VAT refund for foreigners to propel tourism recovery

FILE: Passengers line up at the departure area of the Ninoy Aquino International Airport (NAIA) Terminal 1 in Pasay City. (PNA photo by Avito Dalan)

MANILA – President Ferdinand R. Marcos Jr.’s approved value-added tax (VAT) refund for foreign tourists starting 2024 will revitalize the tourism industry further but local enterprises should get a share of the incentives, too.

As the Philippines will be promoted as an alternative shopping destination, Sen. Nancy Binay said manufacturers of Philippine-made products must be included in the program.

“Kesa dun sa mga store na nagbebenta ng imported or foreign-manufactured products, sa tingin ko, ‘yung complement ng (Unlike stores that sell imported or foreign-manufactured products. I think, the complement of) VAT refund program should be more towards this direction,” Binay said in a statement on Monday.

She has asked the Department of Finance (DOF) to share to the Committee on Tourism, which she chairs, the details of the implementation in retail shops, department stores, ports and airports.

“Parang first time yata itong VAT refund program sa atin. Maganda kung makakapag-present ang DOF ng numero at data kung magkano ang aabuting administrative costs sa implementation nito, ilang percent ang mababawas sa collection natin, at ano ang impact at benefits sa small-and-medium-scale retailers sa industriya ng turismo (This is the first time to have a VAT refund program. It is better if the DOF can present numbers and data on the administrative cost of the implementation, how much will we lose in our collection, and its impact and benefits on small-and-medium-scale retailers in the tourism industry),” Binay said.

Sen. Grace Poe likewise wants to know the pros and cons of the VAT refund.

“We have to consult the experts regarding VAT refund. How we can efficiently roll it out. Will it encourage tourists to come in and spend more and offset possible VAT revenue loss?” Poe said in a separate statement.

In a news release on Sunday, the Presidential Communications Office announced that Marcos approved the VAT Refund Program following the “Quick Wins” recommendations of the Private Sector Advisory Council (PSAC) Tourism Sector Group.

The PSAC is composed of business leaders and industry experts providing technical advice to the President in achieving the government’s economic objectives in six key sectors — agriculture, digital infrastructure, healthcare, infrastructure, jobs generation and tourism.

A total of 2.65 million tourists visited the country from February to December last year, of which 2.02 million were foreign tourists while 628,445 Filipinos were overseas or returning Filipinos.

This figure is higher than the 2021 tourist arrivals of 163,879 but lower than the pre-pandemic level of 8.26 million.