Finance Secretary Ralph G. Recto is optimistic about the Philippines’ economic prospects in 2025, fueled by the recent enactment of two key laws aimed at boosting the tourism industry and local spending as well as strengthening food security in the country.

President Ferdinand R. Marcos, Jr. signed into law on December 9, 2024, both Republic Act (RA) No. 12079 or the Value-Added Tax (VAT) Refund Mechanism for Non-Resident Tourists Act and RA No. 12078 or the Amendments to the Agricultural Tariffication Act.

A priority reform led by the Department of Finance (DOF), RA 12079 introduces Section 112-A in the National Internal Revenue Code (NIRC) of the Philippines, which states that tourists shall be eligible for VAT refunds on locally purchased goods.

With this, the Philippines positions itself alongside countries around the world with a standard VAT system in place, which is designed to incentivize foreign tourists to spend more in the country.

“It is high time that the Philippines catches up with countries around the world that have long implemented a standard VAT refund system. This strategic initiative aims to encourage foreign tourists to spend more in our country, stimulating our domestic economy. With increased tourism spending, we will have higher revenues to collect and we can create more jobs, raise incomes, and accelerate economic growth,” Secretary Recto said.

RA 12079 states that goods should be purchased by foreign tourists in duly accredited stores in person and should be taken out of the country by the tourist within 60 days from the date of purchase.

The value of goods purchased per transaction should be equivalent to at least PHP 3,000 but the Secretary of Finance may adjust this threshold upon recommendation of the Commissioner of the Bureau of Internal Revenue (BIR) taking into consideration the consumer price index.

Such refunds may be made electronically or in cash and shall be drawn out from the Special Account in the General Fund as provided under Section 106 of the Code.

The DOF is mandated by law to engage the services of reputable and internationally recognized VAT refund operators to provide end-to-end solutions to the government to establish and operate a VAT refund system that is consistent with best practices.

The Finance Secretary, after careful consultation with the Department of Trade and Industry (DTI), the Department of Transportation (DOTr), the Department of Tourism (DOT), the National Economic and Development Authority (NEDA), the BIR, and the Bureau of Customs (BOC), shall promulgate the implementing rules and regulations (IRR) 90 calendar days from the effectivity of the Act.

The calculated foregone revenues of the law can be easily offset by the economic impact of bolstered tourism spending induced by the refund.

Data from the DOF shows that savings from the refund fully channeled into additional tourism spending may boost economic output by PHP 2.8 billion to PHP 4.0 billion annually.

On the other hand, RA 12078 enhances the capabilities of the government to protect Filipino consumers by extending market interventions to stabilize rice prices during periods of volatility and to prevent manipulative pricing and hoarding.

“The refinements to the Rice Tariffication Law are essential for the effective management of the Filipino household’s fundamental staple. Dahil dito, makakasiguro ang bawat Pilipino na may sapat at murang bigas sa bansa habang mas lalo pa nating pinapalakas ang sektor ng agrikultura,” Secretary Recto said.

The law strengthens the regulatory function of the Department of Agriculture (DA), through the Bureau of Plant Industry (BPI).

Under this, the DA-BPI is authorized to require the registration and maintain a national database of all grain warehouses, storage facilities, silos, and controlled-temperature cold storages; conduct regular site inspections; and collect and analyze data on rice trade activities, in cooperation with the Philippine Statistics Authority (PSA), the Bureau of Customs (BOC), the National Food Authority (NFA), and other government agencies.

Meanwhile, the new law authorizes the DA Secretary, upon the recommendation of the National Price Coordinating Council (NPCC), to declare a food security emergency on rice due to supply shortage or extraordinary increase in prices.

In addition, the Rice Competitiveness Enhancement Fund (RCEF) has been given an annual appropriation of PHP 30 billion until 2031 to further improve rice farmers’ competitiveness and income.

It will also support other equally important programs, activities, and projects, including composting facilities for biodegradable wastes; pest and disease management; solar-powered water irrigation or impounding irrigation project; soil health improvement; and farming support programs of the DA and the National Irrigation Administration (NIA) on contract farming.