Republic Act No.

9593
“The Tourism Act of 2009”

By:

Grandeureign Ortizo
Roca Regala
Investments and Incentives Law

THE TOURISM ACT OF 2009

Tourism is considered as one of the indispensable elements of the national
economy and an industry of national interest and importance. The Republic Act No. 9593,
also known as “The Tourism Act of 2009,” was enacted on May 12, 2009 and took effect
on June 11, 2009. The enactment of the said law aims to generate investment, foreign
exchange and employment, and to continue to mold an enhanced sense of national pride
for all Filipinos.

Parts of the objectives of the Tourism Act related to our topic are: a) to provide full
government assistance by way of competitive investment incentives, long-term
development fund and other financing schemes extended to tourism related investments;
and b) support the establishment of Tourism Enterprise Zones (TEZs), which will provide
necessary vehicle to coordinate actions of the public and private sectors to address
development barriers, attract and focus investment on specific geographic areas and
upgrade product and service quality.

I. TOURISM ENTERPRISE ZONES

I. A. Tourism Enterprise Zone (TEZ)

What is Tourism Infrastructure and Enterprise Zone Authority (TIEZA)

It is a government corporation replacing the Philippine Tourism Authority (PTA),

which acts as the implementing arm of Department of Tourism (DOT) in providing
support infrastructures and facilitating investments in TEZs. It is the country’s builder of
tourism infrastructure.

What is the Tourism Enterprise Zone (TEZ)?

It is a tract of land with defined boundaries master planned to be developed into

an integrated tourism complex prescribed carrying capacities to host tourism enterprise
facilities and services within the property and designated as such by TIEZA Board.

What areas may be designated as TEZs?

Any geographic area with the following characteristics may be designated:

a. The area is capable of being defined into one contiguous territory;

b. It has historical and cultural significance, environmental beauty or existing or
potential integrated leisure facilities within its bounds or within reasonable
distance from it;
c. It has, or it may have, strategic access through transportation infrastructure, and
reasonable connection with utilities infrastructure systems;
d. It must be at least five hectares and sufficient in size, such that it may be further
utilized for bringing in new investments in tourism establishments and services.
Provided that, in extremely meritorious cases, an area less than five hectares may
be developed as a TEZ if the Board deems it sufficient for the purposes,
requirements and nature of the tourism project to be undertaken therein;
e. It is in a strategic location such as to catalyze the socio-economic development of
neighboring communities;

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f. The area must be situated where controls can easily be established to curtail illegal
activities. The dispersal of economic activities in the least developed areas in the
countryside is encouraged. An area in any of the least developed areas identified
in the annual Investment Priorities Plan (IPP) shall be given priority in the
designation as TEZ.

Who shall designate TEZs?

The TIEZA shall designate TEZs, upon recommendation of:

1. Local Government Unit (LGU); or

2. Private Entity; or
3. Joint ventures between LGU and Private Entity

What are the documentary requirements for designation of TEZs?

Upon Application

a) Duly accomplished TIEZA Application Form;

b) SEC Registration Certificate, copies of the articles of incorporation and by-laws; in
case of a joint venture, a copy of the joint venture agreement;
c) Company Profile, containing basic data/ information on its technical, financial,
marketing and management capability/ competence to undertake the proposed
project;
d) Resolution of the applicant’s board of directors authorizing the filing of the
application and the designation of their authorized representative to TIEZA; list
of its directors, principal officers, and major stockholders, including their
respective bio-data. In the case of an instrumentality of the national government
acting in pursuit of its mandate and/or a local government unit an authority from
the Head of Agency or Local Chief Executive authorizing the filing of the
application and the designation of their authorized representative to TIEZA;
e) Vicinity Map reflecting various land uses, important verifiable landmarks within
the five (5) kilometers radius of the project site, proximity to transportation and
utilities infrastructure, and tourism focal points in the vicinity and their distances
from the project site;
f) Proof of land ownership and/ or Long-Term Lease Agreement(s) for a period of
not less than twenty five (25) years on the entire area of the proposed TEZ ;
g) Endorsement letter from the National Historical Institute (NHI) in the case of
Cultural and Heritage Tourism Zone, from the Department of Health (DOH) in
the case of Health and Wellness Tourism Zone; or from Philippine Retirement
Authority (PRA) in the case of retirement villages/communities; and
h) Other supporting documents/ papers/ clearances as may be required by the
TIEZA depending upon the nature of the business and the type of business
organization of the applicant.

