Agencies said to ready data on tourism, revenue impact of VRST

A LEGISLATOR wants the Department of Finance (DOF) to crack down on the Malacañang-approved tax refund scheme for foreign tourists and its possible impact on government revenue.

Senator Nancy Binay, chairman of the Upper House Committee on Tourism, welcomed the 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 plans for traveling.

However, she wants DOF ​​to detail exactly how the scheme will be implemented: “We want to see the numbers and important details such as how DOF plans to implement this, administrative costs, projected collection losses, its impact and benefits to small and medium-sized traders retail 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 issue an executive order to implement the VRST in 2024 based on the recommendations of the Private Sector Advisory Council, Tourism Sector. By law, sales of Philippine goods and services are subject to a 12 percent VAT. (See “Manila rolls out VRST, e-visas for tourists,” c BusinessMirror30 January 2023)

The biggest spenders?

Binay also said the Department of Tourism (DOT) should have detailed reports on visitors’ receipts and determine which nationalities or tourist groups spent the most “so that we can implement a targeted and strategic promotion of our country as an alternative destination for shopping. It would be nice to see the Philippines as a shopping destination and showcase our premium local brands. Data and research are important because marketing needs to be anchored to a behavioral approach to tourists’ purchasing decisions.”

She suggested giving more incentives to local entrepreneurs and companies that produce “Gawang Pinoy” (Filipino Made) items instead of giving them to stores that 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 it unfolded, the Hotel Sales and Marketing Association (HSMA) on Monday agreed that VRST and the e-Visa on Arrival for selected foreign nationals would benefit the tourism industry. “It will certainly help [boost tourist arrivals],” said HSMA president Lolette So, especially the buyer tax refund scheme, citing the experience of many people in Singapore, where the gross sales tax refund scheme is practiced.

Travel Exchange

AT a press conference, HSMA officials also noted that the Philippines has only recovered “67 percent” of the business traveler market.

However, it cited the development of a strong business and leisure market after the pandemic, as many tourists now combine both activities. “Why? On the one hand, they’re really trying to be more practical and economical. So they prefer to go once and stay for a longer period. They come to Manila and experience our hotels, stay two nights, then hop off somewhere else for a beach destination. Then they come back to Manila and stay at another hotel. Business and leisure travelers are becoming innovative and maximizing their budget and also their time.”

HSMA and the Philippine Tour Operators Association (Philtoa) signed a memorandum of agreement to hold a joint tourism fair on March 28 and 29 at the Manila Marriott Hotel, exclusively for their active members. Under the terms of the MOA, HSMA members will be the sellers of the travel exchange, Philtoa members will be the buyers. HSMA has about 150 member hotels across the country, while Philtoa members include 350 tour operators and destination management companies.

With this travel exchange, Philtoa and HSMA officials said they will be able to provide affordable rates for hotel stays and tours to their respective guests as both parties contract directly with each other.

Image credits: File photo/Senate PRIB

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