Senator pushes for VAT refund bill to attract more tourists 

A SENATOR on Sunday pushed for the passage of a measure that will give value-added tax (VAT) refund for foreign tourists to encourage more visitor spending in the Philippines.  

“To be truly competitive with its peers in the Asia-Pacific region, the Philippines needs to establish a tourist VAT refund system, one that is unfortunately not provided in our current tax laws,” Senator Sherwin T. Gatchalian said in the bill.  

Under the proposed measure, non-resident tourists with a foreign passport not engaged in trade or business in the Philippines who bring out at least P3,000 worth of Philippine goods within 60 days after arrival can avail of VAT refunds.  

The VAT refund should not exceed 85% of the total amount of VAT paid by the tourist, according to the bill.  

The Finance secretary, with recommendations from the Commissioner of Internal Revenue, may adjust the threshold amount based on the changes in the administration cost for the refund, consumer price index, and other market conditions.  

The Finance department may tap a “reputable and technologically innovative service provider” to handle the VAT refund process.  

Refunds not claimed within 60 days will be automatically remitted to the national treasury.  

The bill is currently pending at the committee level, while a similar measure in the House of Representatives was approved on third reading on March 6.  

The Philippines currently applies a uniform 12% VAT on nearly all sales of services and imports in the country.  

Many Asian countries like Thailand and Indonesia have been allowing foreign visitors to enjoy a VAT refund.  

“Any form of tourist entertainment raises national income, be it hotel accommodations, food purchases, transportation, visits to sports venues, theaters, bars, museums, health services, or any other kind of service,” Mr. Gatchalian said.  

Department of Tourism (DoT) data show that 2.02 million foreign tourists visited the Philippines last year, with international borders reopened in February, generating approximately $3.68 billion in revenue.  

Before the travel restrictions during the coronavirus pandemic starting in March 2020, the country logged in 8.26 million international tourist arrivals in 2019, based on DoT records.   

Tourism revenue that year stood at P482.16 billion, with inbound tourism expenditure accounting for 3% of Philippine gross domestic product, while domestic tourism expenditure accounted for 16%. — Beatriz Marie D. Cruz