Gatchalian: VAT refund scheme for foreign tourists will revitalize PH tourism

The Philippines’ tourism industry will experience a boost once the proposed implementation of the value-added tax (VAT) refund program for foreign tourists is implemented, Sen. Sherwin Gatchalian said on Friday, February 17.

Gatchalian, chairman of the Senate Committee on Ways and Means, said he is certain that the program could potentially revitalize the local tourism industry, which in turn could help drive overall economic growth.

The senator calculated that the estimated foregone revenue from the implementation of the program is about P3-billion or about 0.08% of total government revenue.

The figure is a minimal amount compared to the revenue from potential tourist arrivals that can drive the country’s overall economic growth. The internal estimate is based on pre-pandemic levels, he pointed out.

“The VAT refund program would incentivize foreign tourists into spending more money in the country in terms of shopping activities as well as spending on hotels, restaurants, and other recreation-related activities,” Gatchalian said.

“In the medium to long term, the program could attract more foreign visitors to the country, rejuvenate the local tourism industry, and create more employment opportunities for Filipinos,” he added.

Earlier, the Department of Tourism (DOT) reported a total of 2.65 million visitors from February to December last year, significantly higher than the 163,879 tourists recorded in 2021. However, this is considerably lower compared to the 8.26 million total number of tourists recorded prior to the Covid-19 pandemic.

A technical working group to create the legislation for the VAT refund program has been formed at the House of Representatives.

Malacañang earlier announced that President Ferdinand “Bongbong” Marcos Jr., had approved the recommendation of the Private Sector Advisory Council (PSAC) Tourism Sector Group to implement the refund mechanism for foreign tourists by 2024.

Such practice, commonly known as VAT refund, is common across the globe, particularly in Europe and Southeast Asia, to attract foreign tourists, Gatchalian pointed out.

“Inaasahan nating magpapalakas ito ng ating turismo na siya namang tutulong para magkaroon ng trabaho ang karamihan sa ating mga kababayan at payabungin pa ang mga industriya na naapektuhan nang husto ng pandemya (We expect that this will boost our tourism which in turn will help most of our compatriots to have jobs and further boost the industries that have been badly affected by the pandemic),” the lawmaker stressed.