DOT and BOI Finalized Incentives to Tourism Firms’ COVID-19-Proofing Investments

Responding to a request from Tourism Secretary Bernadette Romulo-Puyat, the Board of Investments (BOI) has approved investment incentives for tourism and tourism-related industries that are upgrading and modernizing their facilities aimed at ensuring the health, safety and wellness of their clients in view of the new normal brought about by the COVID-19 pandemic.

“We recognize that the tourism sector has been one of the worst affected of all the major sectors of the economy due to the current health crisis. By way of providing investment incentives, we hope the sector, which was a major driver of the economy’s growth pre-Covid-19, will stay afloat, continue their business operations, and recover the soonest they can,” said Trade Secretary and BOI Chairman Ramon Lopez.

Following discussions with the Department of Tourism (DOT) on the tourism stakeholders’ plea on the possible measures to ensure continuity of their business operations, the BOI crafted and approved the policy to help the tourism sector. The tax incentives to be granted by BOI are income tax holiday for a period of three years and duty-free importation of capital equipment (only VAT will be paid) for tourism projects that will renovate to enhance health and safety features and processes. The income tax holiday to be given will be pro-rated according to the amount of upgrade/renovation.

“Tourist accommodation facilities who would like to undertake improvements to make their facilities COVID-proof may consider registration of such with the BOI as modernization projects subject to qualification requirements,” Secretary Lopez said. “For existing tourism accommodation facilities in Boracay, which is currently covered by the locational restriction policy, the BOI will look into the possibility of likewise qualifying their COVID-proof improvements as modernization projects that may be entitled to a three-year income tax holiday (ITH) incentive.”

“While we currently have locational restrictions for new and expansion of tourism facilities in Boracay, we may qualify modernization of those in the area. All these, to help the tourism industry recover faster and provide comfort/safety in our tourism facilities,” he said.

Tourism enterprises that are eligible to apply for investment incentives include hotels and resorts, meetings, international conventions, and events (MICE) facilities, and tourist transport companies nationwide, including those in Boracay.

For tourist transport, these should be locally-assembled vehicles with sanitation features. The motor vehicles to be acquired or to be upgraded/modernized will have such sanitation and hygiene features including but not limited to barriers, payment portals, deionizers, seat organizers for sanitation kits, and other features that would promote physical distancing.

Examples of renovations/upgrade that can qualify for such tax incentives include renovation of guestrooms, 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 (STP); a mobile check-in system; non-touch or no contact door lock systems and non-touch control panels in elevators and other areas.

“The BOI will continue to work closely with the DOT in the review of our relevant policies to provide the necessary support to our tourism stakeholders and restore industry vigor and growth at the soonest possible time,” Secretary Lopez said.

The BOI has been supportive of the local tourism industry, implementing many initiatives to further improve the sector’s competitiveness. Just early this year, pre-COVID-19, it conducted capacity building activities on securing international certifications for particularly for the medical travel and wellness tourism sector with the aim of making the industry prepared not only for the growing needs of the Filipinos, but also for the growing opportunities in the medical tourism industry. The capacity-building initiatives support and help enable the healthcare facilities and services, especially those licensed by the Department of Health (DOH) and/or accredited by the DOT.

The capacity-building is part of the many initiatives the BOI is implementing to further develop globally competitive industries through its Industry Development Program (IDP). The Roadmap on Medical Travel and Wellness Tourism was completed in 2015 with the active participation of relevant stakeholders.

Among the recommendations in the Roadmap are the implementation of a uniform system of data collection, analysis and dissemination and the development of a brand strategy for the country. The capacity building activities seeks to ensure that the sector, prior to the brand strategy launch, will have the right healthcare facilities that are internationally recognized and accredited that can multiply the people-value the country is known for.