New laws to boost investments, revenues

Finance Secretary Ralph Recto is optimistic about the Philippines' economic prospects in 2025, fueled by the recent enactment of two key laws aimed at boosting the tourism industry and local spending as well as strengthening food security in the country.

- By LAWRENCE AGCAOILI

President Marcos signed into law Republic Act No. 12079 or the Value-Added Tax (VAT) Refund Mechanism for Non-Resident Tourists Act and RA 12078 or the Amendments to the Agricultural Tariffication Act on Dec. 9.

A priority reform led by the Department of Finance (DOF), RA 12079 introduces Section 112-A in the National Internal Revenue Code of the Philippines, which states that tourists shall be eligible for VAT refunds on locally purchased goods.

With this, the Philippines positions itself alongside countries around the world with a standard VAT system in place, which is designed to incentivize foreign tourists to spend more in the country.

"It is high time that the Philippines catches up with countries around the world that have long implemented a standard VAT refund system. This strategic initiative aims to encourage foreign tourists to spend more in our country, stimulating our domestic economy. With increased tourism spending, we will have higher revenues to collect and we can create more jobs, raise incomes, and accelerate economic growth," Recto said.

RA 12079 states that goods should be purchased by foreign tourists in duly accredited stores in person and should be taken out of the country by the tourist within 60 days from the date of purchase.

The value of goods purchased per transaction should be equivalent to at least P3,000 but the Secretary of Finance may adjust this threshold upon recommendation of the Commissioner of the Bureau of Internal Revenue (BIR) taking into consideration the consumer price index.