President Ferdinand R. Marcos Jr. sees the newly enacted measure, providing a refund of Value Added Tax (VAT) for foreign tourists, will lift the country’s stature in the global market. 

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

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

Travel sector boost

As President Marcos signed the VAT refund mechanism for non-resident tourists on Monday, Tourism Secretary Christina Garcia Frasco said the measure is expected to significantly boost tourism-related spending, resulting in a more robust economy.

Earlier, the House Committee on Ways and Means projects a 29.8 percent increase in tourist expenditures.

“In 2023, inbound tourism expenditure on shopping reached ₱137.4 billion, highlighting its crucial role in the tourism value chain. Shopping remains a key driver of tourist activity, and this VAT refund scheme is expected to further elevate the country’s appeal,” according to Frasco.

 She added, “From handcrafted souvenirs to premium local brands, the program will encourage tourists to invest in our unique offerings. It will directly benefit micro, small and medium enterprises (MSMEs), create jobs, and drive economic growth. The projected 29.8 percent increase in tourist spending demonstrates the transformative potential of this initiative in fostering inclusive development.”

The law aims to attract more non-resident tourists to the country by providing them with a VAT Refund System on locally purchased goods.

The VAT refund scheme allows non-resident tourists to claim refunds on purchases worth at least P3,000 per transaction.

Refunds apply to goods bought in person at accredited stores, provided these items are taken out of the country within 60 days of purchase.

The legislation was passed by the Senate as Senate Bill 2415 on 23 September and adopted by the House of Representatives as an amendment to House Bill 7292 on 24 September.

 “This law is more than an economic incentive; it is an invitation for the world to experience the creativity, craftsmanship, and hospitality that make our nation unique. We applaud our President and the Legislature for this forward-thinking legislation, which strengthens our commitment to making the Philippines a more accessible and attractive destination for the global traveler,” Secretary Frasco said.

The law mandates the Department of Finance, in consultation with the Department of Trade and Industry, Department of Transportation, the DoT, National Economic and Development Authority, Bureau of Internal Revenue, and Bureau of Customs to draft and release the implementing rules and regulations within 90 days from the law’s effectivity.