Retailers support VAT-refund for tourists 

The Philippine Retailers Association (PRA) said it is hoping the government will heed its call to implement value-added tax (VAT)-free shopping for tourists, according to a report by BusinessMirror.

Among the Association of Southeast Asian Nation (Asean) countries, the Philippines is “probably one of the few countries left that don’t implement a VAT refund scheme for tourists,” PRA Chairman Paul A. Santos said in a news briefing last Monday.

Santos noted there’s a need to implement the tax measure to encourage outbound tourists to do their shopping in the Philippines.

“Shopping is an integral part of the tourist experience. You go visit a country like Hong Kong or Singapore, apart from seeing the sites [and] eating, the next thing that you do is shop,” he said on the sidelines of the “Philippine Furniture Furnishings Market” event in Pasay City.

“You want tourists to spend more of their dollars or euros in Philippine shops. We look at the VAT and duty-free exemption extended to these visitors as well,” the PRA chairman added. Santos stressed that the country’s current legislation doesn’t have a “mechanism that authorizes this scheme.” Instead, he noted, the only exemption scheme that the country has is the de minimis rule in the Customs Modernization Act.

“But it just says that certain imports but it refers to imports, not domestic purchases whose VAT and duty components should be refunded back to tourists,” Santos said.

He also noted that President Ferdinand R. Marcos Jr. himself has endorsed the measure to Congress, adding that “we will probably see some action from the Congress when they resume sessions in July.”

Last March, the House of Representatives endorsed for Senate approval the bill creating a VAT refund mechanism for non-resident tourists.

This, after lawmakers—voting 304 affirmative and 4 negative—approved on third and final reading House Bill (HB) 7292 to expand the country’s competitiveness in tourism vis-à-vis its peers in the regions.

The bill seeks to allow foreign tourists to claim a VAT refund on purchased goods worth at least P3,000 per transaction from accredited retailers. The measure also entitles tourists to claim VAT refund through service providers on goods purchased.

The bill, however, provides that goods must be taken out of the country within 60 days from the date of purchase.

HB 7292 also seeks to empower the secretary of the Department of Finance to adjust the threshold, taking into account administration costs in process refunds, consumer price index and other market conditions, upon the recommendation of the Tourism Secretary and the chief of the Bureau of Internal Revenue.

The bill defines tourist as a foreign pass holder who is a non-resident individual not engaged in trade or business in the Philippines.

The principal author of the bill, House Committee on Ways and Means Chairman Joey Sarte Salceda, said this proposal was already approved in principle by the President when it was brought up by the Private Sector Advisory Council.

If enacted into law, Salceda said he expects between P10 billion to 40 billion in increased sales from local suppliers for the first year of the implementation of the provision in the bill.