Prior to designation

A. Resolution of the concerned LGU approving the development plan;

B. Copy of the approved Comprehensive Land Use Plan of the concerned LGU;
C. Verified survey returns and technical description of the land area for the proposed
TEZ;
D. Environmental Compliance Certificate issued by the Department of Environment
and Natural Resources (DENR);
E. Clearance/Permit from the concerned Protected Area Management Board if the
proposed zone is within a Protected Area;

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F. Financial statement for (3) years for existing companies;

G. Development Plan of the area which shall identify and include the following:
a. Tourism focal points and resources available within the proposed TEZ and
adjoining areas;
b. Features which satisfy the requisites for the designation of a TEZ
enumerated under Section 2, Rule II of these Rules;
c. Amount to be invested by the applicant in the area;
d. Areas for infrastructure development and the kind of development, for
investment and the nature of investment, and for preservation and the
sustainable activities allowed within preserved areas;
e. Public utilities to be operated within the TEZ;
f. Medium and long-term studies on market trends, and corresponding
development strategies for the TEZ;
g. Studies on the economic impact of development within the TEZ and in
surrounding communities;
h. Studies on the carrying capacity of the TEZ and surrounding communities;
i. Design plans for structures incorporating therein measures that should
ensure the sustainable development of the area and the surrounding
environment, to include the following: the civil and architectural plans that
preferably incorporates Philippine design elements and cultural heritage,
structural plans, electrical, mechanical, sanitation and design
computations, cost estimates and specifications, financial schedules and
construction timetable;
j. Energy efficiency and climate change mitigation measures to be adopted
and implemented in the area; and
k. Compliance statement on Development Standards. TIEZA shall in
coordination with the Department formulate and enforce development
standards for the operation and maintenance of all facilities and structures
to be built on all Tourism Zones. The development standards to be
formulated and enforced shall be used as basis for the accreditation of
tourism enterprises seeking to avail of the incentives under the Act. Such
standards shall prescribe the minimum and progressive levels of operating
quality and efficiency consistent with local and international standards,
such as but not limited to the following:
i. Infrastructure Requirements;
ii. Setback Requirements;
iii. Consumption of natural resources;
iv. Sewerage Disposal System;
v. Surface Water Disposal;
vi. Safety and security;
vii. Site Coverage Density;
viii. Landscaping;
ix. Visual Security;
x. Roads;
xi. Vehicle Parking;
xii. Waste Water Treatment; and
xiii. Ventilation Requirements.
H. Other requirements as may be prescribed by the TIEZA Board
a. Cost-benefit Analysis Form

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Flagship TEZs

The Flagship TEZ Program is a joint initiative of the Department of Tourism and
TIEZA to proactively develop strategically important TEZs by way of master planning
the area, granting of incentives, or providing the necessary infrastructure support.

In shortlisting the potential sites, the following criteria are employed:

a) The property must at least be fifty (50) hectares, with the owner/s having clean
title or right to develop the property;
b) It must be accessible through or near a gateway i.e. airport, seaport, or
interprovincial or national road;
c) It has or may have basic utilities such as water, power, and information and
communication technology;
d) Strong institutional support by way of a comprehensive land use plan or local
tourism development plan is desired;
e) The property in itself must offer tourism resources; and
f) The property owner/s must be willing to enter into a partnership with TIEZA
and commit to the implementation of the master plan if the site/s were to be
identified or designated as a Flagship TEZ.

The following are the current Flagship TEZs

1. Long Beach Tourism Enterprise Zone in San Vicente in Palawan

It covers 883.11 hectares

2. Rizal Park
58 hectares

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3. Mt. Samat Shrine or Dambana ng Kagitingan in Bataan

72 hectares from the foot up to the cross

4. South Palms Resort in Panglao Island, Bohol

A total of 43 hectares land

5. Bucas Grande, Surigao Del Norte

A total area of 353 hectares and under a 25 year lease with DENR-PAMB

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Ordinary TEZs

1. Ciudad de Victoria (CDV) is a proposed 58‐hectare tourism zone in Bocaue and

Santa Maria, Bulacan, along the North Luzon Expressway (NLEX). CDV is a joint
venture project among New San Jose Builders, Inc. (NSJBI), New Era University
(NEU), Bright Homes & Realty Corporation, and Iglesia ni Cristo.

