Foreigners’ VAT refunds seen to boost tourism

Sen. Win Gatchalian  — Senate Public Relations and Information Bureau

MANILA, Philippines — The Senate proposal allowing foreign travelers to reclaim value-added taxes (VAT) on local goods would help attract more tourist arrivals ahead of the holiday season, Sen. Sherwin Gatchalian said on Friday.

“I am confident and optimistic that once enacted into law, this proposed measure would further enhance the country’s tourism, which would help provide employment to our countrymen,” Gatchalian said in a statement.

“I am hopeful that the measure will be enacted into law in time for the year-end holidays when many tourists come to the country to experience our Christmas and New Year festivities,” he said.

Voting 20-1, the Senate on Monday approved on third and final reading Senate Bill No. 2415, or An Act Creating a VAT Refund Mechanism for Non-Resident Tourists, which allows foreign tourists to claim VAT refunds for buying local goods worth at least P3,000.

READ: Senate okays bill on VAT refunds for foreign tourists

The system is similar to the VAT rebate mechanisms already being implemented in Singapore, Malaysia, South Korea and several countries in Europe.

Besides enticing more foreign tourists, Gatchalian, who sponsored the measure, said providing VAT refunds would help boost the country’s tourism competitiveness among Southeast Asian nations.

“The grant of a VAT refund can encourage purchases from tourists, especially since shopping has emerged as a motivating factor for travel in recent years,” the senator said.

READ: Retailers group welcome passage of VAT refund bill

Citing data from the National Economic and Development Authority, the senator said the proposed incentive for foreigners would generate as much as P5.7 billion yearly from 2024 to 2028.

He added that it would also help generate employment to about 4,400 to 7,100 Filipinos during the said period.