TOURISM RELATED INVESTMENT LAWS The Tourism Act of 2009 (Republic Act No. 9593) Special Economic Zone Act (Republic Act No. 7916) The Omnibus Investment Code of 1987 (Executive Order No. 226) Act Granting of Special Investors Resident Visa (SIRV) (Executive Order No. 63) The Foreign Investments Act of 1991 (Republic Act No. 7042) Investors’ Lease Act (Republic Act No. 7652)

TOURISM ENTERPRISE ZONES

TOURISM ENTERPRISE ZONES THE TOURISM ACT OF 2009 (R.A. 9593) Designation, operation and administration of incentives to the establishment of tourism enterprise zones (TEZ) CRITERIA Defined into one contiguous territory; Must have historical and cultural significance, environmental beauty, or existing or potential integrated leisure facilities within its bounds or within reasonable distances from it; Strategic access through transportation infrastructure, utilities, infrastructure system

TOURISM ENTERPRISE ZONES At least five (5) hectares and sufficient in size. It is in a strategic location such as to stimulate the sustainable socio-economic development of neighboring communities. The area must be situated where controls can easily be established to curtail illegal activities.

TOURISM ENTERPRISE ZONES THE TOURISM ACT OF 2009 (R.A. 9593) Incentives Available to Tourism Enterprises outside of designated TEZs CRITERIA Registered Tourism Enterprise undertakes a substantial expansion/upgrade of facilities Cost of expansion/upgrade of physical assets amounts to at least 50% of the original investment There is a significant change in its category classification under the DOT’s accreditation system

TOURISM ENTERPRISE ZONES Incentives to TEZs and tourism enterprises within the zone Income Tax Holiday (6 years, extendible for another 6 years) Net Loss Carry Over (Deduction from gross income for 6 years) Gross Income Taxation (5% GIT Rate) Importation of Capital Investment and Equipment Importation of Transportation Equipment and Spare Parts Importation of Goods and Services

TOURISM ENTERPRISE ZONES Tax credit Social Responsibility Incentive Employment of Foreign Nationals Special Investor’s Resident Visa Foreign Currency Transactions Requisition of Investment Lease and Ownership of Land

TOURISM ENTERPRISE ZONES Incentives to Tourism Enterprise located outside of TEZ Income Tax Holiday (6 years, non-extendible) Importation of capital equipment free of taxes and duties

TOURISM ENTERPRISE ZONES Classification of TEZs Cultural Heritage Tourism Zone Health & Wellness Tourism Zone Eco-tourism Zone General Leisure Tourism Zone Mixed Use Tourism Zone

Ciudad De Victoria, Bulacan DESIGNATED TEZs. Ciudad De Victoria, Bulacan Newport City, Paranaque

TOURISM ECONOMIC ZONES

TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) MOA between DOT and PEZA Signed October 7, 2002 Guidelines for Registration of TEZs Effective November 12, 2002

TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) Registrable Activities Tourism Ecozone Developers/Operators Tourism Ecozone Locators Sports and Recreational Centers Accommodation Convention & Cultural Facilities Theme Parks Special Interest Attraction/Activities/Establishments

TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) Registrable Activities Enterprises establishing and operating airports, seaports/marinas

SPECIAL ECONOMIC ZONE ACT (R.A. 7916) TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) Incentives to Tourism Ecozone Developers Exemption from national and local taxes, in lieu thereof, 5% Gross Income Rate

TOURISM ECONOMIC ZONES SPECIAL ECONOMIC ZONE ACT (R.A. 7916) Incentives to Tourism Ecozone Locators Tax and duty free importation of Capital Equipment Income Tax Holiday Employment of foreign nationals Exemption from national and local taxes, in lieu thereof, 5% Gross Income Tax Rate SIRV under E.O. 63

Ilawod Estates Cabatuan Paseo Del Rio De Cagayan DECLARED ECOZONES UNDER PEZA Boracay Eco-Cultural Village Resort Camarines Sur Tourism Park Ilawod Estates Cabatuan Iloilo Paseo Del Rio De Cagayan Cagayan De Oro City

Bagong Nayong Pilipino DECLARED ECOZONES UNDER PEZA Pangulasian Island Green Tourism Economic Zone Embarcadero de Legazpi Legazpi City Manila Bay Resorts Bagong Nayong Pilipino Entertainment City

INVESTMENT PRIORITIES PLAN (IPP)

INVESTMENT PRIORITIES PLAN OMNIBUS INVESTMENTS CODE OF 1987 under (EO 226) Accommodation Facilities (P/NP) (Hotels, Resorts, Condotels ,Tourist Inns, Apartels/Serviced Apartments, Pension Houses, Motels,Private Homes for Homestay, Ecolodges, Bed & Breakfast facilities) Convention and exhibition facilities (MICE) Adventure and Eco-tourism facilities Sport facilities and recreational centers Agri-tourism farms and facilities Theme parks/Amusement Parks Tourist Transport Services Development of Retirement Villages Health/Medical Tourism Facilities (Spas, tertiary hospitals, ambulatory clinics) Tourism Training Centers/Institutes Restoration/preservation and operation of historical shrines, landmarks and structures Guidelines for formulation/finalization by DOT and BOI on the ff: Historico-Cultural Heritage Projects Tourism Training Institutions Agri-Tourism Projects

