Press Releases

House tax panel okays PBBM-approved VAT refund for tourists

February 20th, 2023

The House Ways and Means Committee, chaired by Rep. Joey Sarte Salceda (Albay, 2nd district), approved today the draft substitute bill for the VAT refund for outbound tourists, a proposal already approved in principle by the President when it was brought up by the Private Sector Advisory Council.

“I expect between P10 to 40 billion in increased sales from local suppliers. 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 said.

“Save for India and Cambodia, we are the last major Asian country without an operative VAT refund system for tourists. That hurts our competitiveness for tourists with, say, Vietnam and Thailand, which now receive more tourists than we do.”

Salceda principally authored the measure along with Senior Vice Chair Mikaella Suansing, who chaired the technical working group drafting amendments to the original draft.

The proposal adds a new Section to the National Internal Revenue Code, which outbound tourists to refund goods to be taken out of the country, with a per transaction value of at least P3,000. These goods must be purchased from accredited suppliers.

“A VAT refund, as global studies show, increases the propensity to spend. Generally, for every 1 peso refunded, the tourist spends an additional 1.5 pesos.”

“That will create an additional 20-80 thousand jobs, and will also improve our gross international reserves,” Salceda added.

The measure also allows the VAT refund system to be administered by a service provider, as is the practice in most jurisdictions.

Boost domestic tourism, Salceda urges TIEZA

Salceda also urged the Department of Tourism, represented in the hearings by Undersecretary Shireen Gail Pamintuan, to consider amendments to the Tourism Act or Republic Act No. 9593, to allow the Department of Tourism to grant promotional incentives for domestic tourists, particularly in the meetings, incentives, conferences, and exhibitions sector.

“I am also directing SVC Suansing to look into possible amendments on the matter,” Salceda said.

“I understand that it is the MICES sector is the bulk tourism sector of the country. So, when you incentivize the MICES sector, you incentivize tourists wholesale,” Salceda added.

“I am requesting the DOT to look into a more expansive definition of incentives for the domestic tourism sector,” Salceda urged.

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