[This is Part 3/8 of the discussion on Republic Act No. 9593, also known as The Tourism Act of 2009. Link to other parts found below.]
Who has authority to grant incentives? The TIEZA has exclusive jurisdiction to grant the incentives provided in this law. In the grant of incentives, it shall give equal preference to: (i) large investments; (ii) those with great potential for employment generation; and (iii) those of local small and medium enterprises.
What are the fiscal incentives available to TEZ Operators and Registered Enterprises? The following incentives may, in the discretion of the TIEZA Board, be granted to registered tourism enterprises within TEZs:
1. Income Tax Holiday. New enterprises in Greenfield Tourism Zone (a new or pioneer development, as determined by the TIEZA) and Brownfield Tourism Zone (an area with existing infrastructure or development as determined by the TIEZA) shall, from the start of business operations, be exempt from tax on income for a period of 6 years. The provisions of this subsection shall likewise apply to tourism enterprises outside the zones.
2. Gross Income Taxation. In lieu of all other national and local taxes, license fees, imposts and assessments, except real estate taxes and such fees as may be imposed by the TIEZA, a new enterprise shall pay a tax of five 5% on its gross income earned.
3. Capital Investment and Equipment. Registered enterprises are entitled to an exemption of 100% of all taxes and customs duties on importations of capital equipment, subject to rules and regulations which properly define capital investments and equipment necessary for various kinds of tourism enterprises.
4. Transportation and Spare Parts. Importation of transportation and the accompanying spare parts of new and expanding registered enterprises shall be exempt from customs duties and national taxes, provided that: (i) they are not manufactured domestically in sufficient quantity, of comparable quality and at reasonable prices; and (ii) they are reasonably needed and will be used exclusively by an accredited tourism enterprise.
5. Goods and Services. Subject to rules and regulations which properly define goods and services necessary for various kinds of tourism enterprises, registered enterprises shall be entitled to the following:
- Importation of goods actually consumed in the course of services actually rendered by or through registered enterprises within a TEZ shall enjoy one hundred percent (100%) exemption from all taxes and customs duties, provided that no goods shall be imported for the purpose of operating a wholesale or retail establishment in competition with the DFPC; and
- A tax credit equivalent to all national internal revenue taxes paid on all locally-sourced goods and services directly or indirectly used by the registered enterprise for services actually rendered within the TEZ.
6. Social Responsibility Incentive. A registered enterprise shall be entitled to a tax deduction equivalent to a reasonable percentage, not exceeding 50%, of the cost of environmental protection or cultural heritage preservation activities, sustainable livelihood programs for local communities, and other similar activities.
What are the non-fiscal Incentives available to TEZ Operators and Registered Tourism Enterprises? The following incentives may, in the discretion of the TIEZA Board, be granted to registered tourism enterprises within TEZs:
1. Employment of Foreign Nationals. A registered enterprise may employ foreign nationals in executive, supervisory, technical or advisory positions for such reasonable periods and under such terms as may be provided by the TIEZA Board, with due regard for the proper protection and representation of foreign investments in registered enterprises, and the need to ensure easy travel into and out of the Philippines by such nationals and their immediate families.
2. Special Investor’s Resident Visa. A foreign national who shall have made an investment with a value of at least USD 200,000 in a registered enterprise shall be entitled to a Special Investor’s Resident Visa. The foreign national shall be entitled to reside in the Philippines while his or her investment subsists. Subject to regulations to be issued by the Bureau of Immigration and Deportation (BID), the TIEZA shall issue working visas renewable every 2 years to foreign personnel and other aliens, possessing highly-technical skills which no Filipino within the TEZ possesses, after they have secured Alien Employment Permits (AEP) from the DOLE. The names of aliens granted permanent resident status and working visas by the TIEZA shall be reported to the BID within 30 days after issuance thereof.
3. Foreign Currency Transactions. Subject to the provisions of the New Central Bank Act (Republic Act No. 7653):
- Repatriation of Investments. In the case of foreign investments, the right to repatriate the entire proceeds of the liquidation of the investment in the currency in which the investment was originally made and at the exchange rate prevailing at the time of repatriation.
- Remittance of Foreign Exchange. The right to remit earnings from a foreign investment in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance.
- Foreign Loans and Contracts. The right to remit at the exchange rate prevailing at the time of remittance such sums as may be necessary to meet the payments of interest and principal on foreign loans and foreign obligations arising from technological assistance contracts.
4. Requisition of Investment. There shall be no requisition of the property of registered enterprises, except in the event of war or national emergency, and only for the duration thereof. In any case, the affected person shall be entitled to just compensation.
5. Lease and Ownership of Land. Lands and buildings in each TEZ may be leased to foreign investors for a period not exceeding 50 years, renewable once for a period of not more than 25 years. The leasehold right acquired under long-term contracts may be sold, transferred or assigned, subject to the conditions set forth under the Investor’s Lease Act.
What are the incentives to Tourism Enterprises Outside TEZs? A certain set of rules govern the grant of fiscal and other incentives to tourism enterprises not located within TEZs. Among others, the provisions on Income Tax Holiday for Registered Enterprise shall likewise apply to tourism enterprises outside the zones.
+ Main Primer: Tourism Act of 2009 (RA 9593)
+ The Department of Tourism (DOT)
+ Shared Responsibilities of National and Local Governments
+ Tourism Promotions Board (TBP) and the Tourism Promotions Fund
+ Tourism Enterprise Zones (TEZ)
+ Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
+ Increased Tourist Access
+ Full text of R.A. 9593