TOURISM RELATED INVESTMENT LAWS • The Tourism Act of 2009 (Republic Act No. 9593) • Special Economic Zone Act (Republic Act No. 7916) • The Omnibus Investment Code of 1987 (Executive Order No. 226) • Act Granting of Special Investors Resident Visa (SIRV) (Executive Order No. 63) • The Foreign Investments Act of 1991 (Republic Act No. 7042) • Investors’ Lease Act (Republic Act No. 7652)
TOURISM ENTERPRISE ZONES THE TOURISM ACT OF 2009 (R.A. 9593) Designation, operation and administration of incentives to the establishment of tourism enterprise zones (TEZ) CRITERIA Defined into one contiguous territory; Must have historical and cultural significance, environmental beauty, or existing or potential integrated leisure facilities within its bounds or within reasonable distances from it; Strategic access through transportation infrastructure, utilities, infrastructure system
TOURISM ENTERPRISE ZONES At least five (5) hectares and sufficient in size. It is in a strategic location such as to stimulate the sustainable socio-economic development of neighboring communities. The area must be situated where controls can easily be established to curtail illegal activities.
TOURISM ENTERPRISE ZONES THE TOURISM ACT OF 2009 (R.A. 9593) Incentives Available to Tourism Enterprises outside of designated TEZs CRITERIA Registered Tourism Enterprise undertakes a substantial expansion/upgrade of facilities Cost of expansion/upgrade of physical assets amounts to at least 50% of the original investment There is a significant change in its category classification under the DOT’s accreditation system
TOURISM ENTERPRISE ZONES Incentives to TEZs and tourism enterprises within the zone Income Tax Holiday (6 years, extendible for another 6 years) Net Loss Carry Over (Deduction from gross income for 6 years) Gross Income Taxation (5% GIT Rate) Importation of Capital Investment and Equipment Importation of Transportation Equipment and Spare Parts Importation of Goods and Services
TOURISM ENTERPRISE ZONES Tax credit Social Responsibility Incentive Employment of Foreign Nationals Special Investor’s Resident Visa Foreign Currency Transactions Requisition of Investment Lease and Ownership of Land
TOURISM ENTERPRISE ZONES Incentives to Tourism Enterprise located outside of TEZ Income Tax Holiday (6 years, non-extendible) Importation of capital equipment free of taxes and duties
TOURISM ENTERPRISE ZONES Classification of TEZs Cultural Heritage Tourism Zone Health & Wellness Tourism Zone Eco-tourism Zone General Leisure Tourism Zone Mixed Use Tourism Zone
Ciudad De Victoria, Bulacan DESIGNATED TEZs. Newport City, Paranaque
TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) • MOA between DOT and PEZA • Signed October 7, 2002 • Guidelines for Registration of TEZs • Effective November 12, 2002
TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) Registrable Activities • Tourism Ecozone Developers/Operators • Tourism Ecozone Locators • Sports and Recreational Centers • Accommodation • Convention & Cultural Facilities • Theme Parks • Special Interest Attraction/Activities/Establishments
TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) Registrable Activities • Enterprises establishing and operating airports, seaports/marinas
TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) Incentives to Tourism Ecozone Developers • Exemption from national and local taxes, in lieu thereof, 5% Gross Income Rate
TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) Incentives to Tourism Ecozone Locators • Tax and duty free importation of Capital Equipment • Income Tax Holiday • Employment of foreign nationals • Exemption from national and local taxes, in lieu thereof, 5% Gross Income Tax Rate • SIRV under E.O. 63
DECLARED ECOZONES UNDER PEZA Boracay Eco-Cultural Village Resort Camarines Sur Tourism Park Ilawod Estates Cabatuan Iloilo Paseo Del Rio De Cagayan Cagayan De Oro City
