The Philippines is now VAT-free for foreign tourists following the signing of the implementing rules and regulations (IRR) for Republic Act No. 12079, or the VAT Refund for Non-Resident Tourists.
RA 12079 aims to boost tourism and encourage foreign spending, contributing to economic growth.
The IRR was signed on March 24, 2025, by Finance Secretary Ralph Recto, Bureau of Customs (BOC) Commissioner Bienvenido Rubio, and Bureau of Internal Revenue (BIR) Deputy Commissioner Marissa Cabreros, with Department of Tourism (DOT) Secretary Christina Garcia-Frasco and Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) Secretary Frederick Go as witnesses.
Under the IRR, non-resident tourists can apply for a VAT refund for locally purchased goods from accredited stores worth at least P3,000. These goods must be taken out of the country as accompanied baggage within 60 days of purchase.
The VAT refund applies only to retail and tangible goods like clothing, electronics, jewelry, accessories, souvenirs, food, and consumables for personal use.
Recto emphasized the law’s potential to nearly double economic returns.
“With a multiplier effect of P1.97, every 100 pesos spent by a tourist generates 197 pesos in economic output. Imagine that. Halos doble ang balik sa ekonomiya,” according to him.
“And 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 added.
The Finance Chief stressed that effective execution is key to unlocking the law’s full potential, saying two things must happen: the country must establish a fully functional VAT refund system and a surge in inbound tourism.
“We want more tourists to come — and we want them to stay longer, spend bigger, and transact with convenience,” he said.
To ensure the system’s efficiency, the Department of Finance (DOF) will hire reputable VAT refund operators to handle refunds electronically or in cash.
Recto also noted the DOT’s efforts to market the Philippines and support tourism infrastructure, including expanding airports, seaports, and transport systems.
The DOF will work to accelerate initiatives like the CREATE MORE Act, the PPP Code, and other economic policies to attract investments and boost the tourism sector.
“Our shared goal should be clear: Tourists should leave the Philippines with more than just souvenirs. They should leave knowing that this is a country that delivers on its promises. A country that knows how to take good care of its guests. A country that doesn’t just welcome them with smiles—but with systems and policies that work,” the finance secretary said.IMT
