Gov’t eyes VAT refund system for foreign tourists

MANILA, Philippines — The implementation of a value-added tax (VAT) refund system for foreign tourists is seen to benefit the hotel sector as it may result in longer stays, a property services firm said.

Colliers International Philippines research manager Joey Roi Bondoc told The STAR the VAT refund system will allow tourists greater purchasing power.

“It will bode well for the hotel sector, for retail, especially now that the peso is depreciating,” Bondoc said.

“With the return VAT, they will be able to purchase more and stay longer in hotels,” Bondoc said.

Finance Secretary Carlos Dominguez earlier said the government is targeting a tax refund system for tourists, similar to what is being done in other countries, in place by 2020.

Tourism Secretary Bernadette Romulo-Puyat earlier told The STAR that the DOT welcomes this move.

“We’ll discuss it. But of course if it will help tourism, why not. I think he’s just saying that other countries do that,”Puyat said.

She said it may encourage more foreign tourists to shop.

“Anything that will encourage tourists arrivals is welcomed. And I am so grateful of the Secretary,” Puyat said.

Based on data from the DOT in 2017, shopping was the number one activity made by tourists visiting the country, with 51.60 percent of tourists taking part in it.

Shopping is also where tourists spend a large amount of expenditure on, as it amounts to $20.90 dollars of the average daily expenditure per capita in 2017 of $125.65.

Dominguez earlier said the establishment of the tax refund system would be possible once the government has already launched its electronic invoicing system for more efficient implementation.

“There’s a possibility for us to outsource the system but our problem at the moment is we don’t have an e-invoicing system, which we are currently working on,” he said.

He added that the Philippines has tapped the South Korean government’s assistance to study an e-invoicing structure for the country.

“We have received a grant from the Korean government to study an e-invoicing system, and our plan is to put this in place by 2020. So we have a lot of space to do that. We really targeted the Koreans because they have a very efficient system, which they have developed over at least five years,” Dominguez said.

Philippine Retailers Association (PRA) chairman emeritus Samie Lim earlier said that the implementation of a VAT-refund system would help make the country’s retail sector more competitive.

“All our neighbors, Malaysia, Singapore, Hong Kong and even Korea, their focus now is on shopping. The people spend the most amount on shopping. More than hotels, more than the airlines and the hotels,” Lim said.

“We are very competitive, but we are talking to the Department of Finance to start have the VAT refund so that we are at par with the other countries,” Lim said.

Puyat earlier described the retail sector as an integral component of tourism.

“It’s actually the retailers that help tourism. People come here because of the fantastic local quality of goods. People like to go shopping and we really have the best products,” Puyat said.

The tourism head said the growing number of foreign arrivals presents an opportunity that retailers can tap in a bid to further grow the tourism industry.

Among these opportunities are participation in trade shows; creation of jobs in tourism commerce; promotion of local products; expansion of inventory based on tourism market trends; and collaboration with tourism stakeholders.