Foreign tourists can now enjoy value-added tax (VAT) refunds on their purchases in the Philippines, following the official release of the implementing rules and regulations (IRR) of Republic Act No. 12079, or the VAT Refund for Non-Resident Tourists Act.
Signed on March 24, the IRR enables foreign passport holders to apply for VAT refunds on locally purchased goods worth at least PHP 3,000 from accredited stores, provided the items are taken out of the country as part of their baggage within 60 days.
The ceremonial signing was led by Finance Secretary Ralph G. Recto, along with Bureau of Customs (BOC) Commissioner Bienvenido Y. Rubio and Bureau of Internal Revenue (BIR) Deputy Commissioner Marissa O. Cabreros. Also present were Tourism Secretary Christina Garcia-Frasco, OSAPIEA Secretary Frederick D. Go, and Trade Secretary Maria Cristina Aldeguer-Roque.
“This is a landmark reform that will directly boost tourism and drive consumer spending,” said Recto during the signing ceremony.
RA 12079 aims to make the Philippines a more attractive shopping and travel destination by allowing non-resident tourists to claim VAT refunds — effectively lowering the cost of goods and incentivizing spending.
The VAT refund system will apply only to tangible retail goods such as clothes, electronics, jewelry, food, souvenirs, and other personal-use items, and not to services or business-related purchases.
The Department of Finance (DOF) has been tasked to engage internationally recognized VAT refund operators to ensure the system is efficient and seamless. Refunds may be processed either electronically or in cash, depending on the system set in place.
Recto emphasized the economic ripple effect of increased tourist spending, citing government estimates that “every PHP 100 spent by a tourist generates PHP 197 in economic output.”
“Halos doble ang balik sa ekonomiya,” Recto said. “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.”
However, he stressed that the success of the program hinges on two key factors: an effective VAT refund system and a strong influx of tourists.
“We want more tourists to come — and we want them to stay longer, spend bigger, and transact with convenience,” he said.
To ensure accessibility and inclusivity, Recto promised that the refund system will be “world-class, modern, and built on the principles of transparency, efficiency, and ease.”
The measure aligns with the broader economic strategy to reinvigorate the tourism sector, which has seen a steady recovery since pandemic restrictions were lifted. According to the Department of Tourism, South Korea and Japan remain the top sources of international visitors, with rising arrivals from Europe and North America.
The government also sees this VAT refund system as complementary to ongoing efforts to expand infrastructure and connectivity, such as the development of airports, roads, and transport systems that facilitate inbound travel.
Recto added that the DOF supports the full implementation of the CREATE MORE Act, the Public-Private Partnership Code, and other pro-investment policies to accelerate tourism-linked development.
“Our shared goal should be clear,” he said. “Tourists should leave the Philippines with more than just souvenirs. They should leave knowing that this is a country that delivers on its promises.”
He concluded, “For if we do things right, in the eyes of our visitors, we won’t just be a country of pristine beaches and warm hospitality. We’ll be that one ultimate tourist destination they’ll keep coming back to — again and again.”
