Senator Nancy Binay on Monday hailed the offer by President Ferdinand Marcos Jr. to refund the value-added tax (VAT) collected from foreign tourists.
Binay said the President’s gesture would help “kickstart” the country’s tourism industry.
“It would be nice to see the Philippines as an alternative shopping destination and showcase our premium local brands,” the senator said.
Binay, chair of the Senate Committee on Tourism, said “we also want our tourists have a pleasant experience and the ease of traveling and shopping in the Philippines.”
“That’s why it would also be a good thing if the DOF could walk us through its (VAT refund) implementation in retail shops, department stores, in ports and airports,” she said.
She said it would seem this VAT refund program is first time for us.
“It will be much better if the DOF can present numbers and data how much will be the administrative costs in its implementation.
She also wants to know how many percent will be lost from our collection, and its impact and benefits to small- and medium-scale retailers in the tourism industry.
Binay also called on the government to add incentives to, local enterprises and entrepreneurs who promote truly ‘Gawang-Pinoy’ items rather than those stores selling imported or foreign-manufactured products.
“The complement of VAT refund program should be more towards this direction,” she further said.
Senate Finance committee chairman Sen. Sonny Angara noted that in most countries , VAT system has the refund program for tourists and non-residents alike, “hence when we travel we bring the goods and receipts home and receive the refunds in cash or through our credit cards.”
“It’s worth exploring this since in the long run it may prove to be a win because it may attract and encourage more tourist spending,” Angara said.
He added that it will make the Philippines more competitive.
Sen. Joseph VictorV Ejercito said there is a need to weigh the benefits and consult the financial experts on its effects.
He said the Philippines was not really known as a shopping destination, but more more for tourism and recreation.
“But then again the benefits will offset the revenue lost on VAT collections then we can consider,” noted the senator.
Senate Minority Leader Aquilino Pimentel III said the country needed a legislation on the VAT refund.
He said if there were legal basis to do so, then the country can and should do it to attract more foreign tourists.
However, Pimentel asked if the domestic current systems were able to detect and segregate VAT payments of foreign tourists.
“If both the law and the system are in order, then I see the value of the plan,” he said.
Sen. Chiz Escudero said most countries have this and, “for me, there is no reason for us not to offer this as well in order to attract tourists to shop in the Philippines.”
But, Escudero noted, the rules must be laid down clearly in order to avoid abuse and the possibility of tax leakage.
“Given that this is done in many countries for quite some time now, we should look into the best practices available and implement a system on vat refund for tourists/foreigners that best suits us and our needs and idiosyncrasies,” he explained.
Sen. Grace Poe noted that the lawmakers still needed to consult with experts regarding the VAT refund.
“How we can efficiently roll it out, what are the pros and cons. Will it encourage tourists to come in and spend more and offset possible VAT revenue loss,” she asked.