2. Bravo Golf Resort and Residences (BGRR) in Dumaguete City. The facility,
formerly known as the Dumaguete Golf and Country Club, was one of the earliest
golf courses to be built in the country.

3. Hijo plantation, Inc. (HPI) is an abaca plantation in the 1940s. The 760-hectare
property has about 4.5 kilometers of beach line, two rivers lined with mangroves,
a 60-hectare second growth forest, home to wild pigs, monkeys, birds and other
animals, atmosphere of a former banana and coconut plantation, and other
features suited to tourism development. Currently there is a beach resort, Banana
Beach, open to the public; a boutique hotel resort called Lanikai; a fishing village
named The Spot and other features for tourism. However, only the 325-hectare of
its property is registered as a Mixed Use Tourism Zone.

4. Queen’s Castle TEZ is a proposed mixed‐use tourism zone in the municipality of

Medellin, province of Cebu. It is developed with a vision of creating a destination
that will contribute to the steady increase in tourist arrival in the province, thereby
creating more livelihood opportunities.

5. Resorts World Manila (RWM, or the Project), strategically located across the Ninoy
Aquino International Airport‐Terminal 3 (NAIA‐3) and adjacent to the Villamor
Golf Course in Pasay City, Manila, is a 24‐hour world‐class leisure and
entertainment facility within Newport City, a mixed‐use community of integrated
residential condominiums, hotels, restaurants, shops and offices developed by
Megaworld Corporation, an AGI subsidiary.

6. Hacienda Primera Development Corporation’s Amorita Resort was designated as

TEZ on July 26, 2018. Located in Panglao, Bohol, the Amorita Resort is
geographically positioned within the heart of a key tourism development area. It
has been recognized both locally and internationally as one of the leading luxury
resorts in the province, and local leaders have acknowledged its efforts on
community development and on cultural and environmental preservation.

7. Aton Land & Leisure Zone in Barangay Guinhalaran, Silay City is a 13-hectare
Tourism Enterprise Zone composed of a Theme Park, a Lifestyle Complex, and a
Commercial Complex.

8. Kingdom Global City TEZ in Davao City. It is under the classification of general
leisure TEZ. It has a total development cost of P7.9 billion and was master-planned
as an integrated tourism complex comprising of the Kingdome Stadium, King’s
Palace Hotel, Queen’s Palace Hotel, Aviation Complex and an amusement park.

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What are the classifications of TEZs based on existing developments?

A. Brownfield Tourism Zone (BTZ)

It refers to an area with existing infrastructure or tourism related development as
determined by TIEZA with a minimum area of five (5) hectares.

B. Greenfield Tourism Zone (GTZ)

It refers to an area with new or pioneer development or no existing infrastructure
and tourism related development as determined by TIEZA with a minimum area
of five (5) hectares.

Why do we need to know the classifications of TEZs?

Because it affects the application of incentives.

What are the classifications of TEZs?

A. Cultural Heritage Tourism Zone
These are areas that will allow the tourist to experience the places, artifacts and
activities that authentically represent the stories of the people living in the area,
past or present. The area may include, but will not be limited to:

a. Cultural landscapes;
b. Historic sites, areas and precincts;
c. Ruins, archaeological and maritime sites;
d. Sites associated with industrial, scientific and agricultural heritage;
e. Collections that house or collectively promote objects of heritage
significance;
f. Historic places and areas, including villages, small towns, cities and parts
of larger urban areas with significant cultural and heritage assets; and
g. Museums, Art Galleries, Cultural Centers, Arts & Crafts Shops, and
Antique Shops, and Cultural Sites.
B. Health and Wellness Tourism Zone
These are areas that will allow visitors to avail of quality but affordable
mainstream, traditional, or alternative healthcare services for treatment of illnesses
and health problems in order to maintain one’s health and well-being. The area
may include, but will not be limited to enterprises that are, or offer:

a. Medical and Allied Services;

b. Spas;
c. Health Farms;
d. Counseling and Rehabilitation Services; and
e. Traditional Filipino Touch Therapy.
C. Eco-Tourism Zone
These are areas that will allow visitors to experience a form of sustainable
tourism within a given natural and/or cultural area where community
participation, conservation and management of biodiversity, respect for culture
and indigenous knowledge systems and practices, environmental education and
ethics as well as economic benefits are fostered and pursued for the enrichment of

