Laws & Incentives

Executive Order No. 63 – grants incentives to foreigners investing at least US$50,000 in a tourist-related project or in any tourist establishment as determined by the Committee created in the same law. E.O. 63 grants the foreign investor a Special Investor’s Resident Visa (SIRV) for as long as the investment subsists. The E.O. also recognizes the right of the investor to remit earnings from his investment in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance. In case of liquidation, the investor is also allowed to repatriate the entire proceeds of the liquidation of the investment. Lastly, the right of succession is also recognized. An investor may apply for SIRV at the Philippine Embassy or Consulate in his home country or place of residence. If already in the Philippines, the investor may file the application at the Department of Tourism or at the One-Stop-Action-Center of the Board of Investments (BOI).

Omnibus Investments Code (Executive Order No. 226) – This EO authorizes the BOI to grant fiscal incentives to tourism enterprises engaged in the:

Development of Tourism Estates – a tourism estate is a large tract of land with defined boundaries in any of the destinations identified in the Philippine Tourism Master Plan. The land should be suitable for the development of an integrated resort complex including accommodations, food and beverage outlets, convention, sports, and recreational centers, commercial outlets, among others. It must be provided with roads, water supply facilities, power supply, drainage and sewerage systems, and other necessary infrastructure. The estate must be located outside Metro Manila, at least 50 hectares, and under a unified continuous management.

Establishment of Tourist Accommodation Facilities – tourist accommodation facilities include hotels, resorts, inns, pensionnes, and special interest resorts outside Metro Manila. New projects can qualify for a pioneer status if they satisfy the following:

TYPE OF FACILITY MINIMUM PROJECT COST
Less Developed Area Elsewhere (excluding Metro Manila)
De Luxe/First Class Hotels US$50,000/room US$100,000/room
Class AAA Resort US$5 M per resort US$10 M per resort

Projects not meeting the aforementioned prescribed minimum project cost may only be classified under a non-pioneer status.

Operation of Tourist Transport Facilities (Tourist Buses) – Application for registration should be accompanied by a proof of filing an application with the Land Transportation Franchising Regulatory Board (LTFRB). Buses must be brand new and suited to local conditions.

Expansion of Existing Tourist Accommodation Facilities – expansion projects shall be eligible for registration if they involve the addition of guestrooms exceeding 25% of existing facilities of a tourist accommodation facility and located outside Metro Manila.

Modernization/Rehabilitation of Tourist Accommodation Facilities – a modernization/rehabilitation program involves the upgrading/modification and/or restoration to the original condition of the facilities/structures/amenities of tourist accommodation facilities outside Metro Manila to conform with the classification requirements of the Department of Tourism. A project must entail a cost of at least Php 300,000.00 per room to qualify for a pioneer status.

Restoration of Historical and Cultural Sites/Properties – Restoration of historical and cultural sites/properties covers only those that are at least 100 years old as certified by the National Historical Institute and endorsed by the DOT.

Incentives granted under E.O. 226 include income tax holiday and employment of foreign nationals.

Foreign Investments Act of 1991 (Republic Act 7042)
With the passage of the Foreign Investments Act, foreign nationals are now allowed to invest up to 100% equity participation in new or existing economic activities except those found in the Foreign Investment Negative List (FINL).

Special Economic Zone ACT of 1995 (Republic Act 7916)
This Republic Act provides for the legal framework and mechanism for the creation, operation, administration and coordination of Special Economic Zones in the Philippines, creating for this purpose, the Philippine Economic Zone Authority (PEZA) and for other purposes.

Incentives available are:

  1. Income tax holiday (ITH) for six years for pioneer firms and generally four years for non-pioneer firms. If a non-pioneer firm is located in a less developed area, it shall generally be entitled to 6 years ITH. Firms locating within Metro Manila shall not be granted ITH unless they are within a government industrial estate or they are service-type projects with no manufacturing facilities or they are power-generating plants or they are exporters with expansion projects.
  2. Tax credit on raw materials, supplies, and semi-manufactured products.
  3. Employment of foreign nationals.
  4. Guaranteed repatriation of foreign investments and earnings thereon.
  5. Enterprises located within the export processing zones/industrial estates will generally be entitled to the foregoing incentives.

In addition to the foregoing, PEZA firms will likewise be entitled to the following:

   a. Special tax treatment of merchandise within the zone.
   b. Exemption from local taxes and licenses; and
   c. Exemption from branch profit remittance tax.

Enterprises allowed to operate within the Subic Bay Freeport (SBF) shall, in lieu of paying all other taxes, pay a final tax of five percent (5%) of gross income earned provided their income from local (non-export) sales shall not exceed thirty percent (30%) of their income from all sources.

In general, investment incentives are not transferable. Tax credit certificates may, however, be transfered in accordance wiht the memorandum of agreement between the Department of Finance and BOI.

Build-Operate-Transfer (BOT) Law (Republic Act 7718)
The BOT Law authorizes the financing, construction, operation, and maintenance of infrastructure projects by the private sector. It allows national implementing agencies and local government units to enter into BOT arrangement as a means of encouraging the participation of foreign and local companies in the country’s infrastructure development program.

Tourism estates including related infrastructure facilities and utilities are among the priority projects eligible for BOT implementation.

Backed up by a wide range of credit enhancements and investment incentives, the BOT Law opened to the private sector a new window of investment opportunity.

Salient points of the amended BOT Law include the following:

 • Provides flexibility to both the government and private sector by allowing the use of a variety of arrangements under the BOT scheme to suit specific conditions;
 • Broadens the type and variety of projects that can be implemented under the BOT process;
 • Recognizes the need for private investors to realize rates of return reflective of market conditions;
 • Institutionalizes government support for BOT projects; and
 • Allows government agencies and local government units (LGUS to accept unsolicited proposals.

The BOT Law mandated the Coordinating Council of the Philippine Assistance Program (CCPAP) BOT Center to coordinate and monitor all projects undertaken RA 7718.

The BOT Center is specifically involved in:

 • project development
 • policy advocacy
 • institution building
 • marketing and promotions
 • monitoring