Fiscal Incentives - RA 9593 (Tourism Act)

The enactment of RA 9593 (May 12, 2009) or the Tourism Act of 2009 recognizes the importance of tourism as an indispensable element of the national economy.

RA 9593 provides for the creation of three corporate entities attached to the DOT and under the supervision of the Secretary of Tourism for program and policy coordination, namely the: Tourism Promotions Board (TPB), Duty Free Philippines Corporation (DFPC) and Tourism Infrastructure and Enterprise Zone Authority (TIEZA). The TPB shall be responsible for  marketing and promoting the Philippines domestically and internationally as a major global tourism destination while the DFPC is authorized to operate the duty- and tax-free merchandising system in the Philippines to augment the service facilities for tourists and to generate foreign exchange and revenue for the government. On the other hand, the TIEZA shall designate, regulate and supervise the Tourism Economic Zones (TEZs) as well as develop, manage and supervise the tourism infrastructure projects in the country. These entities are exempted from the payment of corporate income tax, as provided under the NIRC, as amended.

In addition, the following incentives, at the discretion of the TIEZA board, may be granted to registered tourism enterprises within the TEZs:

1. ITH;

2. Five percent (5%) tax on gross income earned for new enterprises, 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;



3. Capital investment and imported equipment of regular enterprises shall be entitled to an exemption of 100% of all taxes and duties;

4. Importation of transportation vehicles and the accompanying spare parts by new and expanding regular enterprises shall be exempt from custom duties and national taxes;

5. Goods and services
a. Importation of goods actually consumed in the course of services actually rendered by or through regular enterprises within a TEZ shall enjoy 100% exemption from all taxes and custom duties, subject to certain conditions;
b. Tax credit equivalent to all national internal revenue taxes paid on all locally-sourced goods and services directly or indirectly used by regular enterprises for services actually rendered within a TEZ; and

6. Social responsibility incentives, wherein 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.

Tourism enterprises located outside a TEZ are also granted tax incentives subject to the provisions of the Omnibus Investment Code, Foreign Investment Act, Special Economic Zone Act of 1995, Bases
Conversion and Development Act and other applicable laws. The tax incentives provided to tourism enterprises located inside and outside of TEZs shall take effect only for a period of ten (10) years from the effectivity of the law.

Furthermore, RA 9593 also provides that restoration activities undertaken by the Intramuros Administration, National Parks Development Committee and Nayong Filipino Foundation may be entitled to a tax deduction equivalent to the full cost of the restoration activity directly incurred in
accordance with the provisions of the NIRC, as amended.