Saint Louis University

SCHOOL OF ACCOUNTANCY MANAGEMENT AND COMPUTING STUDIES

Baguio City

1. What are corporations created under Republic Act 9593 otherwise known as “Tourism Act of
2009”? Briefly discuss the corporations based on the following:
a. Mandate - Tourism Enterprise Zones (TEZ)
The Act encourages the creation of Tourism Enterprise Zones (TEZs) that will
serve as centers for tourism growth.
Tourism Infrastructure and Enterprise Zone Authority (TIEZA)
TIEZA is responsible for establishing, regulating, and supervising TEZs formed
under this Act, as well as developing, managing, and supervising tourism
infrastructure projects around the country.
Duty Free Philippine Corporation
As a body corporate, DFPC is responsible for running the Philippines' duty- and
tax- free retailing system, which aims to improve tourist services while also
producing foreign exchange and money for the government, as required by E.O.

b. Board composition –The TIEZA shall be governed and its powers exercised by a
Board of Directors ("TIEZA Board"), composed as follows:
(a) The Department Secretary, as Chairperson;
(b) The TIEZA Chief Operating Officer, as Vice Chairperson;
(c) The TPB Chief Operating Officer;
(d) The DPWH Secretary;
(e) The DENR Secretary;
(f) The DILG Secretary: and
(g)On the suggestion of the Tourism Congress, the President will designate five (5)
representative directors from a list of at least three (3) nominees each
category as indicated in Section 67. They must be Filipinos with demonstrated
competence in business management, marketing, finance, tourism, and
other related disciplines, and they must serve for a period of three (3)
years, with a maximum of three (3) years of extension

c. Benefits granted by RA 9593 to the corporations – Capitalization - The TIEZA shall

have an authorized capital of Two hundred fifty million pesos (Php250,000,000.00)
which shall be fully subscribed by the national government.
 Collection and Allocation of Travel Taxes. - Provided that the national government
shall look for alternative funding sources for programs funded by the travel tax in the
event of a phase out of travel tax collection following international agreements.

The government’s contribution to the Higher Education Development Fund, equivalent to

forty percent (40%) from the total gross collections of the travel tax, shall be retained:
Provided that the Commission on Higher Education (CHED) shall give priority to
tourism related educational programs and courses. The ten percent (10%) share of the
National Commission for Culture and the Arts from the total gross collections of the
travel tax shall likewise be retained.
 Exemption from Payment of Corporate Income Tax – Not withstanding any provision
of existing laws, decrees, and executive orders to the contrary, the TIEZA shall be
exempt from the payment of corporate income tax, as provided under the NIRC.

d. Funding – The TIEZA shall obtain the funds for its operations from the following:
(a) Fifty percent (50%) of the proceeds from travel tax collections;
(b) A reasonable share from the collections of the Office of Tourism Resource Generation, to be
determined by the Department;
(c) Income from projects managed by the TIEZA; and
(d) Subsidies or grants from local and foreign sources that may be received by the TIEZA

Funding - A minimum of fifty percent (50%) of the annual net profits of the DFPC shall be remitted
automatically to the Office of the Secretary to fund tourism programs and projects, in lieu of its
statutory remittance to the national government under Republic Act No. 7656, seventy percent (70%)
of which shall be given to the TPB.
(15 points)

2. a. Differentiate TEZ operator from TEZ administrator. – The term "TEZ operator" refers to
a company that has been lawfully incorporated under Batas Pambansa Blg. 68, also known as the
Philippine Corporation Code, and other relevant laws, with capital contributed by local governments and/or
private companies WHILE “TEZ” Administrator is a person appointed by a TEZ operator's Board of
Directors.

b. Differentiate TEZ operator from TEZ overseer. - The term "TEZ operator" refers to a
company that has been lawfully incorporated under Batas Pambansa Blg. 68, also known as the Philippine
Corporation Code, and other relevant laws, with capital contributed by local governments and/or private
companies WHILE "TEZ Overseer" is a term used by the TIEZA to refer to a person who shall be
appointed by it to perform such functions as may be delegated by law in accordance with law.
(5 points)

