Tourist spending to rise nearly 30% with VAT refund law in place — DoT

TOURIST spending is projected to increase 29.8% if the government passes the value-added tax (VAT) refund law for foreign tourists, according to the Department of Tourism (DoT).

In a statement on Thursday, the DoT expressed support for the passage of the refund legislation, which it called “a crucial milestone in enhancing the country’s appeal as a premier tourism destination, positioning the Philippines competitively among its regional neighbors.”

“The projected increase in tourist spending, as estimated by the House Committee on Ways and Means, represents a tremendous opportunity for growth in local businesses, especially micro, small and medium enterprises (MSMEs), and an increase in tourism employment,” it added.

On Monday, the Senate approved on final reading, Senate Bill No. 2415, which will allow tourists to claim VAT refunds on locally purchased goods worth at least P3,000.

A counterpart bill for the proposed measure was approved by the House of Representatives on March 6, 2023.

The measure is also seen as an opportunity to promote products such as Marikina shoes, barongs, and traditional weaves, it said.

“This initiative, coupled with ongoing improvements in our tourism infrastructure and innovative tourism programs, will elevate the overall travel experience for our visitors and encourage longer stays and return visits,” the DoT said.

At the 2024 Outstanding Filipino Retailers Awards Night late Wednesday, Philippine Retailers Association President Roberto S. Claudio said that the passage of the measure is being closely watched by the retail sector.

He said that the Philippines is the only country in Asia where tourists do not get VAT refunds.

“So, tourists never came to the Philippines to do their shopping. Shopping is the biggest expense of any tourist worldwide,” he said.

“This is one explanation why Thailand, Vietnam, and Singapore are getting more tourists than our country,” he added.

Hans Sy, executive committee chairman of SM Prime Holdings, Inc., said that the VAT refund scheme for tourists is a positive development for SM.

“I just hope that they can make it very easy and simple. If you go to Japan, outright, they do the discount there as long as you show your passport,” he said.

“I hope it won’t be like some other countries that make it almost impossible for you to get it … that’s why for us, in whatever we do, we make sure that everything is really done for (the customers),” he added.

He said he believes that technology will help make such measures easy to implement. 

“I actually could see the future with so many technology-aided things. To me, it’s also still a challenge because that’s going to really make the arena really competitive,” he added. — Justine Irish D. Tabile