QuestionsQuestions (BIR REVENUE MEMORANDUM ORDER NO. 36-92)
The TIEZA Resolution expressly states it adopts and amends the “TIEZA Guidelines… and the Administration of Incentives under R.A. No. 9593.” Thus, TIEZA acts within the delegated authority granted by RA 9593 to issue and administer implementing rules/guidelines for tourism enterprise zones (TEZ) and incentives.
It includes hotels, tourist inns, motels, apartelles, resorts, home stay, pension houses, and the accompanying facilities and services.
“Capital Equipment” refers to equipment directly and actually needed and exclusively used by the TEZ Operator and/or the Registered Tourism Enterprise in its registered activity.
Capital Investment refers to acquisition of capital assets or fixed assets expected to be productive in many years, while Capital Equipment refers to specific equipment directly needed and exclusively used in the registered activity.
A person or entity engaged in developing and regularly managing MICE (meetings, incentives, convention, and exhibition) centers for the purpose of exchanging or disseminating views, technical expertise, experiences, knowledge, skills, information, policies, or related activities.
Gross Income means gross sales or gross revenues from registered tourism enterprise activity/ies, net of discounts, returns, allowances, and minus costs of sales/direct costs, but before deductions for administrative, marketing, selling, and/or operating expenses or incidental losses during the taxable period under the NIRC and related revenue regulations.
Unless otherwise specified, “Goods” refers to merchandise used by a registered tourism enterprise in the normal operation of its registrable activity/ies within the TEZ.
It refers to expansion, renovation, or upgrade of physical assets amounting to at least 50% of the original investment of the Tourism Enterprise.
It is the management of all resources meeting needs of tourists and host regions while protecting opportunities for the future—fulfilling economic, social, and aesthetic needs while maintaining cultural integrity, essential ecological processes, biological diversity, and life support systems.
An entity duly incorporated under BP Blg. 68 (Corporation Code of the Philippines) and other relevant laws, unless the TEZ Operator is an LGU or other government instrumentality in pursuit of its mandates; its capital may be provided by LGUs and/or private entities, and it administers and supervises each TEZ.
It is handling a real property by developing, operating, and controlling it, with proper maintenance to achieve optimum market worth; the property is intended partly or in whole to attract tourists and provide total tourism experience.
Initially, incentives under Rule XI are granted only to Primary Tourism Enterprises, which include: (1) Travel and Tour Facilities and Services; (2) Transport Facilities and Services (for land, sea, or air exclusively for tourist use); (3) Accommodation Establishments and accompanying facilities/services; (4) Convention and Exhibition Facilities and Services; (5) Tourism Estate Management Facilities and Services; and (6) other enterprises identified by the Secretary after consultation with concerned sectors.
Incentives may be granted within ten years from the effectivity of the Act; incentives granted prior to expiration continue to be effective until fully realized.
It provides that the listed incentives may, in the discretion of the Board, be granted to TEZ Operators and Registered Tourism Enterprises within the TEZ.
It may be extended but in no case to exceed a total additional period of six (6) years. Before the expiration of the first six (6) years, the enterprise must undertake a “Substantial Expansion.”
They must undertake Substantial Expansion; the expansion/upgrade must extend asset life or increase capacity/efficiency benefitting current and future periods; and in appropriate cases there must be a significant change in category classification under the DOT accreditation system.
If an existing enterprise outside the zone opts to avail the Income Tax Holiday, it is entitled to a non-extendible income tax holiday not to exceed six (6) years from completion of the expansion/upgrade, provided it undertakes Substantial Expansion, the expansion extends asset life/increases capacity/efficiency, and in appropriate cases it has a significant DOT accreditation category change.
They may import Capital Investment and Equipment free of taxes and duties when necessary for the expansion/renovation/upgrade. The benefit is tied to the required expansion/upgrade that qualifies under the incentive rules.
In exceptionally meritorious cases, the Board may allow an enterprise to avail the income tax holiday even if expansion/upgrade is less than 50% of the Original Investment; however, the income tax holiday period must be prorated to the value of the expansion/upgrade.