INVESTMENT PRIORITIES PLAN OMNIBUS INVESTMENTS CODE OF 1987 (EO 226) PIONEER STATUS CRITERIA Hotel projects/apartment hotels/serviced apartments/condotels classified as First Class or Deluxe costing at least US $100,000 / room Resort projects classified as Class “AAA” with project cost of at least US $ 10 million per project Projects located in LDAs Modernization of hotels classified as First Class or De Luxe with a project cost of at least US$ 10,000/room Amusement parks/theme parks with a minimum project cost of US$ 10 million involving the development sites or attractions considered as novel in the Philippines Adventure and ecotourism facilities/agri-tourism farms and facilities with a project cost of at least the Philippine Peso equivalent of USD 5 million.

INVESTMENT PRIORITIES PLAN OMNIBUS INVESTMENTS CODE OF 1987 (EO 226) INCENTIVES TO TOURISM PRIORITY PROJECTS Income Tax Holiday Importation of Capital Equipment (pursuant to E.O. 70) Employment of foreign nationals EO 70 signed March 29, 2012 effective May 10, 2012

INVESTMENT PRIORITIES PLAN INCOME TAX HOLIDAY UNDER EO 226 New Projects (Pioneer) - 6 years New Projects (Non-Pioneer) - 4 years Expansion Projects - 3 years Projects in Less Developed - 6 years Areas (regardless of status) Modernization Projects - 3 years

INVESTMENT PRIORITIES PLAN IMPORTATION OF CAPITAL EQUIPMENT (pursuant to E.O. No. 70) 0% duty on equipment granted to enterprises registered with BOI Can be availed for five (5) years or until May 2017. E.O. 528 expired last June 18, 2011

INCENTIVES UNDER E.O. # 63 SIRV Holders : permitted to enter and reside in the Phils. for as long as the investment subsists, provided that said investor visits the country at least twice a year and stays in the country at least seven (7) days for each visit : issuance of multiple entry SIRV without further documentary requirements other than valid passports : exempt from payment of alien immigration and registration fees and from securing Alien Certificates of Registration (ACR). Remittance of Earnings and Repatriation of Investments - shall be serviced at the exchange rate prevailing on the date of actual remittance. Right of succession - in case of death, the surviving immediate family shall be entitled to the same privileges.

Remittance of Earnings Repatriation of Capital Right of succession INCENTIVES UNDER E.O. # 63 Special Investor’s Resident Visa (SIRV) to investor, wife and unmarried minor children Remittance of Earnings Repatriation of Capital Right of succession SIRV Holders : permitted to enter and reside in the Phils. for as long as the investment subsists, provided that said investor visits the country at least twice a year and stays in the country at least seven (7) days for each visit : issuance of multiple entry SIRV without further documentary requirements other than valid passports : exempt from payment of alien immigration and registration fees and from securing Alien Certificates of Registration (ACR). Remittance of Earnings and Repatriation of Investments - shall be serviced at the exchange rate prevailing on the date of actual remittance. Right of succession - in case of death, the surviving immediate family shall be entitled to the same privileges.

QUALIFICATIONS: He has not been convicted of a crime involving moral turpitude He is not afflicted with AIDS or any loathsome, dangerous or contagious disease He has not been institutionalized for any mental disorder or disability He is willing and able to invest at least US $50,000 in a tourism related project AD LIB on AIDS test Requirement: AIDS test requirement no longer required in view of RA 8504 otherwise known as the Philippines AIDS Prevention and Control Act of 1998 which provides for the prohibition of compulsory HIV testing.

TOURISM RELATED INVESTMENT LAWS FOREIGN INVESTMENTS ACT OF 1991 (RA 7042 AS AMENDED BY RA 8179) Domestic market is open to foreign investors as long as the activity is not restricted in the Foreign Investment Negative List (FINL) Ownership of private lands (up to 40% foreign equity) Tourist Transport Operation (up to 40% foreign equity) Tourism Capability Building Seminar

TOURISM RELATED INVESTMENT LAWS OWNERSHIP OF PRIVATE LANDS General Rule Nationality Requirement under the Philippine Constitution up to 40% foreign equity

TOURISM RELATED INVESTMENT LAWS LEASING OF PRIVATE LANDS General Rule per PD 471 25 years - original 25 years - renewable Exception per RA 7652 or Investor’s Lease Act Minimum investment of US $5 million for tourism projects 50 years - original

SUMMARY At present, the Philippine tourism industry is very dynamic and fast growing .... more and more investments are needed to sustain its growth... Focus on the National Tourism Development Clusters for tourism investments Invest in Philippine tourism. When? NOW. To achieve our target of 10M tourists by 2016, our country needs tourism investment support in building new accommodation facilities, developing roads that lead to tourist sites, building & improving airports & seaports, provision of support amenities -- transport, terminals, among others.... Destination clusters have been identified in the NTDP where these investments must be poured... There is no better time to invest in Philippine tourism than NOW.... as the whole country is just beginning to have fun getting themselves involved in tourism....

Investments. More fun in the Philippines