Approved VAT refund for foreign tourists in PH lauded, hit

Manila, Philippines – The decision of President Ferdinand “Bongbong” Marcos, Jr. to refund the value added tax (VAT) collected from foreign visitors by 2024 to boost tourist arrivals has drawn criticisms and support alike.

Joel Pena, a businessman whose family owns a shopping mall Big Ben in Lipa City, supported the refund saying that the move would be “nice for tourists” given that many countries are already doing the same and it really makes tourists shop more.

“I just came from Bali (Indonesia) and I was able to buy some things due to tax refund and duty free,” Pena, also head of the city tourism council told Hong Kong News speaking in Filipino in a Facebook chat.

He also doesn’t see the move as unfair to businesses saying it’s “more unfair if it’s the tourists paying VAT.”

“Actually, maybe it just applies for shopping. When it comes to dining and groceries, the refund is not effective so I agree with the VAT refund,” he added.

Pena further explained that The VAT/EVAT obligation of businesses is not included in the items purchased by the tourist who have already received a VAT/EVAT refund.

“It’s only the government who has opportunity losses. That’s the only con. Government will have less income,” he added.

Gwendolyn Wong, a businesswoman and former city councilor, said she is also okay with the refund as it will boost sending tourists to the country.

“I dont think we locals can complain, because same as other countries, locals pay VAT. Only tourists get the refund, in fact entices tourists to go shop.
More sales more business for all,” added Wong, also co-founder of Fiesta World Mall.

She however questioned how the refund would be implemented especially on the treatment of input vat “if we have more input VAT than output VAT.”

Input VAT is defined as the VAT an individual pays on purchases while output VAT is the VAT that is added on sales.

Francis Yuson, an entrepreneur and owner of Liam’s Lomi House, said he support’s the government’s move saying “Tax refunds are nice and tourists are really happy with it. Based on personal experience, I really got attracted shopping (because of it).”

Meanwhile, Adrian Manito, a bicycle shop owner told Hong Kong News that he doesn’t see the logic behind the VAT refund and how it will bring in more tourists.

“If you’re a tourist travelling to another country, you already have a set budget. It’s not as if you will go there only because of a VAT refund,” he told Hong Kong News in a phone interview.

Instead of a VAT refund, he suggests that the government improve the service to tourists  specifically in terms of access to transportation, which starts with improving the Ninoy Aquino International Airport.

“The airport leaves first impression to the tourists that will make them return. If you’re coming from a long-flight from US and Canada yet when you arrive here you meet taxi drivers trying to rip you off, what will be your impression,” Manito stressed.

He also suggested that the government create more direct flights to touristy areas like Boracay so that more tourists will come to the Philippines.

Before catering to foreign tourists, he also suggested that the Philippine government help Filipino entrepreneurs first by giving them tax incentives.

Nestor Burgos, a veteran journalist and also coffee shop owner said it’s not VAT refund but improving government services that will help bring in more foreign tourists to the country.

“The government should perform well and improve the tourist attractions then the tourists will come,” he added.

Burgos said the government should also look after Chinese businessmen as well as other foreigners who were able to smuggle items in the country.

In a news release on Sunday, the Presidential Communications Office (PCO) announced that Marcos approved the VAT Refund Program following the “Quick Wins” recommendations of the Private Sector Advisory Council (PSAC) Tourism Sector Group.

Marcos also nodded the PSAC recommendation to roll out e-visa by 2023, prioritizing China and India; and the removal of One Health Pass (OHP) or requirement of one form only for health, immigration and customs.

Aside from this, the PSAC had also recommended the revocation of outdated advisories and loud-speaker announcements in the country’s airports and the automatic inclusion of travel tax in all airline tickets.

Earlier Palace officials said Marcos will issue an executive order to implement the tax refund program, which is also being carried out in other countries.

The Department of Tourism said that a total of 2.65 million tourists visited the country from February to December last year, of which 2.02 million were foreign tourists while 628,445 Filipinos were overseas or balikbayans.

This figure is bigger than the 2021 tourist arrivals of 163,879 but still significantly lower than the pre-pandemic level of 8.26 million.

This year, the Department of Tourism (DOT) targets to welcome 4.8 million visitors, which could generate PHP2.58 trillion in revenue.