THE Tourism Infrastructure and Enterprise Zone Authority (Tieza) will be drafting a bill to drop the “sunset provision” for fiscal incentives for tourism enterprise zones (TEZs) in the Tourism Act of 2009.
“We are preparing a bill to remove the sunset provision in Republic Act [RA] 9353, the Tourism Act of 2009, on the grant of incentives since the Bureau of Internal Revenue [BIR] did not issue guidelines for the last years,” Tieza COO Guiller Asido said.
This developed as the Department of Finance (DOF) said it would study proposed revenue regulations covering incentives for TEZ locators.
In a text message to the BusinessMirror, Finance Secretary Carlos G. Dominguez III said: “We’ll be taking a close look at [the proposed incentives for TEZ locators].”
He added: “We need to determine how much revenue losses will be incurred with such a measure viz the potential benefits to government in terms of taxes, and to the people living in and around those TEZs.”
The DOF is currently preparing a comprehensive package of tax reforms, including restructuring of fiscal incentives for investors, for presentation to lawmakers in October.
The proposed revenue regulation governing fiscal incentives to TEZ locators has been pending with the BIR since 2010, according to Tieza officials. Because these fiscal incentives were not granted to TEZs, Tieza estimates about P232.33 billion in investments into the tourism sector were lost. (See “BIR revenue regulation sought to stem tourism investment losses” in the BusinessMirror, September 23, 2016.)
While Tieza could not provide estimated revenue losses from the grant of the tax-incentives locators, it said in a briefing paper the development of flagship TEZs would create 10,000 rooms (20 percent) of total additional room requirements for the industry; support an additional 1.7 million tourists; and deliver 280,000 additional jobs.
Asido said Tourism Secretary Wanda Corazon T. Teo “already wrote a letter to the BIR [renewing the request for said fiscal incentives], and we will be meeting them, as well.”
Under RA 9353, said fiscal incentives for TEZ locators are supposed to be granted until 2019, the so-called sunset provision. The Tieza official explained: “By removing that provision, we are hoping to provide incentives beyond 2019, since we lost six years due to the absence of a BIR revenue regulation.”
He added that once the bill is completed, Tieza will be requesting “the committees on tourism in both houses [of Congress] to sponsor it.”
Formerly known as the Philippine Tourism Authority, Tieza is a unit of the DOT tasked to “develop, manage and supervise tourism-infrastructure projects in the country. It shall supervise and regulate the cultural, economic and environmentally sustainable development of TEZs toward the primary objective of encouraging investments therein.”
Under this law, fiscal incentives promised TEZs include a six-year income-tax holiday, renewable for another six years; 5-percent gross income taxation; net operating loss carryover; and the tax- and duty-free importation of capital and transportation equipment and consumable goods.
Nonfiscal incentives include the employment of foreign nationals; the special investor’s resident visa; the lease of land by foreign nationals; the social responsibility incentive; and the nonrepatriation of investments.
Tieza has identified five flagship TEZs: San Vicente, Palawan; Rizal Park Complex, Manila; Mount Samat Shrine of Valor, Bataan; Bucas Grande, Surigao del Norte; and Panglao Bay Premiere Properties, Bohol. As flagship TEZs, these will be operated and managed by Tieza.
There are private TEZs that have been approved, as well, and are just waiting for fiscal incentives to embark on their expansion projects. These are Ciudad de Victoria in Bulacan, Bravo Golf Resort in Dumaguete, Hijo Plantation in Davao, Queen’s Castle in Cebu and Resorts World in Parañaque.