The Philippines has officially launched a value-added tax (VAT) refund system for foreign tourists, aiming to significantly boost tourism revenue by encouraging increased spending on local goods.
According to the Department of Finance (DOF), the refund scheme initiative, formalized through the signing of the implementing rules and regulations (IRR) for Republic Act No. 12079, or the VAT Refund for Non-Resident Tourists, is designed to enhance the country's appeal as a shopping destination.
Under the new regulations, non-resident tourists holding foreign passports can claim a VAT refund on locally purchased retail goods valued at ₱3,000 or more, provided these items are taken out of the country as accompanied baggage within 60 days of purchase.
Eligible goods include clothing, electronics, jewelry, and souvenirs intended for personal use.
In a statement on Monday, March 24, Finance Secretary Ralph G. Recto said that the economic impact of this new VAT refund policy is expected to be substantial, with a multiplier effect of 1.97, meaning every ₱100 spent by tourists generates ₱197 in economic output.
Recto added that increased tourist spending will stimulate business growth, create jobs, and generate more government revenue.
To ensure the system's success, the DOF said the government will engage internationally recognized VAT refund operators to provide efficient, transparent, and accessible refund services, available electronically or in cash.
Recto also noted the importance of the Department of Tourism’s (DOT) role in promoting the Philippines as a premier tourist destination and encouraged infrastructure development to enhance connectivity.
He assured stakeholders that the government will accelerate the implementation of key economic laws to attract further investment in the tourism sector.
These law include the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act and the Public Private Partnership (PPP) Code.
Recto said that the goal is to create a seamless and culturally inclusive experience for tourists, ensuring they leave with a positive impression of the Philippines as a welcoming and efficient destination.
He added that the implementation of this system will make the Philippines a prime destination for returning tourist.