BOI removes ITH incentives on tourist facilities in 4 areas

MANILA, Philippines - The Board of Investments (BOI) is removing the income tax holidays (ITH) incentives for new as well as expanding tourism accommodation facilities located in Metro Manila, Cebu City, Mactan Island and Boracay Island to encourage development of such establishments in other parts of the country.

In its Regulation No. 2013-001 published last week, the BOI said new and expanding tourism accommodation projects such as hotels, resorts and bed and breakfast facilities in the four areas that would apply for registration with the agency would no longer qualify for ITH.

“Projects on accommodation establishments located in Metro Manila, Cebu City, Mactan Island and Boracay Island that intend to register with the BOI under the 2012 Investment Priorities Plan (IPP) shall henceforth be entitled to capital equipment incentives only,” it said.

The decision to remove ITH incentives for new and expanding tourism accommodation facilities in the four areas was made as the locations are considered to be developed and already have full capacity.

“In the determination of the Board, Metro Manila, Cebu City, Mactan Island and Boracay Island are already self-propelling tourism areas with a clear growth trajectory and established market,” the BOI said.

It said the new regulation would not have a retroactive effect.

The investment promotion agency added that the new regulation would take immediate effect after its publication in a newspaper.

Under the 2012 IPP which serves as the country’s investment promotions blueprint, tourism is among the activities that could qualify for incentives from the government.

The BOI’s new regulation follows the Philippine Economic Zone Authority’s (PEZA) decision to amend rules on incentives given to tourism economic zone (TEZ) developers and locator enterprises in the four areas to promote development of such establishments in other locations.

In November, the PEZA issued Resolution 12-610 which states that the investment promotion agency would no longer give the five percent gross income tax incentive to developers of TEZs in the four areas.

Under that regulation, the PEZA also said it is removing the ITH and five percent gross income tax incentives given to locator enterprises of the TEZs in the four areas.

Tourism is among the sectors being actively promoted by the government as it is seen to generate employment and support higher economic growth.

The Department of Tourism (DOT), which launched the “It’s More Fun in the Philippines” campaign, is aiming to attract 10 million foreign tourists by 2016.

As of end-February, DOT data showed foreign visitors to the country reached 854,187, up by 10.5 percent from the same period last year.