® Senate
<©fficr o( tl)e
NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
)
SENATE
S. no.2023
23 mar 2
RECEIVED BY:~n
PI -10
Introduced by SEN. WIN GATCHALIAN
AN ACT
CREATING A VAT REFUND MECHANISM FOR NON-RESIDENT TOURISTS, 
ADDING FOR THE PURPOSE A NEW SECTION 112-A TO THE NATIONAL 
INTERNAL REVENUE CODE OF 1997, AS AMENDED
EXPLANATORY NOTE
The coronavirus (COVID-19) pandemic caused a tremendous decrease in the 
number of tourist activities in the Philippines. Prior to the COVID-19 pandemic, the 
Department of Tourism (DOT) recorded approximate 8.26 million foreign tourists in 
2019.1 However, in 2020, 2021, and 2022, the DOT has recorded 1.48 million2, 0.16 
million3, and 2.65 million4 foreign tourists respectively. For 2023, the DOT aims to 
draw in 4.8 million foreign tourists5 and generate at least USDS.8 Billion in revenue.
Taking advantage of the continued reopening of the Philippine borders leading 
to more economic activities, the undersigned sees this as an opportune time to entice 
more non-resident foreign tourists to visit the Philippines and spend their money on 
goods, on top of their usual expenses for services, accommodations, tours, and other 
forms of entertainment.
1 http://www.tourism.gov.ph/fiIes/2023/01/01-04/tourism_demand/Feb-Dec.pdf (Date last accessed: 
March 21, 2023).
2 http://www.tourism.gov.ph/Tourism_demand/Arrivals2020.pdf (Date last accessed: March 21, 
2023).
3 http://www.tourism.gov.ph/Tourism_demand/07112022/Arrivals2021.pdf (Date last accessed: 
March 21, 2023).
4 http://www.tourism.gov.ph/files/2023/01/01-04/tourism_demand/Feb-Dec.pdf (Date last accessed: 
March 21, 2023).
5 https://www.gmanetwork.com/news/topstories/nation/859656/dot-targets-to-have-4-8-million- 
tourists-visiting-philippines-in-2023/story/


To be truly competitive with its peers in the Asia Pacific region, the Philippines 
needs to establish a tourist value-added tax (VAT) refund system, one that is 
unfortunately not provided in our current tax laws. This proposed measure gives 
tourists with foreign passport and who are considered as non-resident alien individuals 
not engaged in trade or business in the Philippines a VAT refund for goods:
1. Locally purchased in duly accredited stores by the tourists themselves;
2. Taken out of the Philippines by the tourists with them within sixty (60) days 
from date of purchase; and
3. The value of the locally purchased goods amounts to at least Three 
Thousand Pesos (Php3,000.00) per transaction.
Tourists shall be entitled to a VAT refund in an amount not exceeding eighty 
five percent (85%) of the total amount of VAT paid by the Tourist on locally purchased 
goods that they take with them out of the country.
The Department of Finance may secure the services of a reputable and 
technologically innovative service providers to facilitate and administer the VAT refund 
process for tourists.
Promoting VAT refund for tourist can lead to consumption impact known as the 
"tourism multiple on national income".6 Under this concept, any form of tourist 
entertainment raises national income, be it hotel accommodations, food purchases, 
transportation, visits to sports venues, theaters, bars, museums, health services, or 
any other kind of service.7
With the hope of revitalizing our local tourism industry and driving overall 
economic growth. It is time we incentivize tourists into spending more money in the
country.
In view of the foregoing, the passage of this/heasure is earnestly sought.
6 https://www.nasdaq.com/articles/why-the-vat-refund-industry-is-ripe-for- 
disruption?fbclid=IwAR2HsxE5YCvF15i8x2lcailS4cY_Fp08RFAWyYMKd6wemdfwTXcPPjxKXT8
7 Id.


