the 25% (or 20% for qualifying MSMEs) corporate rate under the CREATE Act, an international carrier pays a flat 2.5% on its “Gross Philippine Billings” — a revenue-based tax base rather than net taxable income, since sourcing net income across a multi-jurisdiction passenger journey or cargo shipment is impractical to compute and audit.

What counts as “Gross Philippine Billings”? #

Gross Philippine Billings means gross revenue from passengers, excess baggage, cargo, and mail carried on a flight or voyage that originates from the Philippines to a final destination, regardless of where the ticket or freight document was sold or paid for. Law Insider’s legal-definitions reference, reproducing the codified language of Section 28(A)(3)(a) of the NIRC as amended, states the air-carrier definition this way:

“Gross Philippine Billings” refers to the amount of gross revenue derived from carriage of persons, excess baggage, cargo and mail originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document.

For international shipping carriers, the definition follows the same origin logic: gross revenue for passenger, cargo, or mail originating from the Philippines up to the final destination, regardless of where the passage or freight documents were sold or paid. Under BIR Revenue Regulations No. 15-2013, which implements RA No. 10378, transshipped cargo gets a specific rule: if freight originating in the Philippines is transferred at a foreign port to another vessel or aircraft before reaching its final destination, the entire freight revenue — including the leg after the transshipment point — still counts toward Gross Philippine Billings. A carrier cannot shrink its Philippine tax base by routing cargo through an intermediate foreign port.

Two details trip up carriers new to this rule: place of sale is irrelevant (a ticket sold in Tokyo for a flight departing Manila is still Philippine-sourced revenue, because the flight originates here), and destination-only or connecting flights that merely land in or pass through the Philippines without originating here are excluded.

RA No. 10378 reciprocity and tax treaty exemptions #

Republic Act No. 10378 (2013) amended NIRC Section 28(A)(3)(a) to let an international carrier reduce or fully avoid the 2.5% GPB tax on passenger and excess-baggage revenue, based either on an applicable tax treaty or on reciprocity with the carrier’s home country. Before this law, all international carriers paid the same 2.5% GPB rate regardless of how the Philippines was treated abroad. As the Official Gazette’s publication of RA No. 10378 and the Supreme Court E-Library’s copy of the same act summarize it, the amendment ties the Philippine tax outcome to how a carrier’s home country treats Philippine carriers operating there: an international carrier may claim a preferential rate or full exemption on its passenger and excess-baggage revenue if a Philippine tax treaty with that country covers the point, or — absent a treaty — if that country’s own law grants a comparable income tax exemption to Philippine carriers.

Two independent paths lead to relief: tax treaty relief, where a Philippine tax treaty covering international carrier income sets the applicable rate or exemption; and reciprocity, where — absent a treaty — the carrier’s home country grants a comparable income tax exemption to Philippine-flag carriers. Reciprocity is not automatic: under Revenue Regulations No. 15-2013, the carrier generally files for a confirmatory ruling with the BIR’s International Tax Affairs Division, supporting the claim with proof of the foreign country’s law or administrative practice.

Reciprocity exemption under RA No. 10378 covers passenger and excess-baggage revenue specifically; cargo and mail revenue remain subject to separate treatment under the same section. Carriers should not assume a full exemption applies across every revenue stream without checking the scope of their treaty or confirmatory ruling.

Worked example: computing the 2.5% GPB tax #

A concrete computation shows how the 2.5% rate applies before any reciprocity or treaty relief, and how dramatically that outcome changes once RA No. 10378 relief is confirmed. Consider an international airline with flights originating from Ninoy Aquino International Airport in Manila. During one quarter, it sells ₱50,000,000 worth of passage documents attributable to those Philippine-originating flights, and it has no confirmed treaty or reciprocity exemption.

Now contrast that with a second carrier flying the same routes, generating the same ₱50,000,000 in Philippine-originating passage revenue, but whose home country has been confirmed by BIR to grant Philippine carriers a reciprocal income tax exemption under RA No. 10378. That carrier’s GPB tax due on the same revenue is ₱0 — not because the revenue is any different, but because the reciprocity exemption removes the tax base itself for passenger and excess-baggage revenue. The gap between these two outcomes is exactly why carriers pursue a BIR confirmatory ruling rather than assuming exemption applies on its own.

This structure is a useful point of comparison against other narrow, revenue-based BIR tax carve-outs — see Franchise Tax vs VAT: When BIR Franchise Grantees Pay 2% or 3% Instead of 12% VAT for another instance where the NIRC substitutes a special low rate on gross receipts for the standard tax treatment. For how the standard corporate rate that GPB tax replaces actually works for ordinary Philippine corporations, see Corporate Income Tax Rates in the Philippines: 25% vs 20% for MSMEs Under the CREATE Act.

Frequently asked questions #

What is Gross Philippine Billings tax? #

Gross Philippine Billings (GPB) tax is a special income tax under NIRC Section 28(A)(3) charged to international air and shipping carriers doing business in the Philippines, equal to 2.5% of their Gross Philippine Billings — gross revenue from passengers, cargo, and mail on flights or voyages originating from the Philippines to a final destination.

Is Gross Philippine Billings tax the same as regular corporate income tax? #

No. GPB tax replaces the regular corporate income tax for the Philippine-sourced transport revenue of international carriers. Instead of the 25% (or 20% for qualifying MSMEs) rate under the CREATE Act, qualifying international carriers pay a flat 2.5% on Gross Philippine Billings, unless a reciprocity exemption or tax treaty applies.

Can an international airline be exempt from Gross Philippine Billings tax? #

Yes. Republic Act No. 10378 lets an international carrier claim a preferential rate or full exemption from GPB tax on passenger and excess-baggage revenue if its home country grants a similar income tax exemption to Philippine carriers (reciprocity), or if an applicable tax treaty between the Philippines and the carrier’s home country provides for it.

Does GPB tax apply to tickets sold outside the Philippines? #

Yes. Under NIRC Section 28(A)(3)(a) as amended by RA No. 10378, Gross Philippine Billings includes revenue from carriage originating in the Philippines regardless of where the ticket was sold or where payment was made. What matters is where the flight or voyage originates, not where the ticket transaction happened.

How is Gross Philippine Billings computed for cargo that is transshipped abroad? #

For international shipping and air cargo, if freight or cargo originating in the Philippines is transshipped at a foreign port onto another vessel or aircraft before reaching its final destination, the entire freight revenue for the full journey — including the leg beyond the transshipment point — is still included in Gross Philippine Billings, based on BIR’s implementing rules under Revenue Regulations No. 15-2013.

Summary #

Gross Philippine Billings tax charges international air and shipping carriers 2.5% of gross revenue from passengers, cargo, and mail on journeys originating in the Philippines, regardless of where the ticket or freight document was sold. Republic Act No. 10378, implemented through BIR Revenue Regulations No. 15-2013, lets a carrier reduce or eliminate that tax through an applicable tax treaty or reciprocity — but only once BIR confirms the exemption applies. For related BIR carve-outs from standard tax treatment, see Franchise Tax vs VAT: When BIR Franchise Grantees Pay 2% or 3% Instead of 12% VAT and Corporate Income Tax Rates in the Philippines: 25% vs 20% for MSMEs Under the CREATE Act.