3. You were approached by Mr. Uncle Sam, a rich old American businessman who married a
beautiful Filipina to invest here in the Philippines particularly in the field of tourism. His wife owns a beautiful
place at Coron, Palawan which can be used as tourist spot or destination. Uncle Sam asked your help in
creating or designating the place of his wife as a tourism enterprise zone (TEZ). Explain to Uncle Sam how
is the process of designation of a TEZ? (5 points)

On the recommendation of any LGU qr private entity, the TIEZA shall designate TEZs, and
"Carrying Capacity" refers to the number of people who can be supported in a given area within natural
resource limits and without degrading the natural, social, cultural, and economic environment for current
and future generations. The carrying capacity is determined using an accepted model or approach for
determining the maximum number of people for tourist development in any given space at any given
moment.

4. How are tourism enterprise zones (TEZ) administered? Explain. (5points)

A TEZ operator is responsible for administering and supervising each TEZ. Unless the TEZ
operator is an LGU or other government instrumentality pursuing its missions, where capital may be
contributed by LGUs and/or private companies, a TEZ operator shall be an entity lawfully incorporated
under the Corporation Code and other relevant legislation.

5. Gwapo Corporation is the TEZ operator of Baguio City Tourism Enterprise Zone. In 2021,
Expose Hotel corporation applied with the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) for
the grant of income tax holidays for its hotel inside the Baguio City Tourism Zone. TIEZA granted Expose
Hotel corporation income tax holiday to 2027. In 2027, prior to the expiration of the six (6) year income tax
holiday, Expose Hotel corporation applied for another six (6) year income tax holiday with TIEZA. TIEZA
again granted another six year income tax holiday. Is TIEZA correct in granting the extension of six (6) year
income tax holiday? (5points)

No, because Gwapo Corporation did not expand or enhance its facilities significantly prior to the
end of the first six years. If the Gwapo Corporation expands their hotel or upgrades their businesses, the
TIEZA will prolong their income tax holiday for another six years.

6. Ajinamoto is a Filipino corporation serving Japanese foods. It applied with Tourism Infrastructure
and Enterprise Zone Authority (TIEZA) registration as tourism enterprise. However, its restaurant is located
outside the boundary of Baguio City Tourism Enterprise Zone. TIEZA still registered it. Since it is a
registered enterprise under TIEZA, Ajinamoto applied for six (6) year income tax holiday because of the
significant expansion and upgrading being done at the restaurant. TIEZA denied the application for six (6)
year income tax holiday because Ajinamoto is not entitled to it. Is TIEZA correct? Explain. (5 points).

No, Because a business that isn't in a TEZ can claim the 6-year holiday tax. Because Ajinomoto is
a tourism enterprise, it may be eligible for incentives under the Omnibus Investment Code, and the income
tax holiday will be extended to businesses that acquire capital for expansion or significant facility
improvements.

7. Silent Night corporation is the owner of a hotel constructed within the Baguio City Tourism
Enterprise Zone. It applied for accreditation with the Department of Tourism as a primary tourism
enterprise. Thereafter, it applied for the grant of tax free and custom duties free importation of its oversized
bath tubs which came from Europe which are to be used in its hotel. The Department of Tourism denied its
application for the tax free and custom duties free importation. Silent Night corporation appealed to the
Department of Tourism on the ground that since it is an accredited primary tourism enterprise, it should be
granted tax free and custom duties free importation of its oversized bath tubs which came from Europe
which are to be used in its hotel. Is Silent Night Corporation correct? Explain. (5 points)

YES, Because the importation of transportation and related spare parts by new and developing
registered firms is exempt from customs charges and national taxes under RA 9593 Chapter V, Section 86.
The Silent Night corporation has the ability to appeal the denial of the Tax Fee and Custom Fee to the
Department of Tourism.