BIR says VAT refund for foreign tourists should be limited to goods

The Bureau of Internal Revenue (BIR) on Monday said the government's Value Added Tax (VAT) refund for foreign tourists program, which President Ferdinand "Bongbong" Marcos Jr. announced should be in place by 2024, must be legislated and should only cover goods.

Lawyer Brianna Kay delos Santos, section chief of the BIR's Law and Legislative Division, told lawmakers during a House hearing that the Finance Department is recommending a legislation that includes a provision stating that a tourist will be eligible for VAT refund on goods purchased in the Philippines provided that such goods are shipped or taken out of the country within 60 days from the date of purchase.

The legislation must also state that the total value of goods purchased must at least be P2,000.

The BIR, however, clarified that such threshold should be reasonably adjusted to an amount that would sufficiently cover the cost of administering the refund, as determined by the Secretary of Finance upon recommendation of the Commissioner of Internal Revenue.

The BIR also wanted a tourist covered by this law to be defined as a “foreign individual who is not not a resident of nor engaged in trade or business in the Philippines and who comes to the country for travel, recreation, leisure, or business for a period not exceeding three to six months for leisure, business or other purposes.”

Likewise, the BIR said following should be in the regulations:

• retailers/merchants covered
• procedure for claiming the refund
• list of requirements to be presented

The BIR also noted that the law for VAT refund for foreign tourists should also provide regulations for retailers/merchants covered, procedure for claiming the refund, and list of requirements to be presented.

“The Philippines should adopt a VAT refund for  tourist mechanism where the VAT refund is given after a risk-based inspection of goods to be exported, and VAT refund is administered by a single service provider,” Delos Santos said.

The hearing ended with Nueva Ecija Representative Mikaela Suansing, vice chairperson of the House Committee on Ways and Means, getting elected as chair of the technical working group (TWG) that will consolidate the recommendations. —KBK, GMA Integrated News