Philippines implements tax refund for foreign tourists
The Philippines has introduced a Value-Added Tax (VAT) Refund System for non-resident tourists, a move expected to drive growth in shopping tourism. The implementing rules and regulations (IRR) of Republic Act No. 12079 were formally signed on Monday at the Department of Finance (DOF) in Manila.
The law, signed by President Ferdinand Marcos Jr. in December 2024, allows foreign visitors to claim VAT refunds on purchases worth at least PHP3,000 (€48.19), provided the goods are taken out of the country within 60 days.
Department of Tourism (DOT) Secretary Christina Garcia Frasco welcomed the initiative, saying it will encourage higher tourist spending. “The signing of the VAT refund law by our President and the subsequent signing of the IRR comes at an opportune time for our country, where tourism spending is at an all-time high,” Frasco said. “According to the World Travel and Tourism Council, tourists in the Philippines spend the highest per capita among our ASEAN neighbours at no less than $2,073. With this VAT refund act, we expect to generate even greater benefits for our local tourism stakeholders.”
Frasco also highlighted the broader economic benefits. “The ripple effect of this law will extend beyond retail to accommodations, transport, and other related services.”
Economic benefits from tourist spending
Department of Finance Secretary Ralph Recto underscored the economic impact of the VAT refund system, noting its potential to increase business activity and employment. “With a multiplier effect of 1.97, every PHP100 (€1.61) spent by a tourist generates PHP197 (€3.16) in economic output,” he said.
Recto emphasised that increased tourist spending will translate to more business opportunities, jobs, and government revenues. “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,” he added.
Echoing these sentiments, Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) Secretary Frederick Go said the law will have a far-reaching impact. “This new law will encourage more tourism, more tourism spending, which means more revenue for our stores, more jobs for Filipinos, and more growth for our economy,” he stated.
Go also noted that industries outside the VAT refund scope will benefit, including hotels, restaurants, and transport services. “It enhances our appeal as a premier travel destination, giving visitors yet another reason to choose and ‘Love the Philippines,’” he said.
Integrated resort expansion to drive tourism growth
Beyond tax incentives, the Philippine Amusement and Gaming Corporation (PAGCOR) earlier revealed an expansion plan for integrated resort casinos in the country. A new property in Entertainment City is scheduled to open in 2025, followed by developments in Cebu and Boracay by 2026. An economic zone in Central Luzon is also planned for 2027.
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