Senator Win Gatchalian is seeking to boost foreign tourist arrivals in the country and create more jobs with the establishment of a mechanism for a refund of value-added tax (VAT).
“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, as he filed Senate Bill 2023 or An Act Creating a VAT Refund Mechanism for Non-Resident Tourists.
Under the proposed measure, foreign tourists will be provided VAT refund not exceeding 85% of the total amount of VAT paid by the tourist concerned on locally-purchased goods that they take with them out of the country within 60 days.
“Promoting VAT refund for tourists can lead to a consumption impact known as ‘tourism multiple on national income’,” Gatchalian said. He explained that 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.
“With the hope of revitalizing our local tourism industry and driving overall economic growth, it is time we incentivize tourists into spending more money in the country,” the senator said.
Once in place, the proposed measure is expected to boost tourist arrivals in the country. Prior to the COVID-19 pandemic, the tourism department recorded approximately 8.26 million foreign tourists in 2019. This number declined to 1.48 million, 0.16 million, and 2.65 million in 2020, 2021, and 2022, respectively. For this year, the department hopes to draw in 4.8 million foreign tourists and generate at least $5.8 billion in revenues.
“Napapanahon ito upang akitin ang mas marami pang mga dayuhang turista na bumisita sa ating bansa at palakasing muli ang industriya ng turismo. Inaasahan natin na magreresulta ito sa mas maraming trabaho para sa ating mga kababayan,” Gatchalian concluded.