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The government has passed the following laws aimed at encouraging more investments:
LAWS INCENTIVES
Omnibus Investments Code (Executive Incentives granted by the BOI include:
Order No. 226) TAX EXEMPTIONS
- Integrates the basic laws on investments, 1. Income tax holiday
clarifying and harmonizing their provisions 2. Duty free-importation of capital
to encourage and guide domestic and equipment, spare parts and accessories,
foreign investors. It was passed through EO subject to conditions.
226, which took effect on 13 August 1987. 3. Exemption from wharfage dues and
export tax, duty, impost, and fees.
4. Tax and duty-free importation of
breeding stocks and genetic materials
TAX CREDITS
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forming part thereof.
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and which form part of the registered export
product; and
b. For purchases of goods, services, or
properties of firms exporting one hundred
percent (100%) of their product. (Motor
vehicles are not covered, except specialized
vehicles such as backhoe, forklift, etc.)
Non-fiscal Incentives
Bases Conversion and Development The fiscal and non-fiscal incentives granted
Act of 1992 (RA 7227) under either BCDA, SBMA, or CDC
are basically the same, as follows:
Fiscal Incentives
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cost of services.)
Non-fiscal Incentives
The Special Economic Zone Act of PEZA-registered enterprises located within the
1995, (R.A 7916) ecozones administered by PEZA may avail of
- RA 7916 was enacted on 24 February 1995 the following incentives and benefits:
to encourage and promote the All incentives under EO 226 which include
establishment and development of ITH;
economic zones or ecozones in identified Preferential final tax of five percent (5%) of
and selected areas in the country as a gross income in lieu of all
means to achieve sound and balanced national and local taxes, after the ITH period
industrial, economic, and social (alternatively, this incentive
development. may be waived by the registered enterprise
- It also created the Philippine Economic subject to certain conditions);
Zone Authority (PEZA) as the agency Tax and duty-free importation of capital
mandated to enforce the provisions and equipment, spare parts, raw
objectives of the law. materials, and supplies, which are needed in
the registered activity; and
Tax credits for exporters using local materials
as inputs under RA 7844 or the Export
Development Act of 1994.
The Tourism Act of 2009 Registered TEZ operators and enterprises are
(RA 9593) entitled to the following fiscal and non-fiscal
- The law created the Tourism Infrastructure incentives.
and Enterprises Zone Authority (TIEZA) 1. Income Tax Holiday (ITH)
which is tasked to designate, regulate, and New enterprises in Greenfield and
supervise the TEZs, and exercises sole and Brownfield Tourism Zones shall be entitled to
exclusive jurisdiction in the grant and six (6) years ITH from start of business
administration of incentives provided under operations, which may be extended up to a
the Act. The TIEZA is an attached agency maximum of six (6) years if the enterprise
to the Department of Tourism and is under undertakes substantial expansion or upgrade
its supervision in terms of policy and prior to the expiration of its first six (6) years
programs. ITH.
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An existing enterprise in a Brownfield Zone
may avail of a maximum of six (6) years non-
extendible ITH if it undertakes extensive
expansion or upgrade of facilities.
Net operating losses for any taxable year
TYPES OF ENTERPRISES/ACTIVITIES immediately preceding the current taxable year
THAT ARE ELIGIBLE FOR which had not been previously offset as
INCENTIVES UNDER RA 9593 deduction from gross income, may be carried
1. Primary Tourism Enterprises, which refer to over as deduction from gross income for the
facilities and services that are next six (6) consecutive years immediately
directly related to tourism such as, but not following the year of the loss.
limited to the following:
travel and tour services; 2. Gross Income Taxation
inbound travel agencies and tour operators, Final tax of five percent (5%) on gross income
local tour operators, ecotour operators, and tour earned in lieu of all othernational and local
guides; taxes, license fees, imposts and assessments,
tourist transport services whether for land, except realestate taxes, and such fees as may
sea, and air transport be imposed by TIEZA, after the ITH.
