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Finance bucks hotel incentives

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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