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President Ferdinand Marcos Jr. has approved the implementation of the Value-Added Tax (VAT) Refund Program for foreign tourists by 2024 in an effort to boost tourist arrivals in the country, Malacanang said on Jan. 20.
The program is among the “Quick Wins” recommendations presented by the tourism cluster of the Private Sector Advisory Council (PSAC) in a meeting with Mr. Marcos on Jan. 26.
PSAC is composed of business leaders and industry experts providing technical advice to the President on the government’s economic objectives in six key sectors — agriculture, digital infrastructure, health care, infrastructure, jobs generation, and tourism.
According to the Palace, the president will soon issue an executive order on the tax refund, which other countries are also implementing as an enticement to tourists.
This would allow foreign tourists to get a refund on the VAT they have paid for their purchases here which they would bring back to their home countries.
The Bureau of Internal Revenue collects a 12% VAT on goods sold in the country.
Travel tax, e-visas The Department of Tourism (DOT) recorded 2.65 million visitors from February to December last year — much higher than the 163,879 in 2021, but still significantly lower than the prepandemic level of 8.26 million.
According to the department, the 2.65 million international arrivals translated to 208.96 billion Philippine pesos ($3.68 billion) in tourism revenues. Of the total arrivals, 2.02 million were foreign tourists while 628,445 were Filipinos based abroad.
The DOT said it aims to draw 4.8 million tourists to the country this year.
While he granted the tax refund for purchases by foreign tourists, Mr. Marcos also approved the automatic inclusion of the travel tax in all airline tickets. Passengers currently have the option to pay the tax in advance with their ticket purchase, online before their flight, or at the airport during the day of their flight.
Taxable individuals may be charged the full travel tax of 2,700 Philippine pesos for first-class flights and 1,620 Philippine pesos for economy-class flights. The standard reduced travel tax for minors 2 to 12 years old, journalists whose travel is in pursuit of an assignment, and authorized individuals by the President of the Philippines is 1,350 Philippine pesos for first class and 810 Philippine pesos for economy class.
The privileged reduced travel tax for legitimate spouses of overseas Filipino workers (OFWs), unmarried children of OFWs below 21 years old, and children of OFWs with disabilities even above 21 years old are 400 Philippine pesos for first class and 300 Philippine pesos for economy class.
The president also gave his go-ahead on the rollout of e-visas this year.
Furthermore, he scrapped the One Health Pass (OHP), which was the lone requirement for monitoring health, immigration, and customs concerns, as well as the practice of loud-speaker announcements in the country’s airports.
PSAC noted at the meeting that these proposals are aimed at improving airport infrastructure and operations and promoting tourism investments, among other objectives.
Marcos and the council also agreed to prioritize China and India in terms of trade and other relations.
