Speaker Ferdinand Martin G. Romualdez announced on Monday that President Ferdinand R. Marcos Jr. has signed a new law offering value-added tax (VAT) refunds to non-resident tourists. This legislation is expected to significantly boost the tourism sector and domestic commerce.
“This piece of legislation will greatly boost international tourism and the sale of goods by tourist-oriented establishments,” said Romualdez, leader of the House of Representatives.
He explained that increased tourist arrivals and purchases of locally-made products, driven by VAT refunds, would stimulate economic activities benefiting the people.
The new law, titled “An Act creating a VAT refund mechanism for non-resident tourists, adding a new section 112-A to the National Internal Revenue Code of 1997, as amended, for the purpose,” sets the VAT rate in the country at 12 percent, based on the gross selling price.
Romualdez noted that countries popular with international tourists, such as Japan and Singapore, offer VAT or tax refunds as incentives to visitors. These countries have large retail establishments that provide VAT refunds, making them highly attractive to tourists.
“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, adding that the Philippines could learn from these countries’ experiences.
Under the VAT refund law, tourists or non-resident foreign passport holders can apply for a refund if they purchase goods from accredited stores in person, take the products out of the country within 60 days from the date of purchase, and the goods are worth at least P3,000 per transaction.
The law authorizes the Department of Finance (DOF) to contract reputable, globally recognized, and experienced VAT refund operators to manage the VAT refund system for tourists. Refunds can be transferred in cash or through electronic methods.
The DOF, in consultation with the Department of Trade and Industry, Department of Transportation, Department of Tourism, National Economic and Development Authority (NEDA), Bureau of Internal Revenue, and Bureau of Customs, is mandated to issue implementing rules and regulations.
According to NEDA, the VAT refund law is projected to generate P3.3 billion to P5.7 billion in additional revenues from 2024 to 2028 and create 4,400 to 7,100 jobs annually.