DECLARED ECOZONES UNDER PEZA Pangulasian Island Green Tourism Economic Zone Embarcadero de Legazpi Legazpi City Manila Bay Resorts BagongNayong Pilipino Entertainment City
INVESTMENT PRIORITIES PLAN OMNIBUS INVESTMENTS CODE OF 1987 under (EO 226) Accommodation Facilities (P/NP) (Hotels, Resorts, Condotels ,Tourist Inns, Apartels/Serviced Apartments, Pension Houses, Motels,Private Homes for Homestay, Ecolodges, Bed & Breakfast facilities) Convention and exhibition facilities (MICE) Adventure and Eco-tourism facilities Sport facilities and recreational centers Agri-tourism farms and facilities Theme parks/Amusement Parks Tourist Transport Services Development of Retirement Villages Health/Medical Tourism Facilities (Spas, tertiary hospitals, ambulatory clinics) Tourism Training Centers/Institutes Restoration/preservation and operation of historical shrines, landmarks and structures
INVESTMENT PRIORITIES PLAN OMNIBUS INVESTMENTS CODE OF 1987 (EO 226) PIONEER STATUS CRITERIA • Hotel projects/apartment hotels/serviced apartments/condotels classified as First Class or Deluxe costing at least US $100,000 / room • Resort projects classified as Class “AAA” with project cost of at least US $ 10 million per project • Projects located in LDAs • Modernization of hotels classified as First Class or De Luxe with a project cost of at least US$ 10,000/room • Amusement parks/theme parks with a minimum project cost of US$ 10 million involving the development sites or attractions considered as novel in the Philippines • Adventure and ecotourism facilities/agri-tourism farms and facilities with a project cost of at least the Philippine Peso equivalent of USD 5 million.
INVESTMENT PRIORITIES PLAN OMNIBUS INVESTMENTS CODE OF 1987 (EO 226) INCENTIVES TO TOURISM PRIORITY PROJECTS • Income Tax Holiday • Importation of Capital Equipment (pursuant to E.O. 70) • Employment of foreign nationals
INVESTMENT PRIORITIES PLAN INCOME TAX HOLIDAY UNDER EO 226 • New Projects (Pioneer) - 6 years • New Projects (Non-Pioneer) - 4 years • Expansion Projects - 3 years • Projects in Less Developed - 6 years Areas (regardless of status) • Modernization Projects - 3 years
INVESTMENT PRIORITIES PLAN IMPORTATION OF CAPITAL EQUIPMENT (pursuant to E.O. No. 70) • 0% duty on equipment granted to enterprises registered with BOI • Can be availed for five (5) years or until May 2017.
INCENTIVES UNDER E.O. # 63 • Special Investor’s Resident Visa (SIRV) to investor, wife and unmarried minor children • Remittance of Earnings • Repatriation of Capital • Right of succession
QUALIFICATIONS: • He has not been convicted of a crime involving moral turpitude • He is not afflicted with AIDS or any loathsome, dangerous or contagious disease • He has not been institutionalized for any mental disorder or disability • He is willing and able to invest at least US $50,000 in a tourism related project
TOURISM RELATED INVESTMENT LAWS FOREIGN INVESTMENTS ACT OF 1991 (RA 7042 AS AMENDED BY RA 8179) Domestic market is open to foreign investors as long as the activity is not restricted in the Foreign Investment Negative List (FINL) Ownership of private lands (up to 40% foreign equity) Tourist Transport Operation (up to 40% foreign equity) Tourism Capability Building Seminar
OWNERSHIP OF PRIVATE LANDS General Rule Nationality Requirement under the Philippine Constitution up to 40% foreign equity TOURISM RELATED INVESTMENT LAWS
LEASING OF PRIVATE LANDS General Rule per PD 471 25 years - original 25 years - renewable Exception per RA 7652 or Investor’s Lease Act Minimum investment of US $5 million for tourism projects 50 years - original 25 years - renewable TOURISM RELATED INVESTMENT LAWS
SUMMARY At present, the Philippine tourism industry is very dynamic and fast growing .... more and more investments are needed to sustain its growth... Focus on the National Tourism Development Clusters for tourism investments Invest in Philippine tourism. When? NOW.