SM Group, DoT rally behind tourist’s VAT refund bill

The bill seeking value-added tax refund for tourists, seen to entice more foreign travelers into the country, has earned the backing of the Department of Tourism (DoT) and the country’s top conglomerate, the SM Group.

In an interview, SM Prime Holdings chairman of the Executive Committee, Hans Sy, said the measure is a very positive move, especially for mall operators and hotel owners, because such a measure would entice more tourist visitors that would book hotels, roam around to malls, then shop and eat.

“I just hope they can make it very easy and simple. However, if you go to countries like Japan, which is outright, they do a discount there as long as you show your passport. So, I hope we can do that,” he said.

On Monday, the Senate approved on the third and final reading the proposed value-added tax (VAT) refund measure for non-resident tourists, earning 20 affirmative votes, one negative, and no abstention.

Senate Bill No. 2415, or An Act Creating a Vat Refund Mechanism for Non-Resident Tourists, adding a New Section 112-A to the National Internal Revenue Code of 1997, was approved in the plenary.

SBN 2415 aims to provide non-resident tourists with VAT refunds for local purchases worth at least P3,000.

Based on the National Economic and Development Authority (NEDA) assessment, the proposed fiscal reform would generate from P3.3 billion to P5.7 billion per annum from 2024 to 2028.

To enhance Phl appeal to ASIAN neighbors

For her part, Tourism Secretary Christina Garcia Frasco said the legislation is a crucial milestone in enhancing the country’s appeal as a premier tourism destination, positioning the Philippines competitively among its regional neighbors.

“We commend the Senate and House for recognizing the potential of this VAT refund system in encouraging greater tourist spending. By allowing tourists to claim VAT refunds on locally purchased goods worth at least ₱3,000, this measure ensures that visitors have an additional incentive to purchase and bring home goods sold in the country and Filipino-made products, showcasing our local craftsmanship on the global stage,” Frasco said in a statement of support to the bill.

Further, she emphasized that the projected increase of 29.8 percent in tourist spending, as estimated by the House Committee on Ways and Means, represents a tremendous opportunity for growth in local businesses, especially micro, small, and medium enterprises, and an increase in tourism employment.

“The DoT is also aligned with the legislative intent to promote Filipino signature products such as Marikina shoes, barongs, and our traditional weaves, reinforcing the strong cultural identity of our tourism offerings. This initiative, coupled with ongoing improvements in our tourism infrastructure and innovative tourism programs, will elevate the overall travel experience for our visitors and encourage longer stay and return visits,” she said.

“We echo the sentiment that this VAT refund program is not merely about immediate gains, but a long-term investment in our tourism industry. As we continue to transform the Philippines into a tourism powerhouse, we believe that this measure will significantly contribute to our shared goal of a sustainable and globally competitive tourism sector,” Frasco further stated.