Legal basis and covered framework
- The amendments operate within the TIEZA Guidelines governing designation and supervision of a Tourism Enterprise Zone (TEZ) and administration of incentives under R.A. No. 9593.
- The amendments directly revise Book I, Rule I, Sec. 2; Book II, Rule IX; Book II, Rule XI; and Book III, Rule XIII of the TIEZA Guidelines.
- The amendments incorporate incentive rules tied to specific enterprise categories, TEZ placement, and Substantial Expansion requirements.
Scope of persons and tourism enterprises
- Incentives may be granted by TIEZA to TEZ-related tourism enterprises under the amended incentive provisions.
- The incentives framework distinguishes Primary Tourism Enterprises and limits “initial” incentive access to specified tourism facility and service categories.
- The amendments govern how enterprises within the TEZ and outside the TEZ may elect to avail of incentives under the governing guidelines and R.A. No. 9593.
Definitions added and revised
- Accommodation Establishments include 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 the acquisition of capital assets or fixed assets expected to be productive in many years.
- Convention and Exhibition Facilities and Services refers to a person or entity engaged in developing MICE centers and regularly managing and gathering for purposes of exchanging or disseminating views, technical expertise, experiences, knowledge, skills, information, policies, or other related activity.
- Gross Income means gross sales or gross revenues from registered tourism enterprise activities, net of sales discounts, sales return and allowances, and minus costs of sales or direct costs, but before deductions for administrative, marketing, selling and/or operating expenses or incidental losses during a given taxable period under the NIRC and other pertinent revenue regulations.
- Goods means merchandise used by a registered tourism enterprise in the normal operation of its registrable activity/ies.
- Registered Enterprise (or Registered Tourism Enterprise) refers to a facility, service, or attraction primarily engaged in tourism for attracting visitors to and within the Philippines and duly registered with TIEZA.
- Substantial Expansion refers to expansion, renovation, or upgrade of physical assets amounting to at least 50% of the original investment of the tourism enterprise.
- Sustainable Tourism Development means management of all resources meeting the needs of tourists and host regions while protecting future opportunities so that economic, social, and aesthetic needs are fulfilled while maintaining cultural integrity, essential ecological processes, biological diversity, and life support systems.
- TEZ Operator refers to an entity duly incorporated under Batas Pambansa Bilang 68 (Corporation Code of the Philippines) and other relevant laws, unless the TEZ Operator is a local government unit or other government instrumentality pursuing mandates; it administers and supervises each TEZ, and its capital may be provided by LGUs and/or private entities.
- Tourism Estate Management Facilities and Services refers to handling a real property by developing, operating, and controlling it and properly maintaining it to achieve optimum market worth, intended partly or in whole to attract tourists and host a total tourism experience.
- Transport Facilities and Services refers to a single proprietorship, partnership, or corporation regularly providing for a fee or lawful consideration tourist transport services through land based carriers, watercraft, or air conveyances.
- Travel and Tour Facilities and Services refers to entities regularly engaged in extending to individuals or groups services involving arrangements and bookings for transportation and/or accommodation, and handling and/or conduct of tours.
- Primary Tourism Enterprises are defined for incentive purposes as:
- Travel and Tour Facilities and Services and Transport Facilities and Services (for land, sea, or air transportation) exclusively for tourist use;
- Accommodation Establishments and accompanying facilities and services;
- Convention and Exhibition Facilities and Services;
- Tourism Estate Management Facilities and Services; and
- such other enterprises as may be identified by the Secretary, after due consultation with concerned sectors.
Incentives within TEZ: eligibility and limits
- Incentives granted by TIEZA are governed by the timing rule: incentives may be granted within ten years from the effectivity of the Act.
- Incentives already granted prior to expiration of the ten-year period continue to be effective until fully realized.
- Incentives may be granted by the Board, in its discretion, to TEZ Operators and Registered Tourism Enterprises within the TEZ.
- The initial incentives under the guidelines are granted only to Primary Tourism Enterprises, as defined through the specified categories and the Secretary’s identification (after due consultation).
Income tax holiday extension and Brownfield conditions
- The income tax holiday incentive may be extended, but the extension is capped so that the total additional period cannot exceed six (6) years.
- Before the expiration of the first six (6) years, the registered enterprise must undertake a Substantial Expansion.
- Existing enterprises in Brownfield Zones may avail of a non-extendible income tax holiday subject to the following conditions:
- The enterprise undertakes a Substantial Expansion.
- The expansion or upgrade results in extension of the life of assets or an increase in capacity or efficiency that benefits current and future periods.
- In appropriate cases, there is a significant change in category classification under the Department of Tourism’s accreditation system.
Incentives for enterprises outside TEZ
- When an enterprise outside the TEZ elects to avail of incentives, it must do so in writing and file its application for registration.
- Existing enterprises outside the zone that opt to avail the Income Tax Holiday are entitled to a non-extendible Income Tax Holiday incentive not to exceed six (6) years from the time of completion of the expansion or upgrade.
- The non-extendible income tax holiday for an existing enterprise outside the zone is subject to conditions:
- The enterprise undertakes a Substantial Expansion.
- The expansion or upgrade extends asset life or increases capacity or efficiency benefiting current and future periods.
- In appropriate cases, there is a significant change in category classification under the Department of Tourism’s accreditation system.
- Enterprises outside the TEZ may import Capital Investment and Equipment free of taxes and duties when necessary for the expansion, renovation, or upgrade.
- The Board may, in exceptionally meritorious cases, allow an enterprise undertaking an expansion or upgrade of facilities for less than fifty percent (50%) of the Original Investment to avail of the income tax holiday incentive, with the period of availment prorated to the value of the expansion or upgrade.
Administrative implementation and adoption
- The resolution authorizes the publication of the Amended TIEZA Guidelines in the Official Gazette and in a newspaper of general circulation.
- The resolution authorizes necessary filing with the Office of National Administrative Register.
- The amendments are adopted through referendum at Makati City on December 15, 2014.
- The publication and filing authorization is executed to ensure the amended guidelines are properly published and registered for administrative operation.