Following the signing of the implementing rules and regulations for the value added tax refund for foreign tourists, the government expects inbound tourism to further pick up, with Finance Secretary Ralph Recto saying that the country is poised to reap almost double the economic returns from the law.
“With a multiplier effect of 1.97, every P100 spent by a tourist generates P197 in economic output,” Recto claimed.
“More money spent by foreign tourists means more businesses created, more Filipino workers hired, more jobs provided, higher incomes for our people, and more revenues for the government to collect,” he added.
Recto emphasized that unlocking the law’s full potential means establishing a fully functional VAT refund system and seeing a surge in inbound tourism.
Last year, the Philippines welcomed 5.9 million international visitors and generated a record P760 billion in tourism revenues.
Under the IRR, a tourist can get a refund on VAT for locally purchased goods if these are bought from duly accredited stores and are taken out of the Philippines as accompanied baggage within 60 days from date of purchase.
The refund will apply to retain and tangible goods such as clothing, apparel, electronics, gadgets, jewelry, accessories, souvenirs, food or non-food consumables, and other goods intended for personal use.
A VAT refund for tourists is not a groundbreaking program, as many countries have offered the same for some time now. However, if the Philippine government can implement it properly, using all the tools at its disposal, particularly technology, it presents an unique opportunity to improve upon a proven concept and present a new model to the world.
Hopefully the government agencies involved are not looking at just the potential incomes and simply going for the bare minimum as they roll out this new program.*
