The Supreme Court (SC) has upheld the constitutionality of Republic Act 12079, which allows value-added tax (VAT) refunds on select purchases by non-resident foreign tourists.

The 30-page decision by the SC En Banc dismissed a petition challenging the law, emphasizing that the policy decision aims to maintain the Philippines' competitiveness as a global tourist destination.The VAT refund applies to goods priced at least P3,000 from accredited stores, taken out of the country within 60 days.

The law excludes Filipino citizens, but the SC argued that equal protection does not require identical treatment, as the distinction is based on reasonable classifications.

The decision noted that VAT refunds for foreign tourists are a common international practice, with countries like Indonesia, Malaysia, and the EU implementing similar systems.This ruling supports the tourism sector by incentivizing foreign visitors while adhering to tax regulations.