Let me digress a little from my usual focus on Philippine law and justice.
The Philippines is trying its best to develop and promote the culture of tourism among its people.
Recently, it adopted the new Tourism Act of 2009 (R.A. No. 9693) to entice foreign investors to do business in its expanding tourism sector.
It is our way of meeting head-on the crippling global economic crisis.
In addition to the fact that the Philippines is the showcase of American-type democracy in Asia and is the first republic in Asia (circa 1898), more importantly, it is a beautiful archipelago of more than 7,000 amazing tropical islands with magnetic, virgin and refreshing beaches, rivers, lakes, caves, forests, and mountains.
Were it not for its corrupt political leaders, torture-happy police and military officers, violent bank robbers and kidnappers in notorious cities and poverty-stricken towns, archaic and fraud-prone election systems and procedures these past decades, and its very tragic experiences under the arrogant, abusive and exploitative imperialism of Spain, America and Japan (1521 to 1945), the Philippines could have maintained (or even exceeded) its nostalgic rank as the second most economically developed country in Asia, next only to Japan (circa 1960s).
Considering the talents, skills, success-orientation, socio-psychological flexibility, and free spirit of the Filipinos, I dare say the Philippines could have easily surpassed Hongkong, Singapore, Taiwan and Korea in the 1960s to the 1970s were it not for the abovecited pathetic factors.
At any rate, sour-graping aside, I have summarized the salient parts of the newly adopted R.A. No. 9593, Tourism Act of 2009, for the benefit of lawyers and legal researchers visiting this blog for updates on current Philippine conditions.
Salient Parts of R.A. No. 9593, The Tourism Act of 2009:
1. The law strengthens the Department of Tourism (DOT) and the Duty Free Philippines Corp. (DFPC). It creates the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) and the Tourism Promotion Board (TPB) in order to promote the “culture of tourism” among Filipinos.
2. A Tourism Enterprise Zone (TEZ) and its operator must be registered with the TIEZA.
3. A registered Tourism Enterprise (TE) located within a registered TEZ is given various fiscal and non-fiscal incentives by the said law, the same to be implemented by the TIEZA, to wit:
3.1. Income tax Holiday for 6 years for new TEs, extendible for a maximum period of 6 years if the investor would undertake substantial expansion or upgrade of its facilities.
3.2. Net Operating Losses may be carried over as deduction from gross income for 6 years following the year of the loss.
3.3. Gross Income Tax of 5% (upon expiration of the income tax holiday period), in lieu of all other national and local taxes, license fees, imposts and assessments (except real estate taxes imposed by local government units [LGU] and TIEZA regulatory fees).
3.4. Importation Capital Investment and Equipment is exempted from “all taxes and customs duties.”
3.5. Importation of Transportation and Spare Parts is exempted from “customs duties and national taxes”, provided they are not locally manufactured at fair prices.
3.6. Importation of Goods by TEs within a TEZ is exempted from “all taxes and customs duties”. (TEs are prohibited from engaging in wholesale or retail business in competition with the DFPC).
3.7. Local Purchase of Goods and Services is entitled to Tax Credit equivalent to “all national internal revenue taxes paid”.
3.8. Social Responsibility Incentive in the form of a maximum tax deduction of 50% of the cost of environmental protection or cultural heritage preservation activities, sustainable livelihood programs for local communities and other similar activities.
3.9. Employment of Foreign Nationals is allowed in “executive, supervisory, technical or advisory positions” for such periods as may be allowed by the TIEZA.
3.10. Special Investor’s Resident Visa is given by the TIEZA to a foreign investor with an investment of at least US $200,000.00 in a registered TE.
3.11. Working Visas are given by the TIEZA to foreign personnel with highly technical skills. They are renewable every 2 years. The alien must first secure from the Department of Labor and Employment (DOLE) an Alien Employment Certificate (AEC).
3.12. Incentives in relation to Foreign Currency Transactions are subject to R.A. No. 7653 (Central Bank Act). The incentives are as follows:
3.12.1. Repatriation of Investments. The full amount of the foreign investment may be repatriated upon its liquidation in the currency in which it was originally made and at the exchange rate at the time of the repatriation.
3.12.2. Remittance of Foreign Exchange. The earnings from a foreign investment may be repatriated in the currency in which it was originally made and at the exchange rate at the time of the repatriation.
3.12.3. Foreign Loans and Contracts. Payments of interest and principal on foreign loans and obligations arising from technological assistance contracts may be remitted at the exchange rate at the time of remittance.
3.12.4. Requisition of Investment. A property of a TE may be requisitioned (expropriated) only in times of war or national emergency and with just compensation. The compensation shall be repatriated in full.
3.12.5. Lease and Ownership of Land. (See R.A. No. 7652, Investors Lease Act). Lands and buildings in a TEZ may be leased to foreign investors for 50 years, renewable for not more than 25 years. The leasehold right may be sold or assigned.
4. Incentives for TEs outside a TEZ are those given under the (a) Omnibus Investments Code of 1987 (E.O. No. 226, 1987), (b) Foreign Investments Act (R.A. No. 7042, as amended by R.A. No. 8179), and (c) Special Economic Zone Act, and Bases Conversion and Development Act;
5. Civil disputes within a TEZ must undergo mandatory mediation under the TIEZA before being filed in civil courts.
6. Labor disputes within a TEZ shall undergo mandatory mediation under the TIEZA in coordination with the Department of Labor and Employment (DOLE).
7. The DOT Secretary, in consultation with other concerned government and private agencies, shall issue the detailed Implementing Rules and Regulations (IRR) of the law within 90 days from the approval of the law. (We should read the IRR upon publication thereof).
8. Other incentives given by other agencies (e.g., Bases Conversion and Development Act of 1992 [R.A. No. 7227]; Special Economic Zone Act of 1995 [R.A. No. 7916]) will continue to apply, unless there is a duplication, in which case the investor must choose only one scheme.
9. The Local Government Units (LGUs) are encouraged to provide local incentives to TEs, e.g. reductions in local real estate tax and other local fees and charges.
Prepared by:
Atty. Manuel J. Laserna Jr.
http://attylaserna.blogspot.com
http://lcmlaw.multiply.com
