VAT refund for non-resident tourists must pass this year―Sen Gatchalian


THE head of the Senate Ways and Means Committee is confident the proposed value-added tax (VAT) refund measure for nonresident tourists “could likely be enacted into law within the year,” in a vital boost to the country’s bid to ramp up growth and recovery as revenue in many sectors are seen to well-offset the forgone revenue from the bill.

To underscore the urgency of enacting the bill into law, Senator Sherwin T. Gatchalian noted that the Philippines is the only remaining country belonging to the Association of Southeast Asian Nations (Asean) that is yet to adopt a VAT refund program for foreign tourists.

Proponents believe the measure will enhance the country’s competitiveness as a tourist destination in Asia and boost tourist arrivals to its pre-pandemic level of 8.2 million in 2019.

Gatchalian wants the proposed value-added tax (VAT) refund measure for non-resident tourists to “provide a seamless experience” to ensure that the goal of attracting more tourists is realized.

“Customer experience is very important and what we want is a seamless experience when non-resident tourists claim the refund at the airport,” the lawmaker said last Monday.

The VAT-refund process should be in a digital form similar to those adopted by countries such as Singapore to make it easier for foreign tourists to claim the refund, Gatchalian explained. A provision in the proposed measure should also be able to prevent possible abuse by some unscrupulous individuals who might want to take advantage of the program.

The measure, as well, should include a provision on the accreditation of retailers that would be recognized for the VAT refund, the lawmaker said. Such an accreditation process would deter those who may attempt to defraud the government through the VAT-refund program, according to Gatchalian. Moreover, such an accreditation process should make it easier for micro and small enterprises to be included in the VAT refund scheme.

“I really want to give special attention to local products,” the senator stressed, projecting that “this can be a good opportunity to promote local products because there are plenty of mom-and-pop stores that we need to accommodate and help join in the bandwagon of this VAT-refund scheme,” he said.

The Senate Ways and Means Committee will also tackle the possibility of including overseas Filipino workers or Filipino expats based abroad in the VAT refund scheme.

Proponents have projected shopping revenue of about P9 billion with the measure’s enactment―an amount, Gatchalian said, that can compensate for an estimated foregone revenue of P4 billion.

He added that the said tax reprieve is seen to contribute about P12 billion to the country’s gross domestic product.