The new law granting value-added tax (VAT) refunds to foreign tourists will drive economic growth and improve the Philippines' global competitiveness.
This is according to the Private Sector Advisory Council (PSAC), commending Republic Act (RA) 12079, or the VAT Refund for Non-Resident Tourists, which President Ferdinand R. Marcos Jr. signed into law on Monday.
“This legislation embodies the productive collaboration between the private sector and the government,” said Sabin Aboitiz, PSAC Lead Convenor and Aboitiz Group president and CEO.
“We commend Congress for swiftly enacting one of PSAC’s ‘Quick Wins’ recommendations for President Marcos. The VAT refund program will strengthen the Philippines' global competitiveness, drive economic growth, and generate jobs by encouraging higher spending on local goods and services,” he added.
Bobby Claudio, PSAC Tourism Sector Member and Vice Chairman for International Relations at the Philippine Retailers Association, said the law would benefit local industries.
“This initiative not only aligns with global best practices but also highlights the unique creativity and entrepreneurial spirit of Filipino artisans. It fosters sustainable growth while promoting our diverse products to the world,” he said.
The PSAC, which comprises prominent business leaders, regularly advises the President on policy recommendations across six sectors: infrastructure, agriculture, digital infrastructure, healthcare, jobs, and tourism.
RA 12079 was part of the PSAC’s push to strengthen the tourism sector.
In tandem with the VAT refund program, the council has also advocated for measures to boost tourism-related investments, including incentives to match hotel capacity with neighboring countries.
These initiatives are part of the recently enacted the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which offers income tax holidays (ITH) starting when businesses begin earning and allows a 50-percent reinvestment deduction from taxable income.
The PSAC is also pushing for tourism to be classified under Tier III incentives, which would grant six-seven years of ITH for hotel development projects.
“Expanding the Philippines' hotel capacity is crucial for attracting more tourists and ensuring they experience world-class accommodations,” Lourdes Josephine Gotianun-Yap, PSAC Tourism Sector Member and Vice Chairperson of Filinvest Development Corporation, said.
“The CREATE MORE Act establishes a robust foundation for tourism sector growth, ensuring we remain competitive with our regional peers,” she added.
On Wednesday, during a meeting with the PSAC at Malacañang, President Marcos approved the council’s proposals to launch a nationwide shopping festival and simplify the visa and immigration process to further boost tourism.
