Tourists’ VAT refund: Boon or bane?

The proposed Value-Added Tax Refund Program for foreign tourists gained different reactions from lawmakers following Malacañang’s announcement of its implementation by next year.

On Sunday, the Presidential Communications Office announced that the president has approved the implementation of the VAT Refund Program by next year.

Senator Nancy Binay, chair of the Senate Committee on Tourism, welcomed President Ferdinand Marcos Jr.’s approval of the proposal which aims to further boost the country’s tourism.

“We welcome the President’s move to help kickstart the tourism industry by offering VAT refunds to foreign tourists,” Binay said in a statement on Monday.

She stressed that the implementation of the program will pave the way for the country to be known for other things aside from its tourism.

“It would be nice to see the Philippines as an alternative shopping destination and showcase our premium local brands,” Binay said.

“We also want our tourists to have a pleasant experience and the ease of traveling and shopping in the Philippines, that’s why it would also be a good thing if the DoF (Department of Finance) could walk us through its implementation in retail shops, department stores, ports, and airports,” she added.

The lawmaker also suggested that the Finance department should also provide data on how much would the government spend for the implementation of the program, reduction in collections, impacts, and benefits to small- and medium-scale retailers in the tourism industry.

Meantime, Senator Juan Edgardo “Sonny” Angara also welcomed the Chief Executive’s move, calling it “worth exploring.”

Angara, chair of the Senate Committee on Finance, backed the proposal which he said is already being implemented in other countries.

“Most countries’ VAT system has the refund program for tourists and non-residents, hence, when we travel we bring the goods and receipts home and receive the refunds in cash or through our credit cards,” Angara said.

“It’s worth exploring since in the long run, it may prove to be a win since it may attract and encourage more tourist spending; it makes us more competitive,” he added.

Senator Joseph Victor Ejercito, on the other hand, said the government must first weigh the benefits of the program before implementing it and stressed that financial experts must be consulted.

“The Philippines is not really known as a shopping destination but more for tourism and recreation,” said Ejercito. “But then again the benefits will offset the revenue lost on VAT collections then we can consider.”