MANILA — Finance officials are now considering a move to follow the international norm of not requiring value added tax (VAT) payments for items bought in the country but will be brought overseas.
Finance Secretary Carlos Dominguez III said items for exports would not be slapped with VAT since only items that are consumed in the country are required to pay this particular tax.
“If you export it you get a refund for whatever you pay… All other countries do it that way. We want to be a normal country. We want to set it up also for non-residents who buy things here and bring it out. So it’s gonna be like Singapore (and) in Japan,” he said.
Dominguez explained that the government wants to do the right thing.
He said this rule would be in place “before the end of the administration” because most Association of Southeast Asian Nations (ASEAN) countries are implementing it.
“We are giving them what is their due. I don’t know if it will entice more tourists but we have to give them what is their due. It’s really the international practice to do it,” he said.
Asked for a ceiling on the amount of items for VAT-exemption, the Finance chief said all items should be included since “the general tourists do not buy expensive things.”
He also said that though this would have some impact on government revenues, what the tourists spend here is larger than what the refunds would be.
To date, the VAT rate in the country is 12 percent.
Finance Undersecretary Karl Chua said implementation of this VAT-exemption rule for items to be exported would be part of the government’s tax reform program, pointing out that this is a consumption tax and not an incentive.
“We made it clear under the tax reform that the VAT is a consumption tax that everyone should pay when they buy goods for imports. And when they export, they get the refund,” he said.
Chua said the reform on VAT refunds would be done step-by-step, initially with exporters.
He said government finances have improved, thus, this is the right time to implement this reform. (PNA)
