Philippines Implements Tourist-friendly VAT Refund Law To Attract Global Shoppers, Encourage Higher Retail Spending, And Position The Country As A Leading Shopping Destination In Southeast Asia - Travel And Tour World (2025)

Tuesday, April 1, 2025

The Philippines has officially launched a Value-Added Tax (VAT) refund program for non-resident tourists, marking a major milestone in its efforts to enhance international tourism and boost the economy. Spearheaded by the Department of Tourism and signed into law by President Ferdinand Marcos Jr. in December 2024, the program allows foreign visitors to reclaim VAT on purchases worth over three thousand Philippine pesos, provided the items are taken out of the country within sixty days. This move is designed to position the Philippines as a competitive shopping destination in Asia, encourage higher tourist spending, and support local retailers and businesses that rely on the tourism industry.

The Philippines is taking a bold leap toward revitalizing its tourism industry with the implementation of a groundbreaking Value-Added Tax (VAT) Refund Program for international visitors. This initiative is part of a broader strategy to attract high-spending tourists, enhance the country’s global competitiveness as a shopping and travel destination, and inject fresh momentum into the national economy. Department of Tourism (DOT) Secretary Christina Garcia Frasco has expressed strong confidence in the positive impact this law will have on tourism and related sectors.

Frasco delivered her remarks during the ceremonial signing of the Implementing Rules and Regulations (IRR) for Republic Act No. 12079, which took place on March 24, 2025, at the Department of Finance (DOF) building in Manila. The event marked a significant milestone in the government’s efforts to establish a more tourist-friendly fiscal environment, especially in a time when the global travel industry is becoming increasingly competitive.

Signed into law by President Ferdinand “Bongbong” Marcos Jr. in December 2024, Republic Act No. 12079 introduces a fully functioning VAT Refund System designed specifically for non-resident foreign tourists. This legislation allows eligible visitors to reclaim the 12% value-added tax on goods purchased locally, provided those goods are worth at least PHP 3,000 and are physically taken out of the Philippines within 60 days from the date of purchase.

The law covers a wide range of consumer goods, particularly those bought in retail outlets accredited under the program. The refund process is expected to be seamless and accessible, with the Department of Finance, Bureau of Internal Revenue, Bureau of Customs, and the Department of Tourism working together to ensure the efficient rollout of the system. Participating stores will be required to register with the appropriate authorities, and refund counters will likely be placed in major international airports and select exit points to facilitate processing.

Frasco further emphasized that the program is not solely about increasing tourist arrivals. It is also a strategic economic measure designed to stimulate domestic consumption and support Filipino businesses. With tourists encouraged to spend more on local products, small and medium-sized enterprises, especially those in the retail and manufacturing sectors, stand to benefit significantly. This consumer activity has a multiplier effect that will ripple through the economy, creating jobs and promoting inclusive growth in communities that rely heavily on tourism.

The timing of the VAT refund rollout is also crucial. The tourism industry, which suffered immense losses during the COVID-19 pandemic, has been gradually recovering. However, to regain its pre-pandemic momentum and compete with destinations like Thailand, Singapore, and Japan—which already have similar refund systems in place—the Philippines needed a legislative push. RA 12079 delivers just that.

In addition, this program aligns with the government’s broader vision under the National Tourism Development Plan (NTDP), which seeks to position the Philippines as a premier tourism destination in Asia by improving visitor experience, promoting sustainability, and ensuring economic benefits are widely distributed. Encouraging retail tourism plays a vital role in achieving these goals.

Industry stakeholders have also lauded the government’s move, with representatives from the retail, hotel, and airline sectors expressing optimism that the VAT refund scheme will encourage longer stays and increased spending. Airlines anticipate a rise in inbound tourist traffic, while retailers are preparing for a potential surge in sales, especially in urban shopping districts like Makati, Bonifacio Global City, and Cebu City.

As the country prepares to welcome more international guests under this new fiscal policy, the Department of Tourism is expected to ramp up marketing efforts, particularly highlighting the VAT refund benefit in promotional campaigns. Targeted advertising in tourist-heavy markets will inform potential travelers of the new incentives awaiting them in the Philippines.

The Philippines has launched a VAT refund program for non-resident tourists to boost international visitor spending and promote the country as a top shopping destination in Asia. The initiative allows foreign travelers to reclaim taxes on local purchases, aiming to stimulate tourism and support the national economy.

In conclusion, the VAT Refund for Non-Resident Tourists Act marks a transformative step for the Philippine tourism industry. By offering a more attractive and economically rewarding experience for international visitors, the government is not only increasing the nation’s appeal as a destination but also strengthening the foundation for long-term, sustainable economic growth. Secretary Frasco and her team remain optimistic that this policy, coupled with ongoing infrastructure upgrades and digital innovations, will usher in a new era of prosperity for the Philippine travel sector.