3 TOURISM ECOZONES AWAIT NOD
With the Tax Reform for Attracting Better and HighQuality Opportunities (Trabaho) bill getting approval from the House of Representatives, the Tourism Infrastructure and Enterprise Zone Authority hopes its non-fiscal incentives are enough to lure investor
The Tourism Infrastructure and Enterprise Zone Authority (Tieza) is drumming up marketing efforts to lure more investors to apply or register their projects with the agency, amid the government’s proposal to rationalize incentives.
The House of Representatives approved on third and final reading on Monday the Tax Reform for Attracting Better and High-Quality Opportunities (Trabaho) bill, the second package of the government’s Comprehensive Tax Reform Program.
Its priority measure seeks to encourage investments by bringing down the corporate income tax rate from 30 percent to 20 percent and to modernize investment tax incentives to enhance fairness, improve competitiveness, plug tax leakages and attain fiscal sustainability.
While this measure will have a huge impact among investment promotion agencies like Tieza and affect investors’ appetite to build businesses, Maldonado is still confident more investors will pour in money into the tourism industry, which had a 12.2 percent contribution to the country’s gross domestic product last year.
“They may initially be turned off, but we have a tourism industry which is fast growing,” said Donald Maldonado, evaluation and regis- tration division manager for (TEZ tourism economic zones).
Maldonado vowed that Tieza will offer “red-carpet” assistance to investors and “hand-hold” them in securing all documents, permits and licenses to offset the loss of some incentives.
“The aim of the bill is not to remove incentives but to rationalize them...What we now commit is to boost our non-fiscal incentives,” said Maldonado, adding that incentives are in place to entice investors to put up long-overdue infrastructure.
To date, Tieza has designated and registered 14 TEZ and tourism enterprises across the country.
Three big-ticket projects in Cebu, all located in Mactan, have applied to become tourism economic zones TEZ this year.
These projects are the Amisa Private Residences, The Emerald Resort Hotel and Casino of the Udenna Development Corp., and an unnamed mixed-use development, all in Barangay Punta Engaño, Lapu-Lapu City.
The agency has received 10 applications for TEZ development this year. These projects are under evaluation.
A TEZ is a tract of land of at least five hectares with defined boundaries and master-planned to be developed into an integrated tourism complex.
The zone must have prescribed carrying capacities to host tourism enterprise facilities and services within the property with at least $5 million in investment.
The 70-hectare Queen’s Castle Golf and Resort in Medellin is the only approved private TEZ in Cebu, so far. The agency is waiting for JPark Island Resort and Waterpark to transfer its accreditation from an economic zone into a TEZ.
Under the current setup, TEZs get to enjoy both fiscal and non-fiscal incentives.
For fiscal incentives, investors would benefit from a six-year income tax holiday that may be extended for another six years, net operating loss carry over scheme for six years, five percent preferential tax on gross income instead if paying national taxes except for property tax and Tieza fees.
They will also enjoy a tax and duty-free importation of capital investment and equipment, trans- portation equipment and spare parts, and of goods and services.
Other fiscal incentives also include tax credit equivalent to taxes paid on locally sourced goods and social responsibility incentives through tax deduction of up to 50 percent.
For the non-fiscal incentives, investors would be allowed to hire foreign nationals provided they do not exceed five percent of the total workforce.
A special investor’s resident visa will also be granted if at least $200,000 is invested in a TEZ or tourism enterprise. Leasing of land to foreign investors will be also granted for 50 years but is extendable for another 25 years.