Philippines retailers seek level playing field vs online foreign merchants

MANILA, Philippines —The country’s retail industry is calling for the levelling of the playing field between traditional retail stores and online foreign merchants, saying the latter needs to abide by the same laws and ordinances.

At the National Retail Conference and Expo (NCRE) yesterday, Philippine Retailers Association (PRA) president Bobby Claudio said that one significant challenge faced by the local retail industry is the unlevel playing field created by online foreign merchants.

“Ensuring that online retailers adhere to the same laws and ordinances that traditional stores abide by is crucial. Matters such as taxation, duties, product standards, intellectual property, price tags, official receipts, and truth in advertising among others, must be upheld consistently across all online marketplaces,” Claudio said.

“Addressing this concern is of paramount importance to our retail community,” he said.

In line with this, Claudio said the PRA support for the proposal of an internet taxation law, specifically citing Senate Bill 250.

“We firmly believe that this bill will pave the way for a more equitable business landscape in the Philippine Retail Industry, benefiting both local and international online players,” Claudio said.

Senate Bill 250 aims to level the playing field between traditional and digital businesses by clarifying the imposition and collection of value-added tax (VAT) from digital service providers.

“The PRA remains steadfast in its mission to keep the local retail industry competitive and conducive to growth. Our primary focus lies in creating an equitable playing field for both online and brick-and-mortar stores while positioning the Philippines as a top tourist destination in Asia,”Claudio said.

As the retail industry continues to evolve, Claudio acknowledged that it has brought some positive changes.

“Embracing these transformations is a testament to our adaptability and openness to growth. However, we recognize the importance of maintaining a fair and competitive environment for all players in our industry,” Claudio said.

Apart from the proposed digital taxation law, Claudio also cited two more major developments that the retail industry currently faces particularly the 1D-2D barcode migration and the VAT refund scheme for tourists.

Meanwhile, the PRA official said they have also been actively championing the proposed bill on VAT Refunds for Non-Resident Tourists in the Philippines.

“This crucial legislation seeks to establish a mechanism for refunding value-added tax (VAT) to non-resident tourists, thereby enhancing our country’s overall shopping and tourism experience. We recognize the immense potential this bill holds in attracting more tourists, stimulating retail businesses, and fostering overall economic growth,” Claudio said, adding that the bill is set to undergo floor deliberation in the Senate within the coming weeks, with plans for industry-wide implementation slated for the first quarter of 2024.

The PRA said earlier that a VAT refund system for tourists would encourage them to spend more in the Philippines.

Latest available data from the Philippine Statistics Authority (PSA) showed that inbound tourism expenditures registered at P27.62 billion in 2021, 79.2 percent lower than the P132.58 billion recorded in the year before.

Compared to pre-pandemic levels, inbound tourism expenditures for shopping accounted for 11 percent of the P600 billion inbound tourism expenditure in 2019 at P66.128 billion.