Co-Sponsorship Speech on SBN 2145: VAT Refund Mechanism for Non-Resident Tourists

Co-Sponsorship Speech on SBN 2145 — in substitution of Senate Bill Nos. 2023 and 2148 (filed by SJE)

VAT Refund Mechanism for Non-Resident Tourists

September 18, 2023

Mr. President, esteemed colleagues: 

I rise to co-sponsor Senate Bill No. 2145 under Committee Report No. 106 or the Creation of a VAT Refund Mechanism for Non-Resident Tourists. 

Under the proposed legislation, non-resident tourists will be made eligible for a VAT refund on goods costing at least P3,000 purchased from authorized retailers in the Philippines, within sixty (60) days from date of purchase. Many of us will know that a tourist VAT Refund system is not anything new. In fact, among ASEAN members, Indonesia, Malaysia, Singapore, Thailand, and Vietnam already have one in place. 

Travel and tourism have been heavily devastated by the pandemic’s impact, and other industries felt the pinch as a result of relatively low foreign tourist arrivals. Following the COVID-19 pandemic, the industry’s Gross Value Added declined to 5.1% of GDP in 2020 with a marginal increase to 5.2% of in 2021.

In 2019, the tourism industry accounted for 12.9 percent of the Gross Domestic Product, establishing itself as one of the key drivers of the Philippine economy. 

Sa datos ng Department of Tourism, the Philippines received 3.37 million foreign visitors from January to August 2023, accounting for 70 percent of the country’s 4.8 million target arrival for this year. Data also indicated that there are 5.3 million tourism-related jobs in the country. 

Tourism has a broad effect on the domestic economy and the people especially in the countryside who rely on tourism for a living.

Marami na ang mga naging pag-aaral na nagpapakita ng multiplier effect ng turismo. Direct spending may be a predominant contributor to GDP, but indirect effects are also significant, suggesting a strong linkage with the local economy and job generation. 

Ginoong Pangulo, kung magkakaroon tayo ng VAT refund para sa mga turista, malaki ang magiging pakinabang nito sa ating ekonomiya dahil mas dadami ang gagastos at mas makikinabang ang ating mga kababayan. Isa rin po itong form of relief at incentive para sa foreign tourists para ma-engganyo silang bumisita sa Pilipinas, ngayong nagbabalik na ang sigla ng turismo sa ating bansa.

While there may be tax implications in passing this measure, the resultant relief will be in the form of increased spending and revenues for our local enterprises.

Mr. President, this measure is also consistent with the approval of President Ferdinand Marcos of a value-added tax refund program for foreign tourists by 2024 to attract more visitors[1]

We call on our colleagues to support this measure, which is expected to boost the tourism industry’s growth and full recovery. 

Maraming salamat po, Ginoong Pangulo.