MANILA, Philippines — Senator Sherwin Gatchalian has sought the passage of a measure that would institutionalize the creation of a value-added tax (VAT) refund program for foreign tourists in the country.
“With the hope of revitalizing our local tourism industry and driving overall economic growth, it is time we incentivize tourists into spending more money in the country,” Gatchalian said when he filed Senate Bill No. 2023 last week before Congress goes on a break.
“In view of the foregoing, the passage of this measure is earnestly sought,’” the chairman of the Senate committee on ways and means added.
President Ferdinand “Bongbong” Marcos Jr. has already approved the VAT refund program for foreign visitors starting next year.
A bill for the same program was later approved in the House of Representatives.
READ: VAT refund for foreign tourists proposal approved by House of Representatives
Under his bill, Gatchalian said tourists with foreign passports and “who are considered as non-resident alien individuals not engaged in trade or business in the Philippines” are eligible for a VAT refund for goods:
- Locally purchased in duly accredited stores by the tourists themselves;
- Taken out of the Philippines by the tourists with them within 60 days from the date of purchase; and
- The value of the locally purchased goods amounts to at least P3,000.00 per transaction.
“Tourists shall be entitled to a VAT refund in an amount not exceeding 85% of the total amount of VAT paid by the tourist on locally purchased goods that they take with them out of the country,” the senator further explained in his explanatory note of the bill.
Gatchalian believes that the continued reopening of the country’s borders is “an opportune time to entice more non-resident foreign tourists to visit the Philippines and spend their money on goods, on top of their usual expenses for services, accommodations, tours, and other forms of entertainment.”
“To be truly competitive with its peers in the Asia Pacific region, the Philippines needs to establish a tourist value-added tax (VAT) refund system, one that is unfortunately not provided in our current tax laws,” he said.