In a bid to attract more investments in the tourism sector and to enhance the tourism industry’s role as an engine of socio-economic growth, President Rodrigo R. Duterte signed into law, Republic Act No. 11262, last 10 April 2019 approving the extension of administration and grant of fiscal incentives of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) for ten (10) more years, or until 31 December 2029 following the ratification of House Bill No. 8861 and Senate Bill No. 1616 or “An Act Extending The Period For The Grant Of Incentives To Tourism Enterprise Zones And Registered Tourism Enterprises”. TIEZA is the infrastructure arm and the investment promotion agency of the Department of Tourism (DOT).
“The passage of the law is a welcome development as it will make tourism investments in the country more commercially viable and attractive. These investments will be instrumental in making tourism a key driver of socio-economic growth,” Secretary of Tourism Bernadette Romulo-Puyat emphasized.
The DOT finds the passage of RA 11262 to be fair and equitable, because although RA 9593 or the Tourism Act of 2009 authorized TIEZA to register TEZs and grant them incentives for a period of 10 years or until 2019, TIEZA was not actually able to implement the provisions of that law for more than 7 years, because the BIR under the previous administration refused to issue the revenue regulation to implement the tax incentives. The revenue regulation was only issued under the Duterte administration in December 2016, or after more than 7 years. Thus, without the extension under RA 11262, the incentive scheme would have already ceased on August 2019, and TIEZA would have been able to register TEZs and grant incentives for less than 3 years.
Through the extension of the sunset provision, the Tourism Enterprise Zone (TEZ) Operators and Registered Tourism Enterprises (RTEs) can continue to avail fiscal incentives such as the Income Tax Holiday (ITH), five percent (5%) Gross Income Taxation (GIT) Rate, and 100% exemption on all taxes and customs duties on importations of capital investment and equipment, transportation and spare parts, and goods and services necessary to carry out TIEZA-registered activities. The fiscal incentives offered by TIEZA are both critical and pivotal in the development and management of TEZs and RTEs across the country.
“Now that the sunset provision has been finally extended until 2029, TEZ Operators and Locators no longer need to worry about matters related to the availment of TIEZA’s incentives. This is also great news for TIEZA as the incentives we offer are more than necessary to continuously attract investments, generate employment, and promote inclusive growth for our country,” TIEZA Chief Operating Officer (COO) Pocholo D. Paragas said.
The extension of the availment of the fiscal incentives until 2029 is projected to generate PhP 222B in capital investments and 160,000 direct and indirect employment opportunities in the next ten (10) years.
The bills extending the grant of incentives were sponsored by Senator Richard J. Gordon in the Senate and Davao Oriental Representative Corazon Nuñez-Malanyaon in the House of Representatives, both of whom have seen major impacts of the TEZs in the economic development of the host province and in the tourism industry in general.
The extension of sunset provision is championed by the DOT Secretary Bernadette Romulo-Puyat, along with Representatives Alfred D. Vargas, Luis Raymund F. Villafuerte Jr., Estrellita B. Suansing, Ma. Theresa V. Collantes, Marvin “Yul Servo” C. Nieto, Alexandria P. Gonzales, Vini Nola A. Ortega, Mark O. Go, Ann K. Hofer, Enrico A. Pineda, Romeo M. Acop, Luisa Lloren Cuaresma, Marisol C. Panotes, Fernando V. Gonzalez, Maximo B. Rodriguez Jr., Deogracias Victor B. Savellano, Manuel F. Zubiri, Johnny T. Pimentel, Cesar V. Sarmiento, Ramon C. Nolasco, Rico B. Geron, Makmod D. Mending Jr., Peter John D. Calderon, Raul C. Tupas, and Milagros Aquino-Magsaysay as co-authors of HB 8861; and Senators Juan Edgardo “Sonny” M. Angara, Sherwin T. Gatchalian, Joseph Victor G. Ejercito, Gregorio B. Honasan II, Risa Hontiveros, Panfilo M. Lacson, Emmanuel “Manny” D. Pacquiao, Cynthia A. Villar, Juan Miguel F. Zubiri, Franklin M. Drilon, Vicente C. Sotto III, and Ralph G. Recto who co-sponsored SB 1616.
TIEZA, being at the helm of tourism infrastructure development, is committed to perform its role in ensuring that the TEZs are developed in an economically, environmentally, and socio-culturally responsible manner by combining investment incentives with strong regulations.
Formerly known as the Philippine Tourism Authority (PTA), the agency was reorganized into TIEZA upon the implementation of RA 9593 on 13 May 2009. While the DOT family celebrates the extension of the sunset provision, this will also mark TIEZA’s 10th anniversary this year.