Philippines Extend Tourism Incentives for Investors

Philippines, data, tax incentives

The Philippines just extended tax incentives as the country targets 12 million foreign visitors by 2022, compared to 7.2 million last year.  

Tourism in the Philippines is improving, getting stronger than before. However, the country is still far behind its neighbours in the ASEAN. With 7.2 million foreign arrivals last year, international visitors to the Philippines have indeed doubled since 2010. However, this number remains tiny as it stands far behind Thailand with 38 million international arrivals, Malaysia with 26 million, Singapore with 17.5 million and even Indonesia and Vietnam with both 15 million arrivals.

The government is blaming partially the lack of interest of investors to add further hotel rooms. To stimulate investments in designated tourism areas, the government decided to renew for the coming decade a package of special incentives. The designated tourism incentives scheme will be implemented from January 2020, after the expiration of the current package.

The new incentive packages integrates a six-year income tax holiday, duty-free imports on capital goods and services, a net operating loss carryover as an alternative taxation scheme, and a tax deduction for environmental protection and cultural heritage activities, among others. Investors will be able to use them for tourism zones including Cebu, Davao and the Mindanao, Palawan, Manila, Clark, Bataan, Bohol, and Surigao del Norte.

The government aims to welcome with this law over 12 million foreign arrivals by 2022 while international tourism receipts would then grow to $17.7 billion compared to $7.5 billion in 2017.

However, the Philippines will need to speed up investments in infrastructure, probably its biggest weakness. Lack of proper tollways around the country, an almost non-existant rail network, lack of capacities at Manila airport, the country’s largest gateway are some of the woes that tourism faces. Lack of infrastructure makes often a trip to some of the Philippines most beautiful spots a time-consuming experience…

Commenting on the package, Tourism secretary Bernadette Romulo Puyat said that the new law “will make tourism investments in the country more commercially viable and attractive and they will be instrumental in making tourism a key driver of socio-economic growth.”

The country is optimistic to pass this year the 8-million international arrivals’ mark, which would be a new record for the archipelago. Earlier in the month, the Department of Tourism released data for the first five months of 2019. DOT Assistant Secretary Roberto Alabado III said the Philippines had accommodated over 3.4 million foreign tourists from January to May 2019, which is 9.76 percent higher from the previous record in the same period last year. The Department of Tourism (DOT) estimates that the target of 8.2 million international visitors could even be surpassed.

“This makes us optimistic that we will not only achieve the target growth for 2019 as dictated by the National Tourism Development Plan 2016-2022, but we will positively surpass 2018’s numbers, a landmark year for Philippine tourism,” Alabado declared in his statement.