DAVAO CITY -- President Benigno Aquino has signed Republic Act 10374, the law exempting foreign air and shipping carriers from paying the common carriers tax on passenger traffic.

International air and shipping carriers are exempted from paying Gross Philippine Billings provided that the carrier's home country "grants income tax exemption to Philippine carriers" on the basis of reciprocity or an applicable tax treaty or international agreement. 

The law also exempts international carriers from paying the 12 percent VAT for the transport of passengers. 

The law aims to attract foreign carriers to operate more flights to and from the Philippines, helping boost tourist arrivals. 

Aquino signed the law during the opening of the Philippine M.I.C.E. (Meetings, Incentive Travel, Conventions, Exhibitions and Events) Conference held at the SMX Convention Center here.