Senate President Francis ‘Chiz’ G. Escudero said the value-add tax (VAT) refund mechanism for non-resident travelers is a long overdue initiative the country needs to lure more visitors and increase tourist haul.
Escudero made the statement as President Ferdinand Marcos Jr. is set to sign on December 9, 2024 the legislation amending the National Internal Revenue Code to provide for the VAT refund to visiting foreign nationals.
“Providing VAT refunds on goods purchased by tourists is something that many countries around the world have been doing for years. The tourism sector is a consistent contributor to our economy so an uptick in arrivals would provide a boost to our GDP and generate more jobs for our people,” Escudero said.
On average, a foreign tourist spends about P120,000 during a visit to the country, providing a boost to local entrepreneurs and the local economy.
Tourist arrivals in the Philippines have yet to return to pre-pandemic levels, but according to Escudero, the numbers have slowly increased in the past few years.
“By offering the VAT refund for tourists, there is reason for optimism that we will be able to entice more visitors to come to the Philippines and help us compete with our Asian neighbors and even the world in becoming a premier destination for travelers,” he said.
The tourism sector employed 6.21 million Filipinos last year, representing 13% of the workforce, but still below the 7.06 million mark before COVID-19 struck.
“Tourism has a high potential for continued growth and when more tourists enter the country, this will result in the creation of more jobs for our people,” Escudero said.
What is vital, Escudero said, is how efficient the process will be for the implementation of the law, particularly in processing the claims of the tourists, “otherwise this will not produce our intended results.”
Under the law, each purchase done in person from a duly accredited store must be worth at least P3,000 and must be taken out by the departing tourist within 60 days from the date of purchase.
SBN 2415 was authored and sponsored by Ways and Means Committee chair Sen. Sherwin Gatchalian, with Senate President Pro Tempore Jinggoy Estrada as co-author.