BIR sets guidelines on perks for TIEZA locators

MANILA, Philippines - The Bureau of Internal Revenue has finally issued the guidelines on the grant of fiscal incentives to businesses and operators inside tourism enterprise zones (TEZs).

The memorandum order containing the guidelines was signed on Nov. 15 and published on national newspapers on Nov.21.  The rules will take effect on Dec. 6,

With the release of the rules, the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) expects to receive more applications from corporations, local government units and other interested parties.

“The government recognizes the advantage of TEZs in tourism development. It sees the TEZ’s role and capacity to generate jobs and economic activities especially in the provinces,” the TIEZA said.

TIEZA said the move to grant incentives would enable a better and competitive environment among industry players and allow them to offer lower rates for their products and services, thus enticing more tourists to come to the country.

Under RA 9593 or the Tourism Act, TIEZA has the sole jurisdiction in the establishment of TEZs, as well as the issuance of all permits and licenses to registered tourism enterprises.

The TIEZA has already designated five flagship TEZs and six ordinary TEZs while waiting for the revenue regulation.

Investors and enterprises within TEZs can apply for incentives under the new regulation. They can choose among a six-year tax holiday, or a five percent preferential tax on gross income in lieu of national taxes (except for real property tax and fees of TIEZA) or a net operating loss carry over (NOLCO) scheme.

They can also be granted import tax exemptions for capital goods and equipment, and for transport equipment and spare parts for TIEZA-registered activities, among others.

TIEZA may also decide to provide incentives to businesses and establishments outside of TEZs.      

To avail of the incentives, a TEZ operator or the registered tourism enterprise should abide by the provisions of RA 9593 and its implementing rules and regulations, comply with the directives of TIEZA and allow TIEZA representatives to examine its book and other pertinent records.

Incentives may be withheld should TEZ operators fail to comply with the terms and conditions.

TIEZA may also cancel or suspend the grant of incentives for violation of the Tourism Act, material representation or false statements made to TIEZA and whenever the project ceases to be viable.

The rules also provide that TIEZA-accredited locators that violate the terms of their registration will have to pay back taxes computed up to three years directly preceding the date of promulgation of the ruling on their violation.

Non-fiscal incentives – not covered by the revenue regulation – can also be given to the registered enterprises, including the employment of foreign nationals, importation of professional instruments and household effect, special investor’s resident visa, foreign currency transaction, requisition of investment, and lease or ownership of land.