WHEREAS, there is need to encourage and hasten the
establishment of hotel and other tourist oriented facilities necessary
to meet the requirements of the tourist traffic;
WHEREAS, there is need to align incentives and requirements
of Tourism Projects in line with the specific needs of the tourism
industry; and
WHEREAS, it is realized that foreign investment and
financing is required to meet the financial requirements of the said
industry;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the
Philippines, by virtue of the powers in me vested by the Constitution,
do hereby decree and order as follows:
SECTION 1. Title. — This Decree shall be known cited
as the "Tourism Incentives Program of 1974”
SEC. 2. Declaration of Policy. — It is the policy of
the State to encourage and promote tourism in the Philippines,
particularly, in providing services to foreign tourist and travellers,
in order to increase foreign exchange earnings and to hasten the
economic development of the nation.
SEC. 3. Definition of Terms. — For purposes of this
Decree:
- "Philippine Tourism Authority" or simply “Authority” shall mean
the Philippines Tourism Authority; as defined in its charter,
Presidential Decree 189.
- "Registered Tourism Enterprise” shall mean a person,
corporation, partnership, or other entity organized and existing under
the Philippine Constitution registered with the Authority in accordance
with this Decree and engaged in or proposing to engage in rendering
services to foreign tourists and travellers covered by the Tourism
Priorities Plan, and subject to the guidelines prepared by the
Department of Tourism.
SECTION 4. Tourism Priorities Plan. — Not later than
the end of January of every year the Department of Tourism shall submit
to the President through the National Economic and Development
Authority a Tourism Priorities Plan setting forth the tourism activities
to be encouraged and given priority and the tourism facilities required
to supply the needs of foreign tourists and travellers. Incentives
shall be made available to these projects.
SEC. 5. Incentives for Investors. — In addition
to the incentives provided under this Decree, investors in registered
tourism enterprises or projects shall enjoy the basic rights and
guarantees set forth in Section 4 of Republic Act No. 5186, otherwise
known as the Investment Incentives Act.
SEC. 6. Conditions for Availment of Tourism
Incentives. —
- No registered tourism enterprise shall be entitled to any
incentive under this Decree until its registration shall have been
approved by the Authority, which approval shall retroact to the date of
filing of the application for registration.
- To be entitled to registration, an applicant must satisfy the
Authority—
- that in case the applicant is a natural person, that he is a
citizen of the Philippines; and in case the applicant is a partnership
or other association, that it is organized under Philippine laws and
that at least 60% of its capital is owned and controlled by citizens of
the Philippines; or in case of a corporation or a cooperative, that it
is organized under Philippine laws and that 60% of the capital stock
outstanding and entitled to vote is owned and held by Philippine
nationals as defined in Section 3 (f) of Republic Act No. 5186, and at
least 60% of the members of the Board of Directors are citizens of the
Philippines;
- that applicant before engaging in any of the activities
reserved by the Constitution or statutes to Filipino citizens or
corporations owned and controlled by Filipino citizens applicants shall
first comply with the requirements of the Constitution or statutes; and
- that if the applicant will engage in an activity
other than that for which it is registered, it undertakes to install
an adequate accounting system to segregate the investments,
revenues, sales, receipts, purchases, payrolls, costs, expenses and
profits and losses of the registered operations.
- In the case of registered tourism enterprises located in
or whose sphere of activity is in Greater Manila, an average of seventy
percent (70%) of its revenues must be in foreign currency, never
falling below fifty percent (50%) in any given year within the period
for which the incentives are granted and in the case of registered
tourism enterprises located outside Greater Manila, or whose
sphere of activity is outside the same, an average of fifty percent
(50% ) of revenues shall be in foreign currency, never falling
below thirty-five percent (35%) in any given year within the period
for which incentives are granted.
- Upon receipt of the application for registration, the
Authority shall, within thirty (30) days, notify the applicant of all
pertinent requirements not complied with and it shall act on said
application within sixty (60) days after submission thereof.
SEC. 7. Joint Registration. — In cases where the
hotel owners are not the hotel operators, both shall be allowed to
register on a joint basis: Provided, That the hotel operators do
not merely lease the hotel building or facilities from the owners:
And provided, further, That the granting of incentives will not
result in additional benefits to both or to one if treated as a single
registered tourism enterprise.
SEC. 8. Incentives Available to a Registered Tourism
Enterprise. —
- Fifty percent (50%) of foreign exchange earned in the
first five years from the start of operations shall be deductible from
net taxable income, subject to other provisions of Section 10 of
Republic Act No. 6135 and rules and regulations to be promulgated by the
Authority.
- A net operating loss incurred in any of the first ten years of
operation shall be carried over as a deduction from taxable income for
six years following such loss as provided for in Section 7(c) of
Republic Act No. 5186.
- A tax credit shall be granted for taxes withheld on interest
payments on foreign loans as provided for in Section 7(f) of Republic
Act No. 5186 and denned under Section 3 thereof.
- Exemption from real estate taxes on land improvements and
buildings shall be granted for the first five years from the start of
operations.
- Importations of machinery and equipment, and spare parts
shipped with such equipment shall not be subject to tariff duties and
compensating tax within seven years from the date of registration with
the Authority subject to the other provisions in Section 7(d) of
Republic Act No. 5186.