exclusively or majority of its seats are for
tourist use, including airport 3. Exemption of one hundred percent (100%)
taxis and tourist drivers; from all taxes and customs duties on
accommodation establishments such as but importation of capital investment and
not limited to hotels, equipment that will be used directly, actually,
resorts, apartment hotels, tourist inns, motels, and exclusively by the enterprise in its
pension houses, private homes used for registered activity.
homestay, ecolodges, condotels, serviced
apartments, and bed and breakfast facilities; 4. Exemption from customs duties and national
hotel and tourism estate management taxes on importation of transportation
services; equipment and accompanying spare parts that
meetings, incentives, conventions and are reasonably needed and will be exclusively
exhibition organizers and used by the accredited enterprise, provided
facilities; they are not manufactured locally in sufficient
sports and recreational facilities such as but quantity, of comparable quality, and at
not limited to dive shops, reasonable prices.
amusement parks, and adventure and
ecotourism facilities; and 5. Goods and Services
foreign exchange dealers and such enterprises Exemption of one hundred percent (100%)
as may be identified by the Secretary, after due from all taxes and customs duties on
consultation with concerned sectors. importation of goods actually consumed in the
2. Secondary Tourism Enterprises, which course of services actually rendered by or
refer to facilities and services that may be through the registered enterprise, excluding
related to tourism such as, but not limited to goods imported for the purpose of operating a
the following: wholesale or retail establishment in
restaurants; competition with the Duty Free Philippines
specialty shops and department stores; Corporation.
sports facilities and recreational centers such Tax credit equivalent to all national internal
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as museums and galleries, revenue taxes paid on all locally sourced goods
theme parks, zoos; and services directly or indirectly used by the
health and wellness facilities such as but not registered enterprise within the TEZ.
limited to spas, tertiary
hospitals, ambulatory clinics, and medical 6. Social Responsibility Incentive
concierge; Tax deduction equivalent to a reasonable
rest areas in gas stations; percentage, not exceeding fifty percent (50%),
agri-tourism farms and facilities; of the cost of environmental protection or
tourism training centers or institutes, cultural heritage preservation activities,
including tourism trainers; sustainable livelihood programs for local
outbound travel agencies; and communities and other similar services.
other enterprises as may be identified by the
Secretary after due 7. Employment of foreign nationals in
consultation with concerned sectors. executive, supervisory, technical, and advisory
positions for reasonable periods and under
such terms as approved by TIEZA.
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10. Requisition of Investment
Protection from requisition of the property of
the registered enterprise
except in cases of war or national emergency,
subject to payment of just compensation and
repatriation of such compensation.
Export Development Act of 1994 The following are the incentives granted to
(RA 7844) exporters under the EDA:
The Export Development Act (EDA) or RA 1. Exemption from Presidential Decree 1853
7844 was issued to promote and develop the (requiring 100% deposit of duties due on
Philippine export industry as a means to importation upon opening of Letter of Credit),
achieve the countrys economic goals of provided that the importation shall be used for
sustainable agri-industrial development, the production of goods and services for
increased employment, and enhanced incomes. export; and
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added of 10% and below.)
In addition, exporters registered with the BOI,
PEZA, SBMA, CDC, or other
investment promotion agencies may also avail
of the incentives granted by such agencies.
Foreign Investments Act of 1991 (Republic - Foreign nationals are now allowed to invest
Act 7042 as Amended by Republic Act No. up to 100% equity participation in new or
8179 ) existing economic activities including
restaurant operations that are incidental to
the hotel business.
- Foreign equity participation of up to 40% is
allowed in the operation and management
of utilities (i.e. land, air, and water
transport).
Build-Operate-Transfer (BOT) Law The BOT Law authorizes the financing,
(Republic Act 6957 as Amended by construction, operation and maintenance of
Republic Act No. 7718) infrastructure projects by the private sector. It
allows national implementing agencies and
local government units to enter into BOT
arrangement as a means of encouraging the
participation of foreign and local companies in
the country's infrastructure development
program. Tourism estates including related
infrastructure facilities and utilities are among
the priority projects eligible for BOT
implementation. Backed up by a wide range of
credit enhancements and investment
incentives, the BOT Law opened to the private
sector a new window of investment
opportunity. Salient points of the amended
BOT Law include the following:
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4. Institutionalizes government support for
BOT projects; and
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