Tourism by VAT refund

In a report made by the World Economic Forum in May 2024, it is expected that the global tourism industry will continue recovering from the lows of the COVID-19 pandemic and surpass pre-pandemic levels due to demand driven by people's pent-up desire to travel following the lifting of restrictions.

- Anne Christelle Santiago

The report also highlighted that high-income economies like the United States, Spain, Japan, France, and Australia have shown significant recovery in their tourism sectors, as these countries offer more favorable conditions for travel and tourism development. However, for other countries like the Philippines, challenges still remain in trying to reach pre-pandemic tourism levels and growth.

In an effort to aid the tourism sector, Senate Bill 2415 was introduced by lawmakers. The bill was approved on Sept. 23, 2024, on its third and final reading. Senate Bill 2415 proposes to introduce a new section, Section 112-A, to the National Internal Revenue Code, as amended, which will offer a value-added tax (VAT) refund to tourists who are non-resident foreign passport holders.

Under this section, a tourist would be eligible for a VAT refund on locally purchased goods, which may be made either electronically or in cash, provided that the following requirements are met:

The goods are purchased in person by the tourist in duly accredited stores;

The goods are taken out of the Philippines by the tourist within 60 days from the date of purchase; and

The value of goods purchased per transaction is at least P3,000, provided that this threshold shall be subject to review and adjustment every three years by the Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue.