THE Philippines is set to nearly double its economic returns with the implementation of a value-added tax (VAT) refund for foreign tourists.
“With a multiplier effect of 1.97, every 100 pesos spent by a tourist generates 197 pesos in economic output. Imagine that. Halos doble ang balik sa ekonomiya (Almost double the return to the economy),” Finance Secretary Ralph Recto said, in his speech at the ceremonial signing of the Republic Act 12079, or the VAT Refund for Non-Resident Tourists’ Implementing Rules and Regulations (IRR) on Monday, March 24, 2025.
“And more money spent by foreign tourists means more businesses created, more Filipino workers hired, more jobs provided, higher incomes for our people, and more revenues for the government to collect. That’s the simple formula for growth,” he added.
Recto, along with Bureau of Customs Commissioner Bienvenido Y. Rubio and Bureau of Internal Revenue Deputy Commissioner Marissa O. Cabreros, signed the IRR. Tourism Secretary Christina Garcia-Frasco and Office of the Special Assistant to the President for Investment and Economic Affairs Secretary Frederick D. Go witnessed the event.
RA 12079 aims to attract more foreign tourists by encouraging them to shop and spend more in the Philippines, thereby stimulating economic activity.
Recto stressed that effective execution is key to unlocking the law’s full potential, saying two things must happen: the country must establish a fully functional VAT refund system and a surge in inbound tourism.
“We want more tourists to come — and we want them to stay longer, spend bigger and transact with convenience,” he said.
VAT refund process
Recto assured that the VAT refund process will be simple, accessible and culturally inclusive, ensuring that communities, businesses and tourists fully benefit from the law.
“From our end at the Department of Finance, we aim to deliver a VAT refund system that is world-class, modern and built on the principles of transparency, efficiency and ease,” he said.
The IRR mandates the DOF to engage the services of reputable and internationally recognized VAT refund operators to provide end-to-end solutions to the government. Such refunds may be made electronically or in cash to enhance the ease of doing business.
Under the IRR, non-resident tourists or foreign passport holders may apply for a VAT refund for locally purchased goods from accredited stores that are equivalent to at least P3,000. The goods must be physically taken out of the Philippines by the tourist as accompanied baggage within 60 days from the date of purchase.
The VAT refund only applies to retail and tangible goods, such as clothing, apparel, electronics, gadgets, jewelry, accessories, souvenirs, food or non-food consumables and other goods intended for personal use.
Tourist spending
According to Frasco, the Philippines recorded the highest per capita tourist spending in Asean at $2,073 per visitor, underscoring the growing appeal of high-value tourism.
She said the figure signifies the Philippines is now attracting high-quality tourists, generating greater revenue for stakeholders and creating more job opportunities for Filipinos.
Visitors are also staying longer, with the average length of stay increasing from nine nights in 2019 to an average of 11 nights. Data also showed that 70 percent of tourists coming to the country are repeat visitors
For January alone this year, the country already gained a total of US$1.1 billion or P65.3 billion from various activities, products and services related to tourism. (KOC)