The Philippines has officially become value-added tax (VAT)-free for foreign tourists following the signing of the implementing rules and regulations (IRR) for Republic Act (RA) No. 12079, also known as the VAT Refund for Non-Resident Tourists Act. This legislation is designed to invigorate tourism by encouraging foreign visitors to shop and spend more, thereby boosting economic growth.
The IRR was signed on March 24, 2025, by Secretary Recto, alongside Bureau of Customs (BOC) Commissioner Bienvenido Y. Rubio and Bureau of Internal Revenue (BIR) Deputy Commissioner Marissa O. Cabreros. Distinguished witnesses included Department of Tourism (DOT) Secretary Christina Garcia-Frasco, Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) Secretary Frederick D. Go, and Department of Trade and Industry (DTI) Secretary Maria Cristina Aldeguer-Roque.
Under the program, non-resident tourists holding foreign passports can apply for VAT refunds on goods purchased from accredited stores amounting to a minimum of PHP 3,000. To qualify, the items must be taken out of the country as part of the tourist’s accompanied baggage within 60 days from the date of purchase. The refund applies only to tangible retail goods, such as clothing, electronics, jewelry, souvenirs, and consumables intended for personal use.
Secretary Recto emphasized the program’s potential to nearly double economic returns. “With a multiplier effect of 1.97, every 100 pesos spent by a tourist generates 197 pesos in economic output. Imagine that—almost double the return to the economy,” he stated during the ceremonial signing. He highlighted that increased spending by foreign tourists translates to more businesses, more jobs for Filipinos, higher incomes, and greater government revenue.
The Finance Secretary stressed that the program’s success hinges on two factors: the establishment of a seamless VAT refund system and a significant increase in inbound tourism. “We want more tourists to come, stay longer, spend more, and experience the Philippines with ease and convenience,” he said.
Secretary Recto also assured stakeholders of a VAT refund system that prioritizes simplicity, accessibility, and cultural inclusivity. “At the Department of Finance, we are committed to delivering a world-class, transparent, and efficient VAT refund system,” he remarked. To this end, the IRR mandates the engagement of reputable, globally recognized VAT refund operators, with refunds issued electronically or in cash to ensure ease of use.
Additionally, the Department of Tourism is spearheading initiatives to market the Philippines as a premier tourist destination. Recognizing the importance of connectivity, the Department of Finance is actively supporting infrastructure development, including airports, seaports, and transport systems, to enhance accessibility.
Secretary Recto also highlighted the government’s broader economic reforms, such as the CREATE MORE Act and the Public-Private Partnership Code, to attract investments that will further invigorate the tourism sector.
“Our shared goal is clear: Tourists should leave the Philippines with more than just souvenirs. They should leave with unforgettable experiences and the assurance that this is a country that delivers on its promises—with systems and policies that truly work,” he said.
The Finance Chief expressed optimism about positioning the Philippines not only as a land of scenic beauty and warm hospitality but as a destination that offers efficiency and excellence, making visitors eager to return time and again.