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host communities and satisfaction of visitors. The area may include, but will not
be limited to:

a. Sites of scenic natural or rural beauty;

b. Areas for observing wildlife;
c. Areas for low impact activities such as camping, trekking, climbing,
spelunking, diving, surfing, and other similar activities; and
d. Sites for observing and interacting with traditional or indigenous practices
in relation to the environment.
D. General Leisure Tourism Zone
These are areas that may offer recreational facilities that will have high visitor
density. The area may include, but will not be limited to:

a. Golf Parks/Resorts;
b. Theme Parks and Amusement Centers;
c. Convention and Meeting Centers;
d. Sports Complexes/Resorts;
e. Event Centers/Resorts;
f. Department Stores/Restaurants/Shops; and;
g. Zoos
E. Mixed Use Tourism Zone
These are areas that will allow a combination of some or all of the features
of the aforementioned zones within one area. Retirement communities and
facilities duly accredited by the Philippine Retirement Authority may be located
in General Leisure Tourism Zones, Health and Wellness Tourism Zones and
Mixed-used Tourism Zones.

What is TEZ Operator?

These are entities authorized to administer and supervise each TEZ.

Who may qualify to apply as TEZ Operator?

A. Any entity duly incorporated under the Corporation Code and other
relevant laws, or

B. Any Local Government Unit (LGU) or any instrumentality of the

government in the pursuit of their mandate

What is the investment requirement in applying as operator?

The minimum amount of investment required to be entitled to incentives provided

under the Act shall not be less than Five Million US Dollars (US $5,000,000.00) exclusive
of land acquisition costs. Provided that, in extremely meritorious cases, an amount less
than Five Million US Dollars (US $5,000,000.00) may be invested for a Cultural Heritage
Tourism Zone or an Eco-Tourism Zone if the Board deems it sufficient for the purposes,
requirements and nature of the tourism project to be undertaken therein.

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I. B. Registered Tourism Enterprises (RTE)

What is Tourism Enterprise?

It refers to facilities, services and attractions involved in tourism.

What are the classifications of Tourism Enterprise?

A. Primary tourism enterprises

a. travel and tour services;
b. tourist transport services, whether for land, sea or air transportation, for
tourist use;
c. convention organizers;
d. accommodation establishments, including, but not limited to, hotels,
resorts, apartelles, tourist inns, motels, pension houses, and home stay
operators;
e. tourism estate management services; and
f. other enterprises identified by DOT.

B. Secondary tourism enterprises

It refers to all other tourism enterprises not covered by the primary tourism
enterprises.
Examples are:
a. tour guides;
b. adventure sports services involving such sports as mountaineering,
spelunking, scuba diving, and other sports activities of significant tourism
potential; and
c. restaurants, shops and department stores, sports and recreational centers,
spas, museums and galleries, theme parks, convention centers and zoos.

What is Registered Tourism Enterprise (RTE) within TEZ?

These are tourism enterprises located within a TEZ that is duly-registered with
the TIEZA.

What are the general qualifications for registration of a tourism enterprise?

1. Any person, firm, association, partnership, corporation or any other form of

business organization may apply for registration as a tourism enterprise
within the TEZ to avail of incentives and benefits.
2. Comply with the nationality, control and/or ownership requirements of the
working capital.

What are the documentary requirements for registration?

1. Duly accomplished Application Form;

2. Securities and Exchange Commission’s Registration Certificate/Business Permit;
3. Company Profile, containing basic data/ information on their technical, financial,
marketing and management capability/ competence to undertake the proposed
project or business within the tourism enterprise zone;
4. Copies of articles of incorporation and by-laws;
5. Resolution of the applicant’s board of directors authorizing the filing of the
application; list of its directors, principal officers, and major stockholders,
including their respective bio-data;
6. List of machinery and equipment to be used by the applicant with a statement of
their capacity, ownership and/ or mode of procurement;

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7. Proposed site development plan and location map accompanied by a perspective

drawing; construction timetable/ financial schedule; detailed architectural and
engineering plan; cost estimates and specifications;
8. Clearance/ Permit from the concerned Protected Area Management Board if the
proposed business area is within a Protected Area; and
9. Other supporting documents/ papers/ clearances as may be required by the
TIEZA depending upon the nature of the business and the type of business
organization of the applicant.

