Finance chief bucks hotel tax holiday

Income tax holidays (ITH) for hotels and resorts in the country’s hottest travel destinations are not necessary to support the tourism sector, the Finance chief said Wednesday. 

 

“Income tax holidays for already very profitable hotels serves only to further enrich a select few rather than improve the overall environment for tourism investment,” Finance Secretary Cesar Purisima noted in a statement. 

 

“We'd rather collect income taxes and invest in better infrastructure that will further attract more entities to invest in the Philippines,” he added. 

 

Purisima's statement follows the Philippine Hotel Federation Inc.'s (PHFI) April 29 open letter, asking for revocation of Board of Investments (BOI) Regulation No. 2013-001 that streamlined incentives for tourism accommodation establishments in Metro Manila, Cebu City, Mactan Island and Boracay Island.

 

The BOI Regulation repeals the ITH provided under Executive Order No. 226 or The Omnibus Investments Code for establishments in the four areas. 

 

It only gives capital equipment incentives like lower levies on acquired goods to be used in providing service to establishments registering under the government's investment priorities plan.  

 

PHFI officials could not be reached as of posting time. 

 

Purisima maintained that the Philippines offer incentives to the tourism industry that are comparable with Southeast Asian neighbors even without the ITH. 

 

For example, Thailand's Board of Investment only gives exemption from import duties on machinery to hotels, while Inland Revenue Authority of Singapore provide no tax incentives currently granted to leisure establishments in the island nation, he said. 

 

Purisima said the revenue derived specifically from the repealed ITH can be invested in tourism as well as purposes that can have a positive spill-over to the industry.

 

According to the Finance Department estimates, the amount of revenue foregone because of the ITH on projects in the four destinations is P1.06 billion in 2009 to 2010.

 

“This large amount can instead be collected and used to fund programs and projects that will benefit not only the tourism sector, but other equally important sectors as well,” the Finance chief said. — Siegfrid Alegado/VS GMA News