Big news for the Philippines’ tourism industry: the VAT refund for tourists is now a reality. On December 9, 2024, President Ferdinand Marcos Jr. signed Republic Act No. 12079, creating a value-added tax (VAT) refund mechanism for non-resident foreign tourists. The law took effect on January 1, 2025.
In simple terms, qualified tourists can now claim back the 12% VAT they paid on eligible goods during their trip. It’s a move that aligns the Philippines with tourism-heavy countries like Thailand, Singapore, and South Korea, where VAT refunds have long encouraged visitor spending.
Why does the VAT Refund for Tourists matter?
Tourism is one of the Philippines’ key economic drivers. Before COVID-19, the sector contributed 12.7% of GDP. In 2023, over 5.4 million international tourists visited the country—and the government wants those numbers to grow. With many destinations competing for travelers, offering a VAT refund adds another reason to choose the Philippines.
It’s not just about attracting tourists—it’s also about economic impact. The Department of Finance projects that the law could lead to a 30% increase in tourist spending, benefiting both large industries and micro, small, and medium enterprises (MSMEs). If tourist savings from VAT refunds are reinvested into spending, it could boost economic output by ₱2.8 to ₱4 billion annually.
The National Economic and Development Authority (NEDA) also estimates the measure could generate ₱3.3 to ₱5.7 billion in additional revenues between 2024 and 2028, and create 4,400 to 7,100 jobs every year.
How does it work?
Under RA 12079, non-resident tourists can request VAT refunds for goods worth at least ₱3,000, purchased from accredited sellers. These items must be for personal use and brought out of the country within 60 days. Refunds will be processed at international airports and possibly other exit points.
However, not everyone qualifies. If you’re a balikbayan, dual citizen, or an OFW, don’t expect a refund—this is for foreign nationals staying less than 180 days, with no ties to local business or trade.
The Department of Finance (DOF), Bureau of Internal Revenue (BIR), and Bureau of Customs are building the digital system, finalizing rules, and accrediting sellers. It’s a complex rollout, but critical to making the refund system efficient and visitor-friendly.
Has it had an impact yet?
Since the law just took effect in January 2025, it’s too early to track full results. Some airports have refund counters running, but both tourists and sellers are still adjusting. For now, it’s a transition phase.
Still, there’s cautious optimism. Countries with similar systems have seen increased tourist spending—especially from visitors from Korea, Japan, and Europe who expect VAT perks when shopping abroad. The real test will come by mid to late 2025, once the program is fully operational and tourism data is updated.
A step in the right direction
This isn’t just about giving tourists a perk. It’s about making the Philippines more competitive—encouraging higher spending, supporting local businesses, and sending the message that we’re serious about tourism. When visitors shop more, Filipino entrepreneurs, workers, and the economy all benefit.
Let’s hope it works—and that we see more travelers not just enjoying our beaches and culture, but also finding more reasons to shop, stay longer, and return.
