Tax Incentives of Tourism Economic Zone Enterprise in Philippines

Tourism Economic Zone Enterprise PhilippinesBy: Tax and Accounting Center Philippines

Under Philippine Economic Zone Authority (PEZA) rules, a Tourism Economic Zone Locator Enterprise is an establishment and operation within PEZA Tourism Special Economic Zone of sports and recreation centers, accommodation, convention, and cultural facilities and their special interest attraction activities / establishments, with foreign tourists as primary clientele. Tax Incentives of Tourism Economic Zone Locator Enterprise in the Philippines based on qualifications and registration are as follows:

  • Income tax holiday where no income taxes shall be imposed on such number of years for pioneer or non-pioneer enterprise,
  • 5% Gross Income Tax, in lieu of all national internal revenue and local taxes,
  • Tax and duty-free importation, and
  • Zero-VAT rating on local purchases of capital equipment.

Philippine Economic Zone Authority (PEZA) Board issued Board Resolution No. 12-610 dated November 13, 2012 (PEZA Board Reso. No. 2012-610) on the tax incentives of Tourism Economic Zones developers and locators in the Philippines. This was circularized by the Bureau of Internal Revenue (BIR) under Revenue Memorandum Circular No. 23-2013 dated February 22, 2013 (RMC 23-2013).

Under PEZA Board Reso 2012-610, tourism economic zones developers and locators in the Philippines shall have the following tax incentives:

  • No more 5% Gross Income Tax (5% GIT) incentives to developers of Tourism Economic Zones (TEZs) in the following areas:
  1. Metro Manila,
  2. Cebu City,
  3. Mactan Island, and
  4. Boracay Island.
  • No more income tax holiday (ITH) and 5% GIT incentives to locator enterprises of TEZs in the aforesaid 4 areas, except for tax and duty free importation and zero VAT rating on local purchases of capital equipment.
  • No more TEZs to be established in – Metro Manila, Cebu City, Mactan Island, and Boracay Island

Prospective effect of PEZA Board Reso No. 2012-610

The new policy under PEZA Board Reso No. 2012-610 shall apply prospectively and not retroactively. TEZ developer/operators and locator enterprises in the above four areas that have not signed their Registration Agreement with PEZA shall be covered by this new policy.


Based on PEZA Board Reso. No. 2012-610, no more tax incentives are applicable to tourism ecozones in the four (4) areas – Metro Manila, Cebu City, Mactan Island, and Boracay Island. This in effect encourages development of tourism ecozones in other tourist destinations in the Philippines such as Bohol Philippines, Palawan Island Philippines, Davao Philippines, and other parts of the country for tourism industry.

Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may please send mail at info@taxacctgcenter.orgor you may post a question at Tax and Accounting Center Forum and participate therein.

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