Marcos to DOF: Make VAT refund process simple
President Marcos on Monday called on the Department of Finance (DOF) and its attached agency, the Bureau of Internal Revenue (BIR), to ensure that the implementation of the newly signed value-added tax (VAT) refund law will be simple and seamless.
The President issued the directive after signing Republic Act No. 12079, or the VAT refund law, which allows nonresident tourists to recover the amount of VAT they paid for “goods personally purchased at accredited retail outlets” here.
Under the law, tourists may avail themselves of the refund privilege if they buy goods worth at least P3,000 and the items are brought out of the country within 60 days upon purchase.
The BIR collects a 12-percent VAT on goods sold in the country.
In his speech during the signing ceremony in Malacañang, the President expressed optimism that the VAT refund law will boost the country’s tourism industry and entice foreign visitors to buy locally produced goods.
“As we move forward, I urge the [DOF] and the [BIR] to craft implementing rules and regulations that will make this VAT refund process simple, accessible, and culturally inclusive,” Mr. Marcos said.
Boosting tourism
The President noted that while the VAT refund may at first glance lead to less government revenue, it will make up for its economic impact through an estimated 30 percent increase in tourist spending that will benefit large-scale industries and micro, small, and medium enterprises.
“Tourists who have a positive shopping experience are more likely to return—with their friends and their families—supporting our goal to become a premier shopping destination in Southeast Asia,” Mr. Marcos said.
The Philippine Retailers Association (PRA) expects a double-digit increase in revenues once the refund system is implemented, boding well for a sector which accounts for 18.6 percent of the economy.
PRA president Roberto Claudio told the Inquirer on Monday that aside from benefiting the retail sector, the VAT refund system will also make the Philippines more competitive in the tourism market, noting that it is the only Asian country not offering this incentive.
For China Bank Capital Corp. managing director Juan Paolo Colet, what is important is that “the relevant agencies just have to make sure the refund process is quick, efficient and hassle-free.”
‘Signature products’
“This initiative opens a new chapter in our tourism landscape, allowing the country to compete with other tourism markets that attract tourists who are eager to take home authentic, high-quality Filipino products,” the President said.
According to Mr. Marcos, the VAT refund program will “help [spotlight] our rich, local offerings, as the Philippines has long been a “home for unique, handcrafted items.”
He cited the Philippines’ “signature products” such as the Marikina shoes, the intricate handwoven textiles from the northern provinces, and the timeless craftsmanship of Filipino barong that all stand to benefit from this measure.
“These products tell our stories, and now, with the VAT refund, they will be able to be more accessible to global consumers, elevating once again our stature in the global market,” he said.
Efficient implementation
Senate President Francis Escudero said the long-overdue VAT refund mechanism for tourists is something that many countries around the world have been doing for years and an uptick in arrivals will provide a boost to the economy and generate more jobs.
According to Escudero, on the average, a foreign tourist spends about P120,000 during a visit to the country, providing a boost to local entrepreneurs and the local economy.
But what is vital, he stressed, is how efficient the process will be for the implementation of the law, particularly in processing the claims of the tourists, “otherwise this will not produce our intended results.”
Sen. Sherwin Gatchalian said the expected increase in tourist arrivals can translate into employment opportunities across tourism-related industries, such as hotels and hospitality, transportation, travel facilitation and entertainment. —WITH REPORTS FROM ALDEN M. MONZON AND TINA G. SANTOS
