Senate approves bill extending TIEZA power to grant incentives

THE SENATE approved on third and final reading a bill extending the authority of the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) to grant incentives to tourism enterprises until Dec. 31, 2029.
Senate Bill No. 1616 was approved with 17 affirmative votes, zero negative votes, and no abstentions on Dec. 10. The bill seeks to amend Republic Act No. 9593 or the Tourism Act of 2009 to allow the implementation of the incentives scheme to tourism enterprises for another 10 years.
Under the current law, TIEZA has only until August 2019 to grant its incentives.
According to the bill’s committee report, the passage of the proposed measure was sought by the Senate Blue Ribbon Committee after it was revealed during its hearings in 2016 that TIEZA not granted incentives since 2009 due to the lack of Revenue Regulations issued by the Bureau of Internal Revenue (BIR).
After two Senate hearings on the issue, the BIR issued Revenue Regulation No. 7-2016. The revenue regulation noted that the incentive schemes are only effective until 2019 due to the 10-year limit provided in the law.
“While we should be glad that finally the BIR has acted and performed its duty by releasing a Revenue Regulation, we pause to realize the 10-year period granted for incentives in reality means a period much less than the ten years. The law was passed in 2009. So the incentives will end on 2019. This tells us that incentives can run for less than two years only. This is not what the Congress intended this to be,” Committee Report No. 169 stated.
The Senate panel then moved for the passage of the bill that removes the provision in the law which limits the grant of incentives within the 10-year period and extended the grant to Dec. 31, 2029.
The incentives TIEZA can grant to tourism enterprises include income tax holidays for a period of six years, a 5% preferential tax on gross income, exemptions on all taxes and customs duties on the importation of capital equipment, as well as the exemption of transportation equipment and spare parts from tariffs and duties.
TIEZA is also authorized to give preference to “large investments” that provide jobs and that involve local small and medium enterprises.
The bill’s counterpart measures in the House of Representatives, House Bill No. 7333 and House Bill No. 7535, remain pending at committee level. — Camille A. Aguinaldo