The House of Representatives has overwhelmingly approved on third and final reading the measure creating a value-added tax (VAT) refund program for foreign tourists.
Passed on the strength of 304 affirmative votes during plenary session Monday night, March 6 was House Bill (HB) No.7143, titled, "An Act creating a VAT refund mechanism for non-resident tourists, adding for the purpose a new section 109A to the National Internal Revenue Code, as amended".
Four House members voted in the negative during the conduct of nominal voting. There were no abstentions.
Deputy Speaker and Ilocos Sur 2nd district Rep. Kristine Singson-Meehan, who presided over plenary session Monday, subsequently announced the bill’s third-reading passage.
The proposal adds a new section to the National Internal Revenue Code.
Once this is enacted, any non-resident tourist would be able to avail of a VAT refund on goods that he or she purchased from accredited retailers. The per transaction value is set at P3,000.
The main beneficiaries of the VAT refund program are non-resident foreign passport holders and/or dual citizens, who are not connected with any businesses.
As per HB No.7143, the goods must be brought out of the country within 60 days from the date of purchase.
The transaction value of P3,000 may be adjusted depending on the administrative cost of the refund, consumer index price, and other market conditions that will be specified by the Department of Finance (DOF) upon the recommendation of the Department of Tourism (DOT) secretary and Bureau of Internal Revenue (BIR) commissioner.
The measure also allows the VAT refund system to be administered by a service provider, as is the practice in most jurisdictions.
One of HB No.7143's proponents, Albay 2nd district Rep. Joey Salceda, earlier pointed out during committee discussions that the Philippines, save for India and Cambodia, is the last major Asian country without an operative VAT refund system for tourists.
"That hurts our competitiveness for tourists with, say, Vietnam and Thailand, which now receive more tourists than we do,” said Salceda, an economist.