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House bill granting VAT refund to tourists approved on second reading

The House of Representatives on Wednesday approved on second reading a bill granting Value Added Tax (VAT) refund for outbound tourists.

The measure, numbered House Bill 7292, provides that a tourist is eligible for a VAT refund on goods purchased from accredited retailers in the Philippines, provided that such goods are taken out of the country within 60 days  from  the  date  of purchase and the value of goods purchased per transaction amounts to at least P3,000.

Likewise, the bill authorizes the Secretary of Finance to adjust the P3,000 threshold, taking into account the following indicators: administration costs in processing refunds; consumer price index; and other market conditions, upon the recommendation of the Secretary of Tourism and the Commissioner of Internal Revenue.

“This measure [is being passed] to adopt best practices in VAT refund schemes among Asia­ Pacific tourism destinations and expand  the  country's  competitiveness among its peers and neighboring countries,” the committee report on the measure read.

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

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

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

“Generally, for every P1 refunded, the tourist spends an additional 1.5 pesos. That will create an additional twenty to eighty thousand jobs, and will also improve our gross international reserves,” Salceda said.

House Bill 7292 is also backed by President Ferdinand Marcos, Jr.—LDF, GMA Integrated News