Duterte signs law extending perks to tourism ecozones

MANILA, Philippines — President Duterte has signed a law that extends the granting of incentives to tourism enterprise zones (TEZs) for another 10 years by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA).

The President signed Republic Act 11262 on April 10 but it was released more than a month after by the Presidential Legislative Liaison Office (PLLO). The law amends Sections 85 and 103 of RA 9593 or the Tourism Act of 2009.

“The incentive scheme set forth in Sections 86, 87 and 88 of Republic Act 9593 shall be in effect until Dec. 31, 2029, subject to review by the Joint Congressional Oversight Committee,” the amended law read.

Among the incentives to be granted to TEZ developers and tourism enterprises include a six-year income tax holiday that may be extended for another six years, a five percent preferential tax on gross income in lieu of national taxes except for real property tax and fees of TIEZA, a net operating loss carry over scheme, import tax exemptions for capital goods and equipment needed for TIEZA-registered activities, and import tax exemptions for transport equipment and spare parts needed for TIEZA-registered activities.

They will also be exempted from value-added tax and excise tax goods imported by TIEZA-registered activities, tax credit equivalent to taxes paid on locally sourced goods, and tax deduction of up to 50 percent of cost of environmental protection and cultural heritage preservation activities as well as of sustainable livelihood programs of the registered tourism enterprises.

Under the original Tourism Act of 2009, the TIEZA only has until August of this year to grant incentives to TEZs despite the six-year delay in the implementation of the law due to its late implementing rules and regulations (IRR), which was only released in November 2016.

In 2017, the Bureau of Internal Revenue (BIR) clarified that the incentives for TEZ under Republic Act 9593 may be enjoyed by investors even beyond 2019 until these incentives are fully realized.

“In the formulation of the rules and regulations defining and implementing these incentives, and without derogating therefore, the TIEZA may coordinate with the Board of Investments and other government agencies or entities responsible for the grant and administration of incentives to assist in the development of a rationalized national investment policy,” the amended law read.

Meanwhile, the amended Section 103 of the Tourism Act of 2009 added the chairperson of the Committees on Ways and Means of both Houses of Congress to the Joint Congressional Oversight Committee.