PRESIDENT Ferdinand Marcos Jr. signed into law the VAT Refund for Non-Resident Tourists measure on December 9, 2024, aiming to boost tourism, economic growth, and promote local craftsmanship.
What does this law do?
The law introduces a Value-Added Tax (VAT) refund system for non-resident tourists who make purchases in the Philippines.
Tourists can claim VAT refunds on items bought in accredited stores with a minimum total value of P3,000, provided that the goods are taken out of the country within 60 days of purchase.
Why is this important?
Economic Impact:
In 2023, tourism was crucial for the country’s economic recovery, contributing 8.6 percent to the GDP. Shopping was the second-largest expenditure for inbound tourists, highlighting its importance.
The VAT refund is expected to boost tourist spending by 30 percent, benefiting both large-scale industries and micro, small, and medium enterprises (MSMEs).
Global Appeal:
The measure aims to establish the Philippines as a premier shopping destination by encouraging tourists to spend more on locally made products.
Marcos emphasized that this initiative would make unique Filipino products, like Marikina shoes, more accessible to global consumers and help elevate their global market presence.
How will the refund work?
The Department of Finance (DOF) and Bureau of Internal Revenue (BIR) will set up the rules and regulations for implementing the VAT refund.
The process will be designed to be simple, accessible, and culturally inclusive to facilitate a seamless experience for tourists.
Financial considerations:
The estimated annual VAT refunds for tourists could range between P2.9 billion to P4.1 billion.
While this might lead to potential revenue losses, the increase in tourist spending is expected to offset these costs and result in a net economic gain.
Marcos highlighted the importance of the initiative, saying, “With this in mind, we are introducing the VAT refund program for non-resident tourists -- designed not only to stimulate more spending but to promote the Philippines as a premier global shopping destination.” (SunStar Philippines)
*** This article was made with the help of an automated editorial system.