MANILA, Philippines – Foreign tourists coming to the Philippines may now avail of value-added tax (VAT) refunds.

Finance Secretary Ralph Recto, Customs Commissioner Bienvenido Rubio, and Internal Revenue Deputy Commissioner Marissa Cabreros on Monday, March 24, signed the implementing rules and regulations (IRR) of the VAT Refund for Non-Resident Tourists Act.

Under the law’s IRR, foreign passport holders may apply for a VAT refund for goods purchased from accredited stores that are worth at least P3,000. This amount will be adjusted every three years to account for inflation.

These goods are not to be consumed while the tourist is in the Philippines and must be physically taken out of the country within 60 days from the date of purchase.

In the draft IRR released by the Department of Finance (DOF) in early March, Filipinos with dual citizenship would also be eligible for a VAT refund if they used their foreign passport to enter the Philippines.

The VAT refund will only apply to retail and tangible goods such as the following:

• Clothing
• Electronics
• Gadgets
• Jewelry
• Accessories
• Souvenirs
• Food or non-food consumables
• Other goods intended for personal use

Refunds will be given to tourists electronically or in cash.

According to Recto, the government hopes the VAT refund scheme will encourage foreign tourists to stay in the Philippines longer and spend more of their money in local businesses.

“More money spent by foreign tourists means more businesses created, more Filipino workers hired, more jobs provided, higher incomes for our people, and more revenues for the government to collect. That’s the simple formula for growth,” he said.

Recto added that the success of the VAT refund scheme relies on two things: a fully functional refund system and a surge in inbound tourism.

The final IRR requires the DOF to hire a “reputable and internationally recognized” VAT refund operator for end-to-end solutions. 

Tourism Secretary Christina Frasco is also optimistic that the VAT refund scheme will help the Philippines become a shopping destination. She cited data from the World Travel and Tourism Council that found tourists spend more in the Philippines per capita at $2,073 than in other Southeast Asian countries.

Frasco also sees the policy creating a “ripple effect” by boosting generated income of sectors in the tourism industry.

“We foresee that the ripple effect of the implementation of this law will be vast — not only in terms of retail, but most importantly, in terms of the sectors that will benefit from generated income from shopping, accommodations, transport, and other related services,” she said.

President Ferdinand Marcos Jr. signed the VAT Refund for Non-Resident Tourists Act into law in December 2024.

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Data from the Department of Tourism show that over 5.9 million foreign tourists entered the country in 2024. Over 510,000 overseas Filipinos also returned home that year. – with reports from Kaycee Valmonte/Rappler.com