By Charmaine A. Tadalan, January 24 2019; Business World
Image Credit to Philippine Star
THE House of Representatives approved on second reading a bill extending the effectivity of incentives granted to tourism enterprise zones (TEZ) for another seven years.
The chamber, via voice vote, approved House Bill No. 8861, which will amend Republic Act No. 9593, or the “Tourism Act of 2009.”
It proposed to allow the effectivity of the incentive schemes until Dec. 31, 2026, which the Tourism Act provided only to be in effect for a period of 10 years since its effectivity in 2009.
“This is to rectify the seven years of non-implementation of the said incentive scheme due to the non-issuance by the Bureau of Internal Revenue of the necessary revenue regulations,” as stated in the Committee Report.
The Tourism Act, through incentives granted by the Tourism Infrastructure and Enterprise Zone Authority (TIEZA), encouraged investment in sustainable tourism developments.
The law provided a 6-year income tax holiday; a gross income earned tax rate of 5%, in lieu of all national and local taxes, and 100% exemption on all taxes and customs duties on the importation of capital equipment, among others.
In House Bill No. 8083, or the Tax Reform for Attracting Better and High-quality Opportunities (TRABAHO) Bill, the chamber proposed to gradually reduce the corporate income tax (CIT) to 20% from 30% and streamline incentives across all industries.
The proposed tax measure will limit the ITH to three years, but will allow TEZs to avail of other incentives, such as reduced CIT of 18%, which may be enjoyed for two years. It will also remove the GIE and grant 5 years of exemption on customs duty. — Charmaine A. Tadalan