Philippines is now VAT-free for foreign tourists
Foreign tourists in the Philippines may request a refund of the value-added tax for locally purchased goods moving forward.
That's after the signing of the implementing rules and regulations of Republic Act No. 12079, or the VAT Refund for Non-Resident Tourists, on March 24.
RA 12079 aims to boost tourism and encourage more foreign tourists to shop and spend more in the Philippines.
The IRR states that foreigners may apply for a VAT refund for locally purchased goods from accredited stores that are equivalent to at least PhP 3,000.
The tourist must have physically taken out the goods as accompanied baggage within 60 days from the date of purchase.
The VAT refund only applies to retail and tangible goods like clothing, apparel, electronics, gadgets, jewelry, accessories, souvenirs, and food or non-food consumables.
Under the IRR, the Department of Finance is mandated to engage 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.
DOF Sec. Ralph Recto, in his speech during the IRR's ceremonial signing, said the Philippines is poised to reap almost double the economic returns as the agency rolls out the law.
“With a multiplier effect of 1.97, every 100 pesos spent by a tourist generates 197 pesos in economic output. Imagine that. Halos doble ang balik sa ekonomiya,” Recto said. “And more money spent by foreign tourists means more businesses created, more Filipino workers hired, more jobs provided, higher incomes for our people, and more revenues for the government to collect. That’s the simple formula for growth."
In 2024, the Department of Tourism reported that the government earned P760 billion in international visitor revenues.
