House panel okays VAT refund for tourists

The House ways and means panel on Monday approved a bill granting Value Added Tax (VAT) refund for outbound tourists.

House ways and means panel chairperson Joey Salceda said the measure will generate P10 billion to P40 billion worth of increased sales for local supplies.

“That [amount] has the same nature, consequence, and character as exports. And we don’t even have to compete with other exporters. The audience is already captured,” he said.

“Save for India and Cambodia, we are the last major Asian country without an operative VAT refund system for tourists. That hurts our competitiveness for tourists with, say, Vietnam and Thailand, which now receive more tourists than we do,” he added.

Salceda was one of the principal authors of the measure, alongside House ways and means panel vice chairperson Mikaela Suansing who chaired the technical working group drafting amendments to the original proposed bill.

The VAT refund for tourists amends the National Internal Revenue Code by adding a section stating that goods to be taken out of the country by tourists with a transaction value of at least P3,000 will entail a VAT refund, provided that these goods must be purchased from accredited suppliers.

Salceda said that such VAT refund, based on global studies, increases the propensity to spend.

“Generally, for every P1 refunded, the tourist spends an additional 1.5 pesos. That will create an additional 20,000 to 80,000 jobs, and will also improve our gross international reserves,” he said.

The measure also allows the VAT refund system to be administered by a service provider, as is the practice in most jurisdictions.

In addition, Salceda called on state-run Tourism Infrastructure and Enterprise Zone Authority to consider amendments to the Tourism Act or Republic Act No. 9593, to allow the Department of Tourism to grant promotional incentives for domestic tourists, particularly in the meetings, incentives, conferences, and exhibitions sector (MICES).

“I understand that the MICES sector is the bulk tourism sector of the country. So, when you incentivize the MICES sector, you incentivize tourists wholesale,” he said.

“I am requesting the DOT to look into a more expansive definition of incentives for the domestic tourism sector,” Salceda added.—AOL, GMA Integrated News