SEN. Sherwin Gatchalian has filed a measure seeking to attract foreign tourists to the country by giving them tax relief.
Senate Bill No. 2023 calls for the creation of a value-added tax (VAT) refund mechanism for non-resident tourists, wherein they will be provided VAT refund not exceeding 85 percent of the total VAT amount paid by the tourist on locally-purchased products that they may take out of the country within 60 days.
“To be truly competitive with its peers in the Asia Pacific region, the Philippines needs to establish a tourist VAT refund system, one that is unfortunately not provided in our current tax laws,” Gatchalian said.
He said the proposal aims to boost the tourist arrival in the country which has been badly affected by travel restrictions due to the COVID-19 pandemic.
Based on records from the Department of Tourism, Gatchalian said, there were around 8.26 million foreign tourists who arrived in the Philippines in 2019. But the number decreased in 2020 with only 1.48 million, 2021 with 160,000, and for 2022 the country only has some 2.65 million foreign tourists.
He said the DOT is targeting to draw more than 4,8 million foreign tourists this year.
“Taking advantage of the continued reopening of the Philippine borders leading to more economic activities, the undersigned sees this as an opportune time to entice more non-resident tourists to visit the Philippines and spend their money on goods, on top of their usual expenses for services, accommodations, tours, and other forms of entertainment,” he said in the bill’s explanatory note.
Under the bill, foreign tourists will be entitled to VAT refund for goods which are locally produced and bought in duly accredited stores by the tourists themselves, goods which will taken out of the country with them within 60 days from date of purchase, and that the value of the goods purchased should be at least P3,000 per transaction.
“The Department of Finance may secure the services of a reputable and technologically innovative service providers to facilitate and administer the VAT refund process for tourists,” he said.
Gatchalian said promoting VAT refund for tourists “can lead to consumption impact” called “tourism multiple on national income.”
“Under this concept, any form of tourist entertainment raises national income, be it hotel accommodations, food purchases, transportation, visits to sports venues, theaters, bars, museums, health services, or any other kind of service,” he added.
