BOI approves tax perks to help tourism enterprises in upgrade

THE Board of Investments (BOI) has approved fiscal incentives for tourism enterprises which are looking to upgrade their facilities to conform with health and safety standards amid the Covid-19 pandemic.

Tourism Secretary Bernadette Romulo Puyat made this disclosure in Wednesday’s virtual Kapihan sa Manila Bay, as she detailed the recovery plans for her sector. She said, among the incentives that BOI will be granting are “an income tax holiday [ITH] for a period of three years and duty-free importation of capital equipment.” Qualified enterprises will only have to pay for the value-added tax on the imported equipment. She added, the ITH will be “pro-rated according to the amount of upgrade/renovation.”

This was confirmed in a text message by Trade Secretary Ramon Lopez to the BusinessMirror. The BOI, the investment and promotion arm of the DTI, will be issuing guidelines on the tax incentives shortly.

Examples of renovations/upgrade that can qualify for such tax incentives include renovation of guest rooms, food and beverage outlets, function/meeting rooms, recreation areas and/or other common areas; investment in new or upgrade of laundry, kitchen, housekeeping, employee facilities and other back of house facilities; building of full, partial or movable partitions; installation of built-in thermal scanners, hygiene gates, and/or booths; upgrade or improvement of ventilation, air conditioning, air filtration systems, water systems, water treatment facilities such as sewerage treatment plants; a mobile check-in system; non-touch or no contact door lock systems and non-touch control panels in elevators and other areas.

Tourism enterprises that can apply for the incentives, she said, include hotels and resorts, Meetings,  Incentives, Conventions and Exhibition (MICE) facilities, and tourist transport companies nationwide. In response to a question, Romulo Puyat said her agency will also be requesting BOI to include travel agencies and tour operators as eligible for incentives.

As the BOI will require the Department of Tourism (DOT) to endorse the companies applying for the incentives, these necessarily have to be DOT-accredited companies. “If we will endorse them, then we have to know them, so of course, we will probably ask for accreditation. It’s in the law anyway.” She stressed the DOT has waived its accreditation fees for primary tourism enterprises. (See, “DOT waives accreditation fees for new applicants, renewals,” in the BusinessMirror, April 12, 2020.)

Meanwhile, the DOT chief cautioned Air Asia Philippines about prematurely announcing flights to Caticlan and Kalibo, the gateway to Boracay Island, as the Boracay Inter-Agency Task Force (BIATF) had yet to approve the reopening of the island to commercial flights and leisure travel. “We’re going to Boracay tomorrow [Thursday] to check on their health and safety measures…. We have to decide on that [commercial flights] tomorrow.”

At the same webinar, AAP President Ricardo P. Isla said the airline is currently flying 20 percent of its domestic routes—to Cebu, Davao, Cagayan de Oro via Clark, Manila and Cebu. “And then moving towards next week, we’re actually going to be present in the following: Puerto Princesa, Tacloban, Tagbilaran, Bacolod, Iloilo, then Kalibo and Caticlan again,” and before long, the airline would be serving 80 percent to 90 percent of its domestic destinations.

The airline official also expressed optimism “vacation activities” will commence by July or August, even without a Covid-19 vaccine in place, as long as there is contact tracing, and strict implementation of safety standards in destinations.  Isla added Chinese tourists were ready to visit the Philippines, “the moment we manage Covid-19.” As such, he sees international tourism resuming by September or October. About 50 percent of the carrier’s inbound business are from the Chinese market.

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