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What are incentives for TEZ Operators and RTE within TEZs?

I. FISCAL INCENTIVES
A. Income Tax Holiday

BTZ GTZ

New Enterprises Exempt from tax on income for a
period of six (6) years from start
of business operation
May be extended if the enterprise
undertakes a substantial
expansion or upgrade of its
facilities prior to the expiration of
the first six years
Exempt from tax on
income for a period of six
(6) years from start of
business operation
May be extended if the
enterprise undertakes a
substantial expansion or
upgrade of its facilities
prior to the expiration of
the first six years

Existing Enterprises Non-extendible income tax

holiday if it undertakes an
extensive expansion or upgrade
of facilities. Such an income tax
holiday shall consider the cost of
such expansion or upgrade in
relation to the original
investment, but shall in no case
exceed six (6) years to be counted
from the time of completion of
the expansion or upgrade

B. Net Loss Carry Over

These enterprises shall be allowed to carryover as a deduction from the gross
income for the next six (6) consecutive years immediately following the year of the
loss, their net operating losses incurred after the registration.

C. Gross Income Taxation

Except real estate taxes and such fees as may be imposed by the TIEZA, a new
enterprise shall be pay a tax of 5% on its gross income in lieu of all national and
local taxes and license fees, imposts and assessments.

This shall be directly remitted as follows:

One – third (1/3) to be proportionately allocated among affected cities or

municipalities based on the area occupied by the TEZ Operator/
Registered Tourism Enterprise as determined by TIEZA.

One – third (1/3) to the national government

One – third (1/3) to TIEZA

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D. Tax and duty free importation of:

1. Capital Investment and Equipment

Provided, directly and actually needed and will be used exclusively by the
enterprise in its registered activity.
2. Transportation equipment and Spare parts
Provided,
a) Not manufactured domestically in sufficient quantity, of comparable
quality and at reasonable prices;
b) Reasonably needed; and
c) Will be used exclusively by an accredited tourism enterprise.
3. Goods and services
Provided, no goods shall be imported for the purpose of operating a
wholesale or retail establishment in competition with the DFPC
E. Tax Credit
Equivalent to all national internal revenue taxes paid on all locally-sourced goods
and services directly or indirectly used for services actually rendered within the
TEZ.

F. Social Responsibility Incentive

Tax deduction equivalent to fifty percent (50%) of the cost of environmental
protection or cultural heritage, preservation activities, sustainable livelihood
programs, and other similar activities as approved by the TIEZA Board.

Non-Fiscal Incentives

A. Employment of Foreign Nationals

A RTE may employ foreign nationals in executive, supervisory, technical or
advisory position for such reasonable periods and under such terms as may be
provided by the TIEZA Board, provided that the total number of foreigners shall
not exceed 5% of total workforce.

B. Special Investor’s Resident Visa

A foreign national who invests at least $200,000.00 in a TEZ and/or a RTE, his
dependents, spouse and unmarried children under 18 years of age, shall be
entitled to a special investor’s resident visa.

C. Lease of Land
Lands and buildings in each TEZ may be leased to foreign investors for a period
not exceeding fifty (50) years, renewable once for a period of not more than
twenty-five (25) years. The leasehold right acquired under long-term contracts
may be sold, transferred or assigned.

D. Right to Foreign Currency Transactions is Guaranteed

The following rights are hereby guaranteed:

1. Repatriation of investments
2. Remittance of foreign exchange
3. Foreign loans and contracts

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E. No Requisition of Investment
There shall be no requisition of the property of the TEZ Operator or the RTE,
except in the event of war or national emergency and only for the duration thereof.

What law will govern if the Tourism Enterprise is within Special Economic Zones?

Tourism enterprises located in special economic zones created under the Special
Economic Zone Act or by special charter shall continue to be governed by the same.

