Senator Jinggoy Ejercito Estrada has suggested a VAT return scheme for international visitors to the Philippines in order to attract more foreign tourists and support the local economy. Senate Bill 2148, the proposed law, proposes to give visitors with a 12% VAT return on products bought during their stay, comparable to traditions in other nations.

Senator mulls VAT refund for foreign tourists to boost visitor arrivals

This article delves into the bill's specifics, the possible advantages for the local economy and enterprises, and the importance of tourism as a major contributor to the country's GDP.

The Proposed VAT Refund Mechanism's Objective

Senator Jinggoy Ejercito Estrada proposed Senate Bill 2148 to increase tourist arrivals and sales of locally created items in the Philippines. The measure intends to offer qualified foreign visitors with a VAT refund on products costing at least P3,000 purchased from recognized stores within 60 days of purchase. The goal is to help micro, small, and medium-sized firms (MSMEs) and provide new livelihood options for Filipinos by motivating visitors to spend on local items.

The Economic Implications

The suggested VAT reimbursement scheme is predicated on the acknowledgment of tourism's multiplier impact on the local economy. While direct spending by visitors adds considerably to GDP, the indirect impacts, such as job creation and increased economic activity, play an important part in sustaining the country's overall development. The bill's goal is to boost sales of locally created items, which will benefit both the tourist industry and the overall economy.

Changes and Implementation

Senate Bill 2148 authorizes the Secretary of Finance, in consultation with the Secretary of Tourism and the Commissioner of the Bureau of Internal Revenue, to adjust the VAT refund threshold based on administrative costs, inflation, and market conditions. This adaptability enables the mechanism to respond to shifting economic conditions while maintaining its efficacy in drawing international visitors and supporting local companies.

Previous Comparable Proposal

Senator Sherwin Gatchalian introduced a similar measure earlier this year, Senate measure 2023, with the goal of creating a VAT return system for non-resident visitors. Multiple proposals addressing this problem have been introduced, demonstrating legislators' appreciation of the potential advantages of luring international visitors via the establishment of VAT return procedures.

The Value of Foreign Tourists

Foreign visitors, notably those from South Korea, have been acknowledged as an important contributor to the country's tourism business. South Koreans account for around 26.14% of the country's total 1.33 million international visitors, according to the Department of Tourism. The proposed VAT return scheme intends to increase the Philippines' attractiveness as a tourism destination and attract more tourists from other nations.


Senator Jinggoy Ejercito Estrada's proposed VAT return method for international visitors in the Philippines has the potential to increase visitor numbers and revitalize the local economy. The measure intends to assist MSMEs and develop more livelihood options for Filipinos by rewarding visitors to buy locally manufactured items. Implementing such a method might have a beneficial multiplier impact on the economy as a whole. The law, as it advances, underscores the government's commitment to recruiting more international visitors and leveraging tourism as a driver of economic development in the Philippines.



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