A LAWMAKER is asking the Department of Finance (DOF) to break down the Malacañang-approved tax refund scheme for foreign tourists and its possible impact on government revenues.
Senator Nancy Binay, chair of the upper chamber’s Committee on Tourism, welcomed programs to boost the recovery of the tourism industry and described the value-added tax refund scheme for tourists (VRST) as a “promising step in encouraging tourists to consider the Philippines in their travel plans.”
However, she wants the DOF to detail how exactly the scheme will be implemented: “We want to see the numbers and important details like how the DOF plans to roll this out, the administrative costs, the projected losses in collection, its impact and benefits to small- and medium-scale retailers, etc.… Although we are not a shopping mecca like Dubai or Hong Kong, we want our foreign guests to have a pleasant experience and the ease of traveling and shopping in the Philippines, to encourage them to return.”
President Ferdinand R. Marcos Jr. will be issuing an executive order to implement the VRST in 2024, based on recommendations by the Private Sector Advisory Council Tourism Sector. Under the law, sales of Philippine goods and services are imposed a VAT of 12 percent. (See, “Manila dangles VRST, E-visas to tourists,” in the BusinessMirror, January 30, 2023.)
Biggest spenders?
Binay also said the Department of Tourism (DOT) should have detailed reports on visitor receipts and determine which nationalities or travel groups spent the most, “so we can implement a targeted and strategized promotion for our country as an alternative shopping destination. It would be nice to see the Philippines as a shopping destination and showcase our premium local brands. Data and studies are important since marketing should be anchored to the behavioral approach of tourist buying decisions.”
She suggested more incentives be given to local entrepreneurs and companies, which produce “Gawang Pinoy” (Made by Filipinos) items instead of giving them to stores, which sell imported products. “I think this will best complement the VAT refund program,” the lawmaker told the BusinessMirror in a mix of Filipino and English.
As this developed, the Hotel Sales and Marketing Association (HSMA) on Monday agreed the VRST and the e-visa upon arrival for select foreign nationals will be a boon to the tourism industry. “It will definitely help [boost tourist arrivals],” said HSMA president Loleth So, especially the tax refund scheme for shoppers, citing the experience of many in Singapore where the gross sales tax refund scheme is practiced.
Travel exchange
IN a news conference, HSMA officers also noted that the Philippines has only recovered “67 percent” of the business traveler market.
So, however, cited the development of a strong Business-Leisure Market after the pandemic, as many tourists now combine both pursuits. “Why? For one, they’re really trying to be more practical, and economical. So they would rather go one time and stay a longer duration. They come in Manila and experience our hotels, stay for two nights, then jump off somewhere else for a beach destination. Then they come back to Manila and stay in another hotel. The Business-Leisure travelers become innovative and maximize their budget and also their time.”
The HSMA and the Philippine Tour Operators Association (Philtoa) signed a memorandum of agreement to hold a joint travel trade fair on March 28 and 29 at the Manila Marriott Hotel, exclusively for their active members. Under the terms of the MOA, members of the HSMA will be sellers at the travel exchange, Philtoa members will be the buyers. HSMA has about 150 member-hotels nationwide, while Philtoa’s members include 350 tour operators and destination management companies.
With this travel exchange, Philtoa and HSMA officials said they will be able to give affordable rates on hotel stays and tours to their respective guests, as both parties directly contract with each other.
Image credits: File photo/Senate PRIB
