Marcos sees VAT refund for foreign tourists boosting Phl's global stature

President Ferdinand "Bongbong" R. Marcos Jr. sees the newly enacted measure, which provides a refund of Value Added Tax (VAT) for foreign tourists, as a way to lift the country’s stature in the global market.

Marcos signed Republic Act (RA) 12079, or the VAT Refund for Non-Resident Tourists, in a ceremony at Malacañan Palace on Monday.

RA 12079 sets the VAT Refund System on locally purchased goods, which is expected to attract more travelers to the country.

Aside from encouraging higher spending among tourists to stimulate economic growth, Marcos said the new law paved the way for the promotion of the Philippines’ unique craftsmanship of indigenous products within communities near local tourist destinations.

“It is no secret that shopping has become an essential part of the travel experience, and we are poised to capitalize on that momentum,” Marcos said, citing that the move may also position the Philippines as one of the top shopping destinations in the world.

Marcos recalled that the Philippine tourism sector played an instrumental role in the nation’s economic recovery during the post-pandemic era in 2023, contributing an impressive 8.6 percent to the GDP.

“Within this significant share, shopping emerged as the second-largest expenditure for inbound tourists,” he added.

“With this in mind, we are introducing the VAT refund program for non-resident tourists—designed not only to stimulate more spending but to promote the Philippines as a premier global shopping destination.”

The VAT refund program allows non-resident tourists to claim a rebate on purchases made within accredited stores worth P3,000—provided that the items are exported from the country within 60 days of purchase.

Marcos cited an estimated 30 percent increase in tourist spending as the projected economic impact of the newly signed law, which will benefit both large-scale industries and micro, small, and medium enterprises (MSMEs), mentioning the Filipino-made Marikina shoes as an example.

"These products tell our story, and now, with the VAT refund, they will be able to be more accessible to global consumers, elevating once again our stature in the global market,” he said.

Marcos ordered the Department of Finance (DoF) and the Bureau of Internal Revenue (BIR) to craft the implementing rules and regulations (IRR) that would streamline the VAT refund process.

He said the IRR should be “simple, accessible, and culturally inclusive.”

Based on the estimation of the DoF, the country’s VAT refunds to tourists might reach P2.9 billion to P4.1 billion annually.

However, the DoF said the projected loss can be offset by the potential increase in tourist spending and a boost in inbound tourism.

Excellent Taxpayer Service

Meanwhile, BIR Commissioner Romeo Lumagui Jr. expressed full support for the newly signed RA 12079, saying the VAT Refund program is part of the government’s effort to enhance the country’s tourism sector and attract more international visitors.

"The BIR supports the VAT Refund Mechanism for Non-Resident Tourists law and the National Government's initiative of attracting more international tourists and travelers into the country. Excellent Taxpayer Service includes the granting of a tax refund to taxpayers allowed by law to receive the same,” he pointed out.

Lumagui said the landmark law creates more economic opportunities in the tourism sector, “which in turn increases the country’s tax collections in the long run.”

Currently, the Philippines imposes a 12 percent VAT on the sale of goods and services.

Under the law, a tourist, as defined in the consolidated bill, is a foreign passport holder and a non-resident individual not engaged in trade or business in the Philippines. They may process a VAT refund via electronic or cash services from a “reputable, globally recognized, and experienced VAT Refund operator” engaged by the DoF.

Lumagui said the VAT Refund program could also serve as an “attractive feature for foreign tourists who want to save money on purchases made during their stay” in the Philippines.

He likewise sees the new program as making the Philippines a “prime travel destination.”

“The BIR will do its part in promoting the Philippines as a world-class tourist destination,” Lumagui said.