Senators open to VAT refund program to boost PH tourism but...

Several senators on Monday, January 30 said they are amenable to the government's move to grant Value-Added Tax (VAT) refunds to foreign tourists but stressed the need for public consultations on the matter.

Senator Nancy Binay said she welcomes President Ferdinand “Bongbong” Marcos Jr.’s move to help kickstart the Philippine’s tourism industry by offering VAT refunds to foreign tourists but hopes the Department of Finance (DOF) would present numbers and data on how much administrative costs the government would incur when it is implemented.

“It would be nice to see the Philippines as an alternative shopping destination and showcase our premium local brands,” Binay said.

“Gusto rin natin (We also want) that our tourists have a pleasant experience and the ease of traveling and shopping in the Philippines. That's why, it would also be a good thing if the DOF could walk us through its implementation in retail shops, department stores, in ports and airports,” she said.

While it seems to be the first time for the government to impose a VAT refund program, it would be good if the DOF could also cite how much would be deducted from the government’s collection, and what it’s impact and benefits would be on small and medium-scale retailers in the tourism industry.

“Dagdagan din natin siguro ng incentives yung mga local enterprises and entrepreneurs who promote truly 'Gawang-Pinoy' items kesa dun sa mga stores na nagbebenta ng imported or foreign-manufactured products. Sa tingin ko, 'yung complement ng VAT refund program should be more towards this direction (Maybe we should also increase incentives for local enterprises and entrepreneurs who promote truly 'Gawang-Pinoy' items instead of stores that sell imported or foreign-manufactured products. I think that the complement of the VAT refund program should be more towards this direction),” Binay said.

Sen. Sonny Angara, Senate Committee on Finance chairman, said the VAT refund program is worth exploring.

“Most countries’ VAT system has the refund program for tourists and non-residents. Hence, when we travel we bring the goods and receipts home and receive the refunds in cash or through our credit cards,” Angara said.

“It’s worth exploring since in the long run it may prove to be a win since it may attract and encourage more tourist spending; it makes us more competitive,” he said.

Sen. Joseph Victor “JV” Ejercito also said there is a need to weigh the benefits and consult the financial experts on the effects of the proposed VAT refund, considering that the Philippines is not really known as a shopping destination but more for tourism and recreation.

“But then again the benefits will offset the revenue lost on VAT collections, then we can consider,” Ejercito said.

Sen. Grace Poe also stressed the need to consult with experts regarding the VAT refund program, especially on how the government can “efficiently roll it out, what are the pros and cons” and whether it would encourage tourists to come in and spend more and offset possibel VAT revenue loss.

Sen. Aquilino “Koko” Pimentel III also said that if there is legal basis to do so, the government can pursue the rpogram and “should do that to attract more foreign tourists.”

“Also, are our current systems able to detect and segregate VAT payments of foreigners who are tourists? If both the law and the system are in order, then I see the value of the plan,” Pimentel said.