MANILA – The Philippines is poised to strengthen its position as a leading tourist destination with the expected enactment of the Value-Added Tax (VAT) refund mechanism for foreign visitors, just in time for the peak Christmas and New Year holiday season.
Senator Win Gatchalian expressed optimism that Senate Bill 2415, which would allow non-resident tourists to claim VAT refunds on purchases of at least PHP3,000, will be passed before the year-end festivities. This move, he said, will enhance the country’s tourism competitiveness and provide a much-needed boost to the local tourism industry, which has been steadily recovering since the pandemic.
“I am hopeful that this measure will be enacted into law in time for the holidays when many tourists come to the country to experience our Christmas and New Year festivities,” Gatchalian said. He emphasized that the VAT refund system would align the Philippines with its regional peers, many of which have long implemented similar schemes, making the country more attractive to international travelers.
According to Gatchalian, the VAT refund program will not only encourage more tourists to spend on local goods but will also contribute to job creation and economic growth. "We trust that this proposal, once enacted, will further boost the country’s tourism, helping create jobs and strengthening our economy,” he added.
The bill’s passage comes at a time when the Philippine tourism industry is on a steady upswing. Data from the Department of Tourism (DOT) shows that international visitor arrivals in the first half of 2023 reached over 3 million, a 7% increase from the same period last year. South Korea remains the top source market with over 824,000 visitors, followed by the United States, China, Japan, and Australia.
Tourism Secretary Christina Frasco has voiced strong support for the VAT refund initiative, underscoring its potential to boost tourist spending by nearly 30%. In a statement, Frasco said, “This legislation is a crucial milestone in enhancing the country’s appeal as a premier tourism destination, positioning the Philippines competitively among its regional neighbors.”
Frasco added that the VAT refund system is expected to not only increase spending but also promote Filipino signature products, such as Marikina shoes, barongs, and traditional weaves, which are part of the country’s cultural heritage. This initiative, she said, would elevate the overall travel experience and encourage longer stays and return visits.
The DOT also sees the VAT refund system as part of a broader effort to transform the Philippines into a global tourism powerhouse. In 2023, the US Embassy in the Philippines processed and issued over 300,000 non-immigrant visas, and this new measure is expected to further increase tourist arrivals.
As the holiday season approaches, the enactment of the VAT refund law is seen as a timely boost for the tourism sector. The DOT believes that by providing more incentives for foreign visitors, the Philippines can attract even more tourists, making it a top destination in Southeast Asia.
Once the law is in place, tourists will be able to claim VAT refunds at designated centers, enhancing their shopping and travel experience while contributing to the local economy. This move is a significant step in the country’s ongoing efforts to make tourism a key driver of economic growth.
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