Gov’t targets VAT refund system for tourists

The government is targeting to put in place a value-added tax (VAT) refund system for foreign tourists in the country by 2020, according to the Department of Finance (DOF).

During a meeting with the Philippine Hotel Owners Association (PHOA), Finance Secretary Carlos Dominguez said the government is keen on offering a tax refund system for tourists, much like what is being done in other countries.

“Yes, we will, we don’t have the system at the moment but we are certainly going to do it. And it should be in place some time in two years,” Dominguez

said when asked if the DOF is planning to provide tax-free shopping for tourists.

According to the finance chief, the establishment of such system would be possible once the government has already launched its electronic invoicing system for more efficient implementation.

“There’s a possibility for us to outsource the system, but our problem at the moment is we don’t have an e-invoicing system which we are currently working on,” he said.

Dominguez said the Philippines has tapped the South Korean government’s assistance to study an e-invoicing structure for the country.

“We have gotten a grant from the Korean government to study an e-invoicing system, and our plan is to put this in place by 2020. So we have a lot of space to do that. We really targeted the Koreans because they have a very efficient system which they have developed over at least five years,” he said.

Earlier this year, the DOF has already expressed its intent to set up a VAT refund system for tourists to enable the Philippines to catch up with other countries’ practices.

Finance Undersecretary Karl Kendrick Chua had said From B5 the country remains among the few member-countries of the Association of Southeast Asian Nations without a VAT refund system for nonresidents.

Chua said the first part of the process toward this goal was to fix the refunding structure for exporting firms, which was already addressed under the Tax Reform for Acceleration and Inclusion (TRAIN) law.

Finance assistant secretary Mark Joven also said the government could explore the possibility of tapping a third party for the system, much like in France and Singapore.

Meanwhile, Dominguez said the Philippines has also asked for the South Korean government’s assistance for the environment protection and sanitation in Siargao to prevent the tourist area from becoming like Boracay.

“When I was in Korea early this year, I spoke to the finance minister and I asked him specifically to provide us assistance for the Siargao area, in the area of environment and sanitation,” Dominguez said.

“I mentioned we had a real bad experience in Boracay. We want to make sure that the practices to be introduced in Siargao will not lead us down the Boracay path,” he said.