Value-Added Tax (VAT) Refund for Non-Resident Tourists turns into Law

Pres. Ferdinand Marcos Jr., today, signed the Value-Added Tax (VAT) Refund for Non-Resident Tourists into a law.

The VAT Refund Law allows tourists to claim refunds on purchases exceeding Php3,000 made at accredited stores, provided the items are taken out of the country within 60 days.

“It is no secret that shopping has become an essential part of the travel experience, and we are poised to capitalize on that momentum. In 2023, the Philippine tourism sector played an instrumental role in our nation’s economic recovery, contributing an impressive 8.6 percent to the GDP. Within this significant share, shopping emerged as the second largest expenditure for inbound tourists.”

“With this in mind, we are introducing the VAT refund program for non-resident tourists—designed not only to stimulate more spending but to promote the Philippines as a premier global shopping destination. – President Bongbong Marcos”

The Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) will craft rules and regulations that would streamline the VAT refund process.

This law is similar to the existing ones we normally encounter with neighboring countries, like Singapore (8% GST), Hong Kong and Japan, where shopping is one of the top tourist activities. The Philippines has a 12% VAT rate, the highest in South East Asia, and will like make the country attractive for shopping.

Value-Added Tax (VAT) is a type of sales tax that applies to goods, properties, and services in the Philippines, as well as to imported goods. It is imposed on transactions involving the sale, exchange, barter, or lease of these items. In essence, VAT is a tax on consumption, meaning that it is paid by consumers when they purchase goods or services.