Senators want experts' views on VAT refund for foreign tourists

Several senators on Monday said experts must be consulted on the implementation of the Value-Added Tax (VAT) Refund Program for foreign tourists in 2024 to avoid leakage in revenue collection.

Senator Francis Escudero and Senator Grace Poe believed that there needed to be clear rules for the efficient implementation of the VAT Refund Program.

"Most countries have this and, for me, there is no reason for us not to offer this as well in order to attract tourists to shop in the Philippines. However, the rules must be laid down clearly in order to avoid abuse and the possibility of tax leakage," Escudero said in a text message.

"Given that this is done in many countries for quite some time now, we should look into the best practices available and implement a system on vat refund for tourists/foreigners that best suits us and our needs and idiosyncrasies," he added.

For her part, Poe said they will have to consult with experts regarding this policy.

"How [can we] efficiently roll it out, what are the pros and cons? Will it encourage tourists to come in and spend more and offset possible VAT revenue loss?" she asked.

Similar to Poe's views, Senator JV Ejercito said they needed to weigh the benefits and consult financial experts on the policy's effects.

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

Meanwhile, Senate Minority Leader Aquilino "Koko" Pimentel III said the government must impose the policy "if there is legal basis to do so" to attract more foreign tourists.

"Are our current systems able to detect and segregate VAT payments of foreigners who are tourists? If both the law and the system are in order, then I see the value of the plan," he said.

However, the Minority Leader said this needs legislation.

"We need airtight law as well as an efficient and accurate system. Theory and practice," he said.

Senator Sonny Angara said the VAT Refund Program was "worth exploring" as most countries' VAT systems had a similar refund program for tourists and non-residents.

"[I]n 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 said.

On Sunday, the Presidential Communications Office said President Ferdinand “Bongbong” Marcos Jr. approved the implementation of the VAT Refund Program for foreign tourists by 2024 upon the recommendation of the Private Sector Advisory Council's tourism sector group. — DVM, GMA Integrated news