What are the rules on incentives if the RTE is also within an economic zone?

1. Incentives under the Tourism Act shall be without prejudice to availment of other
incentives provided in other laws.
2. There shall be no double availment of same or similar incentives.
3. The enterprise may elect to avail of the scheme provided only under one particular
law.

What is Tourism Enterprise outside the TEZ?

These are existing accommodation establishments not located within a TEZ

Who may qualify to apply for registration as a Tourism Enterprise outside the TEZ?
Only an existing accommodation establishment not located within a TEZ that shall
undertake a substantial expansion or upgrade of its facilities shall be entitled to register
and claim incentives under TIEZA. The cost of expansion or upgrade of its physical assets
should be at least 50% of the original investment.

What are the incentives for RTE outside the TEZs?

A. Economic Incentives
Under the Omnibus Investment Code, Foreign Investment Act, Special
Economic Zone Act, Bases Conversion and Development Act, and other
special laws.

B. Income Tax Holiday

Up to six (6) years for any significant expansion, renovation or upgrade in
its facilities in relation to the amount of the original investment.

C. Importation of Capital Equipment

Free of taxes and duties when necessary for such expansion, renovation, or
upgrade.

When may a Tourism Enterprise avail incentives under the Omnibus Investment
Code?

1. Tourism activities shall always be included in the Investment Priorities

Plan;
2. Rules and regulations concerning the grant of incentives to tourism
enterprises shall be jointly formulated by the BOI and the DOT;
3. The income tax holiday provided under Section 39.1 of the Omnibus
Investments Code shall also apply to existing accommodation enterprises
undergoing substantial upgrade of facilities; and

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4. Accredited tourism enterprises shall be entitled to import transportation

and accompanying spare parts free of taxes and duties provided:
(i) it shall be exclusively used by the enterprise in its operations; and
(ii) they are not manufactured domestically in sufficient quantity,
comparable quality and prices.

Incentives TEZ RTE within RTE

Operator TEZ outside
TEZ

Income Tax Holiday / / /

Gross Income Taxation / / X

Tax and Duty Free Importation of

a. Capital Investment and Equipment / / /

b. Transportation and Spare Parts / / X
c. Goods and Services / / X

Tax Credit for locally-sourced goods and / / X

services

Social Responsibility Incentive / / X

Employment of Foreign Nationals / / X

Special Investor’s Resident Visa / / X

Foreign Currency Transactions / / X

Requisition of Investments / / X

Lease and Ownership of Land / / X

Economic Incentives under Omnibus Yes, if TEZ overlaps with /

Investment Code, BCDA, SEZA other SEZ and upon election
special laws

What happens when a TEZ overlaps or encompasses an economic zone?

The DOT and the DTI shall promulgate rules and regulations to govern the
relationship between TEZs and economic zones created under the Bases Conversion and
Development Act of 1992 and the Special Economic Zone Act of 1995, provided, that such
rules and regulations shall consider the special nature and requirements of tourism in
relation to other industries, establishments and operations in economic zones.

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What are the differences between Tourism Ecozone under PEZA and TEZ under the
Tourism Act of 2009?

PEZA Tourism Act of 2009

Tourism Ecozone refers to a Tourism Tourism Economic Zone is a tract of land

Development Zone / Tourism Estate
which has been granted special economic
zone status, through PEZA registration
and issuance of the required Presidential
Proclamation, with its metes and bounds
delineated by the Proclamation pursuant
to R.A. No. 7916, as amended.
with defined boundaries master planned
to be developed into an integrated
tourism complex prescribed carrying
capacities to host tourism enterprise
facilities and services within the property
and designated as such by TIEZA Board.

Tourism Ecozone Locators refers to Registered Tourism Enterprises are

enterprises registered with PEZA for the tourism enterprises located within a TEZ
establishment and operation, within that is duly-registered with the TIEZA.
PEZA-registered Tourism Ecozones.

Income Tax Holiday for four years except Income Tax Holiday is for six years.
for LDA which is six years

What are the similarities of Tourism Ecozone under PEZA and TEZ under the Tourism
Act of 2009?

- Both Tourism Ecozone and TEZ are identified in the DOT’s Tourism Master Plans.
- Similar in some fiscal and non-fiscal incentives.