- A tax credit equivalent to one hundred percent of the value
of the compensating tax and customs duties that would have been paid on
machinery and spare parts had these items been imported shall be given
to the registered tourism enterprise who purchases machinery, equipments
and spare parts from a domestic manufacturer, and another tax credit
equivalent to fifty percent thereof shall be given to the said
manufacturer subject to other provisions in Section 7(e) of Republic Act
No. 5186, and denned under Section 3(j) thereof.
- Undistributed profit or surplus which a registered tourism
enterprise reinvests shall be allowed as a deduction from its taxable
income in the year such reinvestments were made, subject to other
provisions of Section 7(h) of Republic Act No. 5186, to the extent of:
- 50% for expansion of registered tourism facilities within the
Greater Manila Area;
- 75% for expansion of registered tourism facilities outside
of Greater Manila;
- 75% for the expansion of existing registered tourism
facilities in Greater Manila to additional facilities outside of Greater
Manila.
SEC. 9. Incentives to Philippine Nationals Investing in
Registered Tourism Enterprises Qualified Herein. —
- An investment allowance shall be permitted as a deduction
from the investor's taxable income to the extent of his actual
investment but not to exceed ten percent thereof as provided for in
Section 6 (a) of Republic Act No. 5186.
- Exception from income tax on the portion of the gains
realized from the sale, dispositions, or transfer of capital assets
equal to the portion of the sales proceeds that is invested in new
issues of stock of, or in the purchase of stock owned by
foreigners, in registered tourism enterprises, within six months
from the date the gains were realized, subject to the other
provisions of Section 6(b) of Republic Act No. 5186.
SEC. 10. Incentives to Foreign National Investing in
Registered Tourism Enterprises Qualified Herein. — Exemption from
withholding tax on dividends remitted abroad to foreign investors shall
be granted.
SEC. 11. Other Incentives. — Provisions in
Section 10, 11, and 12, of Republic Act No. 5186 shall also be
applicable to firms registered under this Decree.
SEC. 12. Suspension or Cancellation of Incentives.
— The incentives provided for in this Decree may be suspended or
cancelled in accordance with Section 13 of Republic Act No. 6135.
SEC. 13. Tourism Enterprises Registered Under
Republic Act No. 6135. —Any enterprise registered under Republic Act
No. 6135 at the time of the promulgation of this Decree shall continue
to be governed by provisions of said Act and shall be considered
automatically registered under the provisions of this Decree:
Provided, That the incentives available under Section 8 (b), 8 (e)
and 8 (f) herein shall only be applicable and shall be given
prospective-effect from the date of its registration under this Decree: Provided,
further, That enterprises registered under Republic Act No. 6135
not yet in operation upon the promulgation of this Decree may avail of
all incentives granted herein by subsequent registration under the
provisions of this Decree: Provided, furthermore, That all other
incentives herein shall only be applicable to expansion of registered
capacity.
SEC. 14. Applicablility to Existing Tourism
Enterprises. — An enterprise which satisfies the requirements for
registration specified herein, which at the time of promulgation of this
Decree has not been registered under Republic Act No. 6135, shall be
entitled to registration under this Decree as to its existing capacity.
Similarly, an investor in such an existing enterprise shall be entitled
to benefits and incentives to the extent of his present investment: Provided,
That the application is filed while the area is still in the Tourism
Priorities Plan: Provided, further, That the benefits of this
Decree, so far as may lie applicable to such existing enterprises, shall
be given prospective effect only from the date of registration: Provided,
furthermore, That the incentives applicable shall only be those
covered by Section 8 (a), for a period of 5 years after registration,
Section 8 (b), 8 (e) and 8 (f) and, in the case of expansion of existing
capacity, all other incentives shall be applicable only with respect to
the expanded capacity.
SEC. 15. Certification of Registration. — All
tourism enterprises registered under this Decree shall be issued a
certificate of registration under the seal of the Philippine Tourism
Authority and the signature of its Chairman and/or such other officer
employee of the Authority as it may empower and designate for the
purpose. The certificate shall be in such form and style as the
Authority may determine and shall state, among other things:
- The name of registered tourism enterprises;
- The preferred area of investment in which the registered
tourism enterprise is proposing to engage;
- The nature of the activity it is undertaking or proposing to
undertake, and the registered capacity of the enterprise; and (d) The
other terms and conditions to be observed by the registered tourism
enterprise by virtue of the registration.
SEC. 16. Implementing agency. — The Philippine
Tourism Authority shall issue rules and regulations as may be necessary
for the proper implementation of the provisions, of this Decree within
60 days after its approval. Such rules and regulations shall be
effective 30 clays after their publication in two (2) newspapers of
general circulation in the Philippines.
SEC. 17. Penal provisions. — The penalties shall
be as those provided for in Section 19 of Republic Act No. 6135.
SEC. 18. Revealing clause. — All laws decrees,
orders, rules and regulations or provisions thereof inconsistent with
this Decree are hereby modified or repealed accordingly.
SEC. 19. Effectivity. — This Decree shall take
effect immediately.
Done in the City of Manila, this 9th day of August, in the
year of Our Lord, nineteen hundred and seventy-four.