Lawmaker questions VAT refund for foreign tourists

Local and foreign tourists enjoying a stretch of white-sand beach in Panglao Island, Bohol. (LEO UDTOHAN / file photo)

MANILA, Philippines — Alliance of Concerned Teachers (ACT) party-list Rep. France Castro questioned the need for value-added tax (VAT) refunds for foreign tourists if local tourism generates more revenues for the country.

Castro raised this concern during the House of Representatives committee hearing on ways and means on Monday, after the Department of Tourism (DOT) admitted to committee chairperson and Albay 2nd District Rep. Joey Salceda that local tourism generates more revenue.

The committee was tackling Salceda and other lawmakers’ House Bill (HB) No. 7143, which seeks to institutionalize a VAT refund mechanism for non-resident tourists in the Philippines.

“Alam ko Mr. Chair, meron tayong comparison ng mga foreign tourist here and our local. At nakikita natin, yung local natin, mas maraming nagegenerate, diba? Mas maraming mga local tourist keysa sa foreign tourists, tama ba?’’ Castro said, which Salceda confirmed.

(I know Mr. chairman, we have a comparison between the revenue generated by foreign and local tourists.  And we saw that our local tourism generates more revenue, right?  There are more local tourists than foreigners, am I right?)

Castro also opposed Nueva Ecija Rep. Mikaela Suansing’s views about HB No. 7143 — that the proposed bill can generate revenue through an incremental increase in spending of foreign tourists from P10.6 billion to P42.3 billion.

The Makabayan bloc solon said that local tourists should also receive some form of incentive if this is the case.

 “Eh bakit hindi ‘yong mga local tourist hindi natin tanggalan natin ng VAT, sa mga binibili nila?  So kung ganon, ganon ang sinasabi niyo, na mage-generate ito ng 10 billion something, eh mas malaki yung genegenerate nung mga local tourist natin eh,’’ Castro said.

(Why not exempt our local tourists from VAT on what they buy?)

Castro also pointed out that foreign tourists usually have a higher spending capacity than local tourists — making the proposal imbalanced and unfair to Filipinos.

Salceda, however, argued that the Philippines is only one of the few countries in the Asia-Pacific region with no tax-incentive policy for non-resident visitors.

If HB No. 7143 is enacted, Republic Act No. 8424 or the National Internal Revenue Code of 1997 would be amended to make non-resident tourists entitled to a VAT refund on products purchased from accredited retailers, if the products are exported within 60 days after the item was purchased, and if the goods cost at least P3,000.

According to Salceda, the country would not gain anything if tourists do not actually get to visit the Philippines — noting that the tax exemptions are a way to attract more non-residents to make their trips to the country.

He also said that having tourists buy products where they are made would help local industries.

 gsg/abc