By means of Justine Irish D. Table, Reporter
THE PHILIPPINES must increase their hotel supply to accommodate an expected influx of foreigners tourists after a law was passed allowing them to claim value added tax (VAT) refunds on certain purchases, a cabinet council said on Thursday.
In a statement, the Private Sector Advisory Council (PSAC) said the law, which offers VAT refunds to foreign tourists with at least P3,000 ($51) in local purchases from accredited outlets, “could boost tourism spending, Filipino craftsmanship and position could promote”. the Philippines as a premier global destination.”
The measure is expected to boost tourism spending by 30% and create opportunities for micro, small and medium enterprises selling local products.
Roberto S. Claudio, a member of the municipality’s tourism sector, said the law would help boost local industries.
“This initiative not only aligns with best practices worldwide, but also highlights the unique creativity and entrepreneurial spirit of Filipino artisans,” he said. “It promotes sustainable growth while promoting our diverse products to the world.”
But the council noted that the country would have to match neighboring countries’ hotel capacity to supplement the VAT refund program.
“Expanding hotel capacity in the Philippines is critical to attracting more tourists and ensuring they experience world-class accommodations,” said Lourdes Josephine Gotianun-Yap, PSAC Tourism Industry Member and Vice President of Filinvest Development Corp., in the statement.
She added that the recently enacted law on business recovery and tax incentives for enterprises to maximize opportunities to revive the economy could encourage hotel expansions and renovations.
The council further noted that allowing income tax exemptions for businesses that start generating income and a 50% deduction for reinvestments from taxable income would also help.
“PSAC also advocates for tourism to be classified under Tier III incentives, granting six to seven years of income tax exemption for hotel development projects,” the report said.
The council said their recommendations would help the Department of Tourism (DoT) achieve its target of more than 445,000 hotel rooms by 2028.
“PSAC continues to work with the DoT, Tourism Infrastructure and Enterprise Zone Authority and Board of Investments to review the Strategic Investment Priority Plan and deliver impactful reforms that will benefit both the tourism sector and local communities,” it added.
Joey Roi H. Bondoc, research director at real estate consultant Colliers Philippines, said the VAT refund program is a positive development for the Philippine tourism industry.
“It is a plus, especially because we want to attract the expensive long-distance foreign tourists,” he said. Business world by telephone. “We want them to stay here longer and spend more.”
He mentioned the need for a one-stop shop for VAT refunds, such as a VAT refund center at every international airport.
He added that if the Philippines exceeds eight million foreign tourist arrivals next year, the country would have to increase the number of hotel rooms. “With more than eight million, we will probably reach an occupancy rate of more than 70%, so increasing the number of hotel rooms is also crucial.”
He said the country needs to improve the penetration of foreign hotel brands, now at 40%, to bring down hotel costs.
“More supply will ultimately result in lower hotel prices and attract more tourists here, and that should be supplemented by VAT refunds for foreign visitors,” he added.
Mr Bondoc said the government should offer more incentives to foreign hotel operators. “What’s interesting is that we are now on the radar of these foreign hotel operators for hotels or even condo hotels,” he said.
“So it’s important that we improve not only our infrastructure, our airports, but also the regulatory framework, which means providing more tax incentives because we want to make sure that we send a signal that the Philippines is open for business for this foreign hotel operators,” he added.