Estrada: VAT rebate to boost tourist traffic in PH
Published May 19, 2023 07:37 am
Senator Jinggoy Ejercito Estrada has called on lawmakers to consider legislating a value-added tax (VAT) refund mechanism for foreign tourists to boost visitor arrivals in the Philippines.
Estrada said granting a rebate of the 12 percent VAT on goods they bought from the country, similar to the practice of other countries will improve tourism.
“Kung tataas ang benta ng mga locally made products, hindi lang ang mga MSMEs (micro, small and medium enterprises) ang makikinabang dito dahil kaakibat ng paglago ng negosyo nila ay ang pagbubukas o pagbibigay ng trabaho sa ating mga kababayan (If the sales of locally made products increase, not only the MSMEs will benefit from this because related with the growth of their business is the opening or provision of jobs to our countrymen),” the senator said.
In this regard, Estrada, head of the Senate Committee on Labor, Employment and Human Resources Development filed Senate Bill No. 2148, titled "An Act Creating a VAT Refund Mechanism for Non-Resident Tourists, adding for the purpose a new Section 112-A to the National Internal Revenue Code of 1997, as amended."
Under the measure, tourists shall be eligible for a VAT refund on goods costing at least P3,000 purchased from authorized retailers in the country, within 60 days from the date of purchase.
Under the bill, the secretary of the Department of Finance (DOF), upon the recommendation of the secretary of the Department of Tourism (DOT) and the commissioner of the Bureau of Internal Revenue (BIR), is authorized to adjust the threshold based on administrative costs of processing refunds, inflation, and other market conditions.
“Many studies have pointed out the multiplier effect of tourism. Direct spending may be a predominant contributor to GDP (gross domestic product), but indirect effects are also significant, suggesting a strong linkage with the local economy and in job generation,” he said.
Aside from Estrada, another senator who also filed a similar bill is Sen. Sherwin Gatchalian.
However, some senators, specifically, Senators Francis Escudero and Grace Poe believe it is necessary to come up with clear rules for the implementation of a VAT refund program for international tourists.
Sen. Sonny Angara, chairman of the Senate Committee on Finance, said the VAT Refund Program, is “worth exploring,” echoing Estrada’s explanation that other countries’ VAT systems has a similar refund program for foreign tourists.