Secretary Frederick Go, the Special Assistant to the President for Investment and Economic Affairs (SAPIEA), emphasized the Philippines’ commitment to strengthening its tourism industry with the approval of a value-added tax (VAT) refund mechanism for non-resident tourists.
The initiative, signed into law by President Ferdinand Marcos Jr. on Dec. 9, 2024, aligns the Philippines with global best practices and regional peers like Thailand, Malaysia and Singapore.
“The enactment of the VAT refund law for non-resident tourists is a direct response to the clamor from local tourism groups, demonstrating our government’s responsiveness to our stakeholders,” Go said.
He said the program aims to incentivize foreign travelers to spend more locally, thereby driving economic growth and job creation.
Department of Tourism (DOT) Secretary Christina Garcia Frasco said the new law is a major step in enhancing the Philippines’ position as a premier tourist destination.
“The VAT refund mechanism will strengthen our tourism appeal by providing an opportunity for affordable shopping while supporting local industries and small businesses,” she said.
The new law allows non-resident tourists with foreign passports to claim VAT refunds on locally purchased goods, provided they meet certain conditions.
These include a minimum purchase threshold of P3,000 per transaction and the exportation of goods out of the country within 60 days of purchase.
Refunds may be issued electronically or in cash through accredited stores, with the Department of Finance (DOF) overseeing the program’s implementation.
According to the National Economic Development Authority (NEDA), the VAT refund mechanism could generate P3.3 billion to P5.7 billion annually and create up to 7,100 jobs per year from 2024 to 2028.
DOT projections estimate a 29.8-percent increase in tourist expenditures, with shopping already accounting for P137.4 billion in inbound spending in 2023.
“The program will allow tourists to explore our local craftsmanship, souvenirs, and premium local brands, creating opportunities for micro, small and medium enterprises,” Frasco said, adding that the VAT refund scheme would create significant opportunities for inclusive economic growth and development.