VAT refund system for tourists in place by 2020

To entice more tourists and shoppers into the country, a system to refund the 12-percent value-added tax (VAT) paid by foreign visitors for goods and services they availed of here will be in place by 2020, the head of the Duterte administration’s economic team.

Finance Secretary Carlos G. Dominguez III said that “we are certainly going to do” the VAT refund system.

“It should be in place sometime in two years,” Dominguez added.

In March, Dominguez noted that a VAT refund system for tourists was a global practice.

“I don’t know if it will entice more tourists, but we are going to give them their due. It’s really the international practice to do it,” Dominguez had explained.

Asked if the Philippine government will come up with its own system, Dominguez replied: “There’s a possibility for us to outsource our own system.”

But Dominguez noted that a VAT refund system will entail an e-invoicing system, which the government was still working on.

“We have gotten a grant from the South Korean government to study an e-invoicing system, and our plan is to put this in place by 2020,” Dominguez added, citing that the Koreans were the model as they have “a very efficient” system.

Also, Dominguez said that a South Korean grant would be tapped to ensure that Siargao Island, a fast-rising tourist destination, would not go the same route as Boracay Island, which the government closed down for six months to rehabilitate due to environmental degradation.

“I wrote a special letter [to the South Korean government] for that. I told them, ‘knowing what happened to Boracay, we don’t want this to happen again,’” Dominguez said.