December 10, 2024 | 12:00am
MANILA, Philippines — Non-resident tourists will soon be entitled to a refund of the value-added tax (VAT) on local goods they purchased, as President Marcos yesterday signed into law a refund mechanism to boost the Philippines’ competitiveness as a shopping destination.
Under the measure, non-resident tourists may claim a refund on the VAT for goods personally purchased at accredited retail outlets, provided the goods are taken out of the country within 60 days and meet a minimum transaction requirement of P3,000.
During the signing of Republic Act 12079, Marcos said the VAT refund would stimulate more spending, promote the Philippines as a premier global shopping destination and put a spotlight on the country’s local products.
“It is no secret that shopping has become an essential part of the travel experience and we are poised to capitalize on that momentum,” the President said.
“This initiative opens a new chapter in our tourism landscape, allowing the country to compete with other tourism markets that attract tourists who are eager to take home authentic, high-quality Filipino products,” he added.
According to Marcos, the VAT refund will make the Philippines’ signature products such as Marikina shoes, intricate handwoven textiles from the northern provinces and Filipino barongs more accessible to global consumers and elevate the country’s stature in the global market.
“The economic impact of this measure is projected to be substantial, estimating an almost 30 percent increase in tourist spending. This surge will benefit both large-scale industries and micro, small and medium enterprises – an important pillar of our local economy,” he said.
“Tourists who have a positive shopping experience are more likely to return – with their friends and their families – supporting our goal to become a premier shopping destination in Southeast Asia.”
Based on estimates by the Bureau of Internal Revenue, forgone revenues from the measure range from P4.5 billion to P6 billion every year.
However, the Department of Tourism (DOT) said the forgone revenues would be more than compensated by tourists’ spending and the jobs to be created.
“The fact that tourism contributes no less than P3.36 trillion to the economy as a combined total for domestic and international spending, the forgone revenues will be more than well-paid… Moreover, it’s not just a comparison of what is forgone and what is obtained, but it should also be taken in the light of tourism employment,” Tourism Secretary Christina Frasco said in a chance interview.
“More tourist spending will mean more people employed in the tourism industry, with businesses thriving because it becomes a very attractive tourist shopping destination,” she added.
The law requires the Department of Finance (DOF) to engage the services of one or more reputable, globally recognized and experienced VAT refund operators to provide end-to-end solutions to the government for the establishment and operation of a system for tourists. The refund may be made either electronically or in cash. — Cecille Suerte Felipe, Jasper Emmanuel Arcalas, Keisha Ta-asan, Louella Desiderio, Mark Ernest Villeza
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