VAT refund for foreign tourists: PH may lose over P4B in revenue annually

Sen. Win Gatchalian presides over the Committee on Ways and Means hearing on several measures. Voltaire F. Domingo / Senate PRIB

MANILA, Philippines — Implementing a value-added tax (VAT) refund scheme for foreign tourists will result in a foregone revenue amounting to P4.1 billion in revenue.

Department of Finance (DOF) Domestic Finance Group Director Rowena Sta. Clara bared this figure during the Senate ways and means committee hearing on the bills seeking the creation of a VAT refund mechanism for non-resident tourists.

“The foregone revenue ranges from P2.9 billion to P4.1 billion. The reason for the range is that, in the P2.9 billion, we only accounted for the apparel and general merchandise share of total shopping, while in the P4.1 billion, we accounted for the apparel, general merchandise, and grocery,” Sta. Clara said.

In a media interview after the hearing, committee chair Senator Sherwin Gatchalian said the country would be able to make up for this loss since the VAT refund scheme is also expected to usher in economic gains.

READ: Gatchalian files VAT refund bill: It’s time to incentivize foreign tourists 

“We’ll earn it in terms of shopping revenue. It’s about P9 billion. In terms of contribution to the gross domestic product, it’s about P12 billion. So we can see that we’ll still be able to compensate for the revenue loss through economic activity,” he said in a mix of English and Filipino.

The VAT refund mechanism will also open around 9,000 to 40,000 new employment opportunities in the tourism sector, Gatchalian added.

The lawmaker further said this could increase the number of foreign tourists in the country by 140,000.

But this figure, he noted, can further rise as years go by.

Gatchalian set sights on having a digital VAT refund scheme in the country within the year, noting that the technology and concept for it already exists and is only awaiting implementation through legislation.

“I’ll sponsor this (the bill). We don’t see anything contentious about it, so hopefully, we can pass it in a month’s time. We can implement this by the end of the year,” he said.

In March, the VAT refund bill earned the final approval of the House of Representatives.

RELATED STORIES: 

Senators weigh in on VAT refund for foreign tourists

Philippines to offer VAT refund to foreign tourists by 2024

JPV