House panel OKs VAT refund bill for foreign tourists

Panglao Island in Bohol’s white sand beach is a major attraction among local and foreign tourists. (LEO UDTOHAN / file photo)

MANILA, Philippines — A bill that would institutionalize the value-added tax (VAT) refunds for non-resident tourists purchasing goods in the Philippines was approved by a House of Representatives panel on Monday.

House Bill No. 7143, authored by the House of Representatives committee on ways and means chairperson and Albay 2nd District Rep. Joey Salceda and other lawmakers, was approved during earlier hearings.

If the bill is enacted, foreign tourists in the Philippines who purchase goods worth P3,000 and above from accredited stores get VAT exemption, provided these items are brought out of the country 60 days after the purchase.

Salceda said they expect the proposal to bolster the country’s economy, as it would attract more tourists — adding that the Philippines is one of the few remaining countries without tax exemptions for non-resident tourists.

“I expect between P10 to 40 billion in increased sales from local suppliers. That has the same nature, consequence, and character as exports. And we don’t even have to compete with other exporters. The audience is already captured,” Salceda said.

“Save for India and Cambodia, we are the last major Asian country without an operative VAT refund system for tourists. That hurts our competitiveness for tourists with, say, Vietnam and Thailand, which now receive more tourists than we do,” he added.

Salceda said their bill would also “create an additional 20-80 thousand jobs, and will also improve our gross international reserves”.

Nueva Ecija Rep. Mikaela Suansing, co-author of HB No. 7143 who was assigned to head the technical working group meanwhile allayed fears that the country would lose revenues due to the VAT exemption, saying that it would be offset by increased arrivals. (With reports from Vance Chan, trainee)

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