IRR on VAT refund for tourists signed

MANILA, Philippines — The government expects inbound tourism to further pick up following the signing of the implementing rules and regulations (IRR) for the value-added tax (VAT) refund for foreign tourists.

The Department of Finance (DOF) and its attached agencies, the Bureau of Internal Revenue (BIR) and the Bureau of Customs signed yesterday the IRR of Republic Act 12079 or the VAT Refund for Non-Resident Tourists.

Finance Secretary Ralph Recto said the Philippines is poised to reap almost double the economic returns from the law.

“With a multiplier effect of 1.97, every P100 spent by a tourist generates P197 in economic output,” 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,” he said.

Recto emphasized that unlocking the law’s full potential means establishing a fully functional VAT refund system and seeing a surge in inbound tourism.

“We want more tourists to come – and we want them to stay longer, spend more and transact with convenience,” he said.

Last year, the Philippines welcomed 5.9 million international visitors and generated a record P760 billion in tourism revenues.

The finance chief maintained that the VAT refund process will be simple, accessible and culturally inclusive to ensure that businesses and tourists alike will be able to maximize the law’s benefits.

The IRR mandates the DOF to engage the services of reputable and internationally recognized VAT refund operators to provide end-to-end solutions to the government.

Under the IRR, a tourist can get a refund on VAT for locally purchased goods if these are bought from duly accredited stores and are taken out of the Philippines as accompanied baggage within 60 days from date of purchase.

The refund will only apply to retail and tangible goods such as clothing, apparel, electronics, gadgets, jewelry, accessories, souvenirs, food or non-food consumables and other goods intended for personal use.

The value of the goods purchased per single transaction should also be equivalent to at least P3,000 covered by a single invoice duly registered with the BIR.

To avail themselves of the refund, tourists should present their valid passport and electronic travel system-issued QR code to accredited stores prior to the purchase of eligible goods.

Upon verification, stores will then input a tourist’s passport and purchase transaction details in the VRS and issue a corresponding invoice, indicating that a refund is qualified.

At the airport or seaport, this will be validated, approved and paid by the VRS operator in Philippine currency either in cash or electronically. The tourist will be charged with a service fee for the refund processing.