Renovation of tourism enterprises gets tax perks

MANILA, Philippines — The government will grant tax incentives to various tourism enterprises for the renovation or modernization of their facilities in line with upgrading health and safety protocols, the chief of the Department of Tourism (DOT) said.

“The Board of Investments (BOI) has approved tax incentives that can be given to tourism enterprises that shall renovate, modernize and upgrade their facilities for health and safety purposes,” Tourism Secretary Bernadette Romulo-Puyat said in a forum yesterday.

Among the tax incentives include a three-year income tax holiday and duty-free importation of capital equipment.

Renovations or upgrade that can qualify for such tax incentives include renovation of guestrooms, food and beverage outlets, function/meeting rooms, recreation areas and/or other common areas; investment in new or upgrade of laundry, kitchen, housekeeping, employee facilities and other back of house facilities; building of full, partial or movable partitions; installation of built-in thermal scanners, hygiene gates, and/or booths; upgrade or improvement of ventilation, air conditioning, air filtration systems, water systems, water treatment facilities (STP); a mobile check-in system; non-touch or no contact door lock systems and non-touch control panels in elevators and other areas.

Eligible tourism enterprises include hotels and resorts, meeting, incentives, conference and exhibitions (MICE) facilities and tourist transport companies.

Puyat said DOT is pushing for tour operators to be included as enterprises eligible for the incentives.

DOT earlier said that safety and health would be the priority of the industry unde the new normal. It earlier issued safety and health guidelines for operating hotels.

Philippine Hotel Owners Association (PHOA) president Arthur Lopez, a panelist at the same forum, said the tax incentive is a big help for the upgrade of the facilities of hotels.

“The hotels will be investing in technologies, contactless, touchless,” Lopez said.

“This BOI incentive will help a lot of the hotels to save on this upgrade, “he added.

PHOA earlier recommended the setting up of a renovation fund by the government for hotels that may be for health care or government support during the crisis as among its proposals for the DOT’s tourism response and recovery plan (TRRP).

Tourism Congress of the Philippines (TCP) president Jose Clemente III earlier said the grant of tax incentives for renovation would ease the need for capital expenditures which is quite prohibitive at the moment.

“Tax incentives for renovations and upgrades will be very much appreciated by the tourism stakeholders, especially those in the accommodations sector,” Clemente said.

“It will go a long way in improving facilities to address the safety protocols as called for by the DOT and the IATF,” he said.

Tax incentives have been among the recommendations made by industry groups to help the tourism sector, among the hardest hit by the COVID-19 pandemic, recover.

Data from DOT show that international arrivals from January to May dropped 62.21 percent to 1.3 million arrivals from 3.49 million arrivals in the same period last year.

Estimated inbound tourism revenues during the period plunged 60.56 percent to P81.05 billion from P205.50 billion in the same period a year ago.

DOT earlier announced that hotels under modified general community quarantine areas are allowed to resume normal operations, but at 50 percent capacity.

It emphasized that accommodation establishments would have to secure a Certificate of Authority to Operate from the DOT to ensure that health and safety guidelines are met.

In a recent resolution, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases stressed the importance of the DOT Certificate of Authority to operate for accommodation establishments going back to business during the enhanced community quarantine (ECQ), modified enhanced community quarantine (MECQ), and general community quarantine (GCQ) periods.

“This is a welcome development for us to ensure that the safety and health of visitors will be given utmost priority and will not be compromised,” Puyat said.