Value Added Tax (VAT) Refund on the Horizon for Foreign Guests in 2024

The Presidential Communications Office (PCO) announced last January 29 that President Ferdinand Marcos Jr green-lighted a new Value Added Tax (VAT) program for tourists. The primary objective of this endeavor is to attract more visitors to the country. The new tax relief program for foreigners is slated to be in effect by 2024. 


Currently, the Philippine government collects 12% VAT on goods consumed within the country. The new program seeks to allow foreigners to receive a VAT refund on items they bought and are bringing home from the Philippines. This tax scheme is similar to what other countries, like Singapore, the European Union, and Saudi Arabia, enforce. 


This new tax scheme for foreigners was one of the proposals of a private sector advisory council. The goal is to boost tourism as an influx of visitors is projected to improve revenues and stimulate the country’s economy. Apart from this tax proposal, other measures include renovating the airport and upgrading the infrastructure to boost airport operations. Tourism investment is also highly promoted. 


On top of that, President Marcos Jr. will make it easier for Japanese, Chinese, Indian, and South Korean tourists to visit the country. He approved the launch of an online visa application and portal for these foreign nationals. They hope that this convenient platform will encourage more tourists. As of last year, there were a recorded 2.65 million international visitors who brought in around US $3.68 billion in revenue. 


This outcome exceeded the estimated projection of 1.7 million international guests, so the current administration hopes to even increase that this 2023 and the years to come. Among the visitors last year, about 2.02 million were foreign nationals, while almost 630,000 were Filipinos based abroad. This exceeded the paltry 163,879 tourists of 2021 but is still a lot lower than the pre-pandemic yearly level of 8.26 million tourists. With this new tax reform scheme, the current administration hopes to bring back and even surpass the old records.