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NINETEENTH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
)
Senate
\ “'W .•V? 
-
of III? si trMiirf
23 MAR 21 , P1 :10
SENATE
S. NO. 2023
RECEIVED BV: yL
Introduced by SEN. WIN GATCHALIAN
AN ACT
CREATING A VAT REFUND MECHANISM FOR NON-RESIDENT TOURISTS, 
ADDING FOR THE PURPOSE A NEW SECTION 112-ATO THE NATIONAL 
INTERNAL REVENUE CODE OF 1997, AS AMENDED
Be it enacted by the Senate and the House of Representatives of the Phiiippines in 
Congress assembled:
SECTION 1. A new Section 112-A is hereby inserted after Section 112 of the 
National Internal Revenue Code of 1997, as amended, to read as follows:
"SEC. 112-A. VAT REFUND FOR TOURISTS. - A TOURIST 
SHALL BE ELIGIBLE FOR A VALUE-ADDED TAX (VAT) REFUND ON 
LOCALLY PURCHASED GOODS BY THE TOURIST IN DULY 
ACCREDITED STORES IF SUCH GOODS ARE TAKEN OUT WITH 
THEM BY THE TOURISTS WITHIN SIXTY (60) DAYS FROM THE 
DATE OF PURCHASE, AND THE VALUE OF GOODS PURCHASED 
PER TRANSACTION AMOUNTS TO AT LEAST THREE THOUSAND 
PESOS (PHP 3,000.00): PROVIDED, THAT SUCH THRESHOLD MAY 
BE ADJUSTED CONSIDERING THE ADMINISTRATION COST FOR 
THE REFUND, THE CONSUMER PRICE INDEX, OR OTHER MARKET 
CONDITIONS, AS DETERMINED BY THE SECRETARY OF FINANCE,
UPON RECOMMENDATION OF THE COMMISSIONER OF


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INTERNAL REVENUE: PROVIDED FURTHER, THAT THE TOTAL 
AMOUNT OF VAT REFUND GRANTED TO TOURIST SHALL NOT 
EXCEED EIGHTY-FIVE PERCENT (85%) OF THE TOTAL AMOUNT 
OF VAT PAID BY THE TOURIST.
THE DEPARTMENT OF FINANCE MAY SECURE THE 
SERVICES OF A REPUTABLE AND TECHNOLOGICALLY 
INNOVATIVE SERVICE PROVIDERS TO FACILITATE AND 
ADMINISTER THE VAT REFUND PROCESS FOR TOURISTS.
ALL UNCLAIMED VAT WHICH ARE ELIGIBLE FOR REFUND 
UNDER THIS SECTION SHALL BE AUTOMATICALLY REMITTED BY 
THE SERVICE PROVIDERS TO THE NATIONAL TREASURY UPON 
THE LAPSE OF THE SIXTY-DAY PERIOD TO CLAIM VAT REFUND.
FOR PURPOSES OF THIS SECTION, A 'TOURIST' SHALL 
REFER TO A FOREIGN PASSPORT HOLDER, WHO IS A NON­
RESIDENT ALIEN INDIVIDUAL NOT ENGAGED IN TRADE OR 
BUSINESS IN THE PHILIPPINES.
SEC. 2. Implementing Rules and Regulations. - Within ninety (90) 
calendar days from the effectivity of this Act, the Secretary of Finance, after due 
consultation with the Department of Trade and Industry, Bureau of Internal Revenue, 
Bureau of Customs, and the National Economic Development Authority, shall 
promulgate the necessary rules and regulations to faithfully implement the intent and 
provisions of this Act: Provided, That the failure to promulgate the rules and 
regulations shall not prevent the implementation of this Act upon its effectivity.
SEC. 3. Separability Clause. - If any provision of this Act is declared 
unconstitutional, the remaining parts or provisions not affected thereby shall remain 
in full force and effect.
SEC. 4. Repealing Clause. - All laws, decrees, executive orders, 
implementing rules and regulations, issuances, or any part thereof inconsistent with 
the provisions of this Act are deemed repealed, amended, or modified accordingly.


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SEC. 5. Effectiv/ty. - This Act shall take effect on January 1, 2024 following
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its publication in the Official Gazette or in a newspaper of general circulation.
Approved,