President Ferdinand R. Marcos Jr. on Monday signed into law a measure providing refund of Value Added Tax (VAT) for foreign tourists to attract more travelers and position the country as a “premier global shopping destination.”
Republic Act (RA) 12079 or the VAT Refund for Non-Resident Tourists will establish a VAT Refund System on locally purchased goods, Marcos said in his speech during the ceremonial signing in Malacañang.
Under the new law, tourists can claim a refund on the VAT for goods personally purchased at accredited retail outlets, provided these goods are taken out of the country within 60 days and meet a minimum transaction requirement of PHP3,000.
This initiative opens a new chapter in the Philippines’ tourism landscape, according to the President, allowing the country to compete with other tourism markets that attract tourists who are eager to take home authentic, high-quality Filipino products.
With the new law, an estimated 30 percent increase in tourist spending is projected which will benefit both large-scale industries and micro, small, and medium enterprises.
“These products tell our stories, and now, with the VAT refund, they will be able to be more accessible to global consumers, elevating once again our stature in the global market,” Marcos said.
The President ordered the Department of Finance and the Bureau of Internal Revenue to craft rules and regulations that would streamline the VAT refund process.
Speaker Martin Romualdez said more tourist arrivals and increased tourist purchases of locally made products due to VAT refunds would translate to more economic activities.
“This piece of legislation will greatly boost international tourism and the sale of goods by tourist-oriented establishments,” Romualdez said in a statement.
He cited as examples Japan and Singapore, which offer tax refunds to incentivize visitors.
“Just ask Filipinos who have visited Japan and they will tell you that they patronize these megastores not only for the products they sell at lower prices but also for the tax refunds,” he said.
Citing the National Economic and Development Authority, Romualdez said the VAT refund law is projected to raise PHP3.3 billion to PHP5.7 billion in additional revenues from 2024 to 2028 and create 4,400 to 7,100 jobs a year.
Senator Sherwin Gatchalian, author and sponsor of the measure in the Senate, said increased tourist arrivals would create jobs across various tourism-related industries, including hospitality, transportation, travel, and entertainment.
“Allowing foreign visitors to claim VAT refunds on purchases in the Philippines creates a more appealing environment for tourists and encourages them to spend more on local products, which will eventually be taken out of the country” Gatchalian said in a statement.
He also assured that any revenue loss that the government will incur from the VAT refund will be compensated by economic activities that the measure is expected to generate.
“This law is not just about short-term gains. The measure is about the long-term growth of our tourism industry and economy as a whole. This is a long-term strategy to grow the tourism industry and the economy,” he said. (PNA)
