Foreign visitors to the Philippines now have a compelling reason to shop and spend more, as they can avail themselves of value-added tax (VAT) refunds under a newly implemented scheme.
Finance Secretary Ralph Recto, Customs Commissioner Bienvenido Rubio, and Internal Revenue Deputy Commissioner Marissa Cabreros signed the implementing rules and regulations (IRR) of the VAT Refund for Non-Resident Tourists Act on Monday, March 24, formally establishing the policy.
How It Works?
Under the new law, foreign passport holders who purchase goods worth at least P3,000 from accredited stores can apply for a VAT refund.
The government will adjust this threshold every three years to account for inflation. However, tourists must take these goods out of the country within 60 days of purchase and cannot consume them locally.
Eligible items include:
- Clothing
- Electronics
- Gadgets
- Jewelry
- Accessories
- Souvenirs
- Food and non-food consumables
- Other personal-use goods
Tourists will receive refunds either electronically or in cash, ensuring ease of transaction.
The Philippine government sees the VAT refund scheme as a strategic move to enhance tourism spending and stimulate economic activity.
Recto emphasized that increased foreign tourist spending contributes to business growth, job creation, higher incomes, and increased government revenue.
Tourism Secretary Christina Frasco also said that the country’s high per capita tourist spending compared to its Southeast Asian neighbors.
She noted that the law would create a broad impact, benefiting retail, accommodations, transport, and other related services.
To guarantee smooth implementation, the Department of Finance (DOF) will hire a reputable and internationally recognized VAT refund operator.
Recto noted that the scheme’s success depends on an efficient refund system and a rise in inbound tourism.
The Philippines joins other ASEAN nations that offer VAT refund policies to attract high-spending tourists. By aligning with global best practices, the country aims to position itself as a premier shopping and leisure destination.
President Ferdinand Marcos Jr. signed the VAT Refund for Non-Resident Tourists Act into law in December 2024 as part of broader efforts to attract more international visitors.
Data from the Department of Tourism show that over 5.9 million foreign tourists arrived in the country in 2024, with over 510,000 overseas Filipinos also returning home.*
Reymund Titong is a Filipino journalist steadily building his voice in the field of news reporting, driven by a commitment to tell meaningful and relevant stories.
He serves as a correspondent for Rappler, maintains a personal blog on Medium, and is the communications officer of Hope Builders Organization Negros Island.