Friday, 6 March 2009

Philippines ratifies bill boosting tourism framework

J. F. S. Valdez
BusinessWorld Online

BOTH CHAMBERS of Congress ratified last Wednesday night a bill reorganizing state tourism agencies and giving tax perks to tourism and related businesses.

Under the reconciled version of Senate Bill (SB) 2213 and House Bill (HB) 5229, entitled the "Tourism Act of 2008," agencies attached to the Department of Tourism (DoT) will be reorganized.

The Philippine Tourism Authority will be renamed the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), a state corporation that will designate, regulate and supervise tourism enterprise zones (TEZs), which will provide incentives to locators, as well as develop and manage tourism projects in the country.

TEZ locators will pay a final tax of only 5% of gross income, instead of the 30% corporate income tax, provided that income from local sales does not exceed 30% of income from all sources.

Private developers whose projects become TEZs will be able to offer to their locators duty-free importation of capital goods and income tax holidays.

The bill provides that any area with the following features may be designated a TEZ: defined as one contiguous territory; has historical and cultural significance, environmental beauty, or potential for integrated leisure facilities; offers strategic access through transportation systems; has sufficient area to expand for more new investments.


The bill provides P500 million in state funding for TIEZA’s first year of operation.

The agency will draw funds from tourism development fees, 50% of travel tax collections, project revenues, as well as subsidies and grants. Five percent of the travel tax collection share that TIEZA will get will be earmarked for the development of heritage sites and other prime tourist destinations. Another 5% will be allocated for the development of ecotourism sites in depressed provinces with strong tourism potentials.

Establishments that have applied to become TEZs include Marriott Hotel in Cebu City and the Shangri-la hotel in Boracay.

Duty Free Philippines will be reorganized to become Duty Free Philippines Corp., tasked to handle tax-free merchandising.

The Philippine Convention and Visitors Corp. will become Tourism Philippines (TP), responsible for promotional activities. The government will allocate 40% of the proceeds from the sale of some assets of the Philippine Tourism Authority to initially fund TP’s operations.

The Philippine Retirement Authority, now under the Office of the President, will be transferred to the Tourism department, along with the Intramuros Administration, the National Parks and Development Committee, and Nayong Pilipino.

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