House Speaker Martin Romualdez commended President Ferdinand Marcos Jr. on Monday, for the newly signed law which will boost the tourism sector and economic commerce.
According to the Speaker, more tourist arrivals and increased tourist purchases of locally-made products due to VAT refunds would translate to more economic activities that can aid in benefiting Filipinos.
“This piece of legislation will greatly boost international tourism and the sale of goods by tourist-oriented establishments,” Romualdez stressed.
The President signed three laws on Monday, including the Republic Act (RA) 12079, or the VAT Refund for Non-Resident Tourists Act. According to Romualdez, this added a new section to 112-A to the National International Revenue Code of 1997.
Based on the gross selling price, the Philippines’ VAT rate is at 12%. However, countries like Japan and Singapore offer VAT or tax refunds as an incentive to their visitors. The large retail establishments in the said countries offer refunds on VAT or local sales tax, making it highly popular among tourists
“Just ask Filipinos who have visited Japan, and they will tell you that they patronize these megastores not only for the products they sell at lower prices but also for the tax refunds,” he said.
“Under the VAT refund law, tourists or non-resident foreign passport holders may apply for a refund if they buy goods from a duly accredited store in person, if the products are taken out of the country within 60 days from the date of purchase, and the goods purchased are worth at least P3,000 per transaction,” the Speaker’s press release indicated.
The law mandates the Department of Finance (DOF) to contract more reputable and experienced VAT refund operators to operate the system. The DOF is also required to issue the implementing rules and regulations, after consulting with the following departments:
- Department of Trade and Industry (DTI)
- Department of Transportation (DOTr)
- Department of Tourism (DOT)
- the National Economic and Development Authority (NEDA)
- the Bureau of Internal Revenue (BIR)
- the Bureau of Customs (BOC)
The VAT refund law is projected to raise PHP3.3 billion to PHP5.7 billion in additional revenues from 2024 to 2028, creating around 4,400 to 7,100 jobs a year.
