House tax panel okays VAT refund for tourists
The House Ways and Means Committee approved Monday the draft substitute bill for the VAT refund for outbound tourists, a proposal already approved in principle by the President when it was brought up by the Private Sector Advisory Council.
“I expect between P10 to 40 billion in increased sales from local suppliers. That has the same nature, consequence, and character as exports. And we don’t even have to compete with other exporters. The audience is already captured,” Salceda said.
“Save for India and Cambodia, we are the last major Asian country without an operative VAT refund system for tourists. That hurts our competitiveness for tourists with, say, Vietnam and Thailand, which now receive more tourists than we do.”
Salceda principally authored the measure along with Senior Vice Chair Mikaella Suansing, who chaired the technical working group drafting amendments to the original draft.
The proposal adds a new section to the National Internal Revenue Code, which outbound tourists to refund goods to be taken out of the country, with a per transaction value of at least P3,000. These goods must be purchased from accredited suppliers.
“A VAT refund, as global studies show, increases the propensity to spend. Generally, for every 1 peso refunded, the tourist spends an additional 1.5 pesos,'' said Salceda.
“That will create an additional 20-80 thousand jobs, and will also improve our gross international reserves,” Salceda added.
The measure also allows the VAT refund system to be administered by a service provider, as is the practice in most jurisdictions.
