FINANCE Secretary Ralph G. Recto said the law offering value-added tax (VAT) refunds for tourists will have a multiplier effect on the economy equivalent to nearly double actual visitor spending.
Mr. Recto made the remarks during the signing of the law’s implementing rules and regulations (IRR), according to a Department of Finance (DoF) statement on Monday.
The DoF said Mr. Recto, Customs Commissioner Bienvenido Y. Rubio, and Internal Revenue Deputy Commissioner Marissa O. Cabreros signed the IRR that day.
“With a multiplier effect of 1.97, every P100 spent by a tourist generates P197 in economic output. Imagine that. Halos doble ang balik sa ekonomiya (The economy will reap nearly double of what tourists spend),” Mr. Recto said in his speech at the ceremonial signing of the IRR.
The signing was witnessed by Tourism Secretary Christina Garcia-Frasco and Secretary Frederick D. Go, who heads the Office of the Special Assistant to the President for Investment and Economic Affairs.
President Ferdinand R. Marcos, Jr. in December signed the Act Creating a VAT Refund Mechanism for Non-Resident Tourists, which is designed to encourage visitors to spend more while travelling in the Philippines.
The law allows tourists to claim VAT refunds on purchases worth at least P3,000 from accredited stores.
“For this law to succeed, two things must happen: We need a fully functional VAT refund system and a surge in inbound tourism,” he said.
The Department of Tourism reported that the Philippines generated about P760.50 billion in revenue from inbound tourism expenditures in 2024.
Mr. Recto said the Philippines must have a simple, accessible, and culturally inclusive VAT refund process that allows businesses, and tourists to maximize its benefits.
“The IRR tasks the DoF with engaging the services of reputable and internationally recognized VAT refund operators to provide end-to-end solutions to the government. Such refunds may be made electronically or in cash to enhance the ease of doing business,” he said.
At a March 13 briefing, the Asian Consulting Group called for an automated refund mechanism. — Aubrey Rose A. Inosante