By Jennifer
Ambanta | Posted on May. 23, 2013 at 12:02am |
[
manilastandardtoday.com ]
Finance
Secretary Cesar Purisima defended Wednesday the decision of the Board of
Investments to strip hotels and resorts of income tax incentives, saying
tourism establishments will remain profitable even without such perks.
“Income tax
holidays for already very profitable hotels serve only to further enrich a
select few rather than improve the overall environment for tourism
investments,” Purisima said.
The
Philippine Hotel Federation Inc. earlier called for the revocation of Board of
Investments Regulation No. 2013-001 pertaining to the grant of incentives for
tourism accommodation establishments in Metro Manila, Cebu City, Mactan Island
and Boracay Island.
The
directive stated that projects on
accommodation establishments in the four areas that intend to register with the
BoI under the 2012 Investment Priorities Plan should be just entitled to
capital equipment incentives, effectively removing the income tax incentive
provided under Executive Order No. 226, or The Omnibus Investments Code.
The BoI
earlier estimated that forgone revenues from the income tax holidays granted to
hotels and resorts in four areas amounted to P1.06 billion.
The 2009-2010
BOI data showed the total average return on investment of the travel and tourism
industry was 15 percent without tax holidays. The same data showed more than
half of the tourism-related projects in those years were located in at least
one of the four areas covered by the regulation in question.
“BoI-registered
enterprises engaged in tourism-related activities, particularly in tourist
accommodation facilities, are profitable and will be profitable even without
income tax holidays,” Purisima said.
He said the
current tax privileges and incentives were at par with other Southeast Asian
neighbors that also provided such benefits to their tourism industries.
He said
Thailand was giving exemption from import duties on machinery and only non-tax
privileges to hotels to support tourism.
Singapore
does not provide tax incentives to hotels and restaurants, he added, although a
tax allowance was given for the construction of infrastructures in Sentosa
Island in the past.
Malaysia
provides income tax exemption of 70 percent or investment tax allowance of 60
percent to investors for undertaking new investments in hotels and tourism
projects.
Purisima said
while the tourism sector was an important industry, the income tax to be
collected from numerous hotels and resorts could also be used to fund sectors
and industries that were equally significant.
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