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II. DUTY AND TAX-FREE MERCHANDISING SYSTEM FOR

TOURISM PURPOSES

II. A. Duty Free Philippines Corporation

What is Duty Free Philippines Corporation (DFPC)?

It is the reorganized Duty Free Philippines pursuant to RA No. 9593.

It is mandated to operate the duty-and tax-free merchandising system in the

Philippines to augment the service facilities for tourists and to generate foreign exchange
and revenue for the government.

It has the exclusive authority to operate or franchise out stores and shops that
would sell, among others, duty-and tax-free merchandise, goods and articles, in
international airports and seaports, and in TEZs and ports of entry throughout the
country.

Where is the first outlet located?

The first duty free outlet is located at the Arrival area of NAIA while a month later
the second outlet was opened at the Departure area of NAIA.

What is the market segment of DFPC?

It caters the international travelers market, namely, the Balikbayans / Overseas

Filipino Workers (OFWs), Regular Filipino Travelers (RFTs), Foreign Individual Tourists
(FITs), and Tour Groups (comprising mostly of Japanese, Taiwanese, Chinese & Koreans).
DFP’s potential market size is dependent on outgoing and incoming travelers.

How much is the authorized capitalization of DFPC?

The authorized capitalization is 500 Million pesos, fully subscribed by the National
Government.

Why should DFPC be exempted from duties and taxes?

In other to compete in the international tax and duty free market and generate
foreign exchange and revenue for the government.

What are the duty and tax exemptions of DFPC?

a. Duties and taxes exemptions for:

1. Importation of merchandise for sale, including excise tax and VAT
exemption;
2. Purchase of locally sourced merchandise and articles to be sold at duty and
tax free stores and shops, including VAT exemption;
3. Importation of fixtures and other supplies and materials required and
necessary to ensure that the operation of the duty and tax free stores at par
with international standards, provided:
i. No commercial value;
ii. will not be subsequently sold;

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iii. directly related and necessary to the operation of the tax and duty
free store outlet.
4. Importation of promotional items, advertising materials, samples and other
articles, provided:
i. accessories to the principal merchandise for sale; or
ii. solely intended for promotional purposes as an essential part of the
effort and are without commercial value.
b. Local taxes and fees imposed by the LGUs; and
c. Corporate income taxation.

Are DFPC stores located in TEZs entitled to incentives provided for RTEs?

Yes, provided it is registered with the TIEZA. It shall be entitled to all incentives
available to RTEs in the TEZs. The enjoyment of incentives shall be without prejudice to
other incentives provided to DFPC under the Act. The importation and resale of goods
in direct competition with DFPC by registered enterprises within a TEZ shall be
prohibited.

Who are entitled to purchase tax and duty-free goods, articles and merchandise in
DFPC stores?

a. Incoming passengers within 48 hours upon arrival from a foreign country for
regular travelers;
b. Incoming balikbayans and OFWs, as defined in existing laws, within 15 days upon
arrival from a foreign country and 30 days upon arrival beginning November 15
to January 15;
c. Departing passengers with confirmed bookings destined to foreign countries
before boarding their flights or vessel at an international airport or seaport;
d. Diplomatic personnel as well as personnel of other governments and offices of
international organizations, institutions, associations and agencies entitled to tax
and/or duty exemptions pursuant to Philippine law or agreements to which the
government of the Republic of the Philippines is a signatory as endorsed by the
Department of Foreign Affairs (DFA);
e. The persons enumerated in Section 108 item (b)(2) of this Rules.
i. Family members of qualified Overseas OFWs that are entitled to the
absentee buying program as permitted by RA 9174;
ii. Departing foreign tourists who shall purchase items at such store location
and pick-up said item upon their departure from the Philippines, wherein
the item shall be picked up at the departure section of an international
airport or seaport;
iii. Upon the development of a “sealed bag” system in cooperation with the
Bureau of Customs (BOC), departing foreign tourists who shall purchase
items at such store location and present the item in a sealed bag at the
departure area of an international airport or seaport. The items, including
the corresponding transaction receipt, must be presented no later than one
month from the date of purchase and all items must remain sealed in its
bag. Failure to do so will result in the payment by DFPC of the proper taxes
and duties due on the entire transaction.

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