House Endorses Approval of Bill Seeking to Refund VAT for Foreign Tourists
The House of Representatives endorsed the approval of the proposed bill that enables refunds for the value-added tax (VAT) for foreign tourists to the Senate on Monday.
With 304 affirmative and 4 negative votes, the proposed House Bill (HB) 7292 aims to boost tourism in the Philippines. The HB seeks to allow foreigners to have a VAT refund on purchased products worth at least ₱3,000 per transaction and entitle them to claim VAT refund through service providers.
Moreover, the bill states that the purchased goods must be brought outside of the country within 60 days from the date of the transaction.
HB 7292 also seeks authorization from the Department of Finance (DOF) Secretary to adjust the threshold. Adjustment factors may include administration costs in processing refunds, consumer price index, and other market conditions. These factors are upon the recommendation of the Tourism Secretary and the chief of the Bureau of Internal Revenue (BIR).
The HB defines a tourist as a foreign pass holder without residence in the Philippines and is not engaged in any trade or business.
According to the bill’s author House Committee on Ways and Means Chairman Joey Sarte Salceda, the Administration already approved the proposal in principle.
Salceda stated that he expects between ₱10 billion to ₱40 billion in increased income from local suppliers for the first year if the HB is enacted into law.
Salceda cited, “That has the same nature, consequence, and character as exports. And we don’t even have to compete with other exporters: the audience is already captured.”
Salceda added, “A VAT refund, as global studies show, increases the propensity to spend. Generally, for every ₱1 refunded, the tourist spends an additional ₱1.50. That will create an additional 20,000 to 80,000 jobs and will also improve our gross international reserves.”
The Department of Tourism (DOT) aims to welcome 4.8 million visitors, which could generate ₱2.58 trillion in revenue for 2023.
