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Philippines: Export group makes appeal on 12% VAT
The Philippine Exporters Confederation Inc. (Philexport) urged the government to ensure processes and requirements for implementing the 12-percent value added tax (VAT) on indirect exports won’t burden exporters and micro, small and medium enterprises (MSMEs).
In a letter to Bureau of Internal Revenue (BIR) Commissioner Cesar Dulay, Philexport President Sergio Ortiz-Luis, Jr. expressed concerns about the impact of Revenue Regulations (RR) 9-2021 that need to be quickly addressed.
RR 9-2021 implements the imposition of 12-percent VAT on exports and sale of services previously taxed at zero-percent VAT as contained in Republic Act 10963 or the “Tax Reform for Acceleration and Inclusion (TRAIN) Law.”
Luis said companies worry that the implementation procedures and requirements, particularly on filing for VAT refunds, will consume more time and money, both of which they are short of.
He said entrepreneurs are hoping for “a favorable and urgent response on these issues” to help them recover from their losses and continue their business operations.
One of these major concerns is the requirement to physically file for VAT refunds at the BIR’s VAT Credit Audit Division (VCAD) in Quezon City.
“This is the exporter/taxpayers’ money that they are refunding. Imposing difficult processes is not fair, considering that there is cost of money and the negative impacts on their cash flows, particularly of MSMEs,” Luis said.
According to Luis, the BIR should decentralize the processing of VAT refunds by setting up VCAD branch offices that can decide and act on VAT refund applications and even release the funds.
Another issue raised is the need to keep and duplicate voluminous documents, which according to Luis is unnecessary and additional process that transfers the burden of proof on their shoulders.
He said the BIR should instead issue rules on the automatic assessment of VAT refunds where input VAT exceeds output VAT in the case of MSME exporters without further need for separate forms and supplementary evidence.
“Exports account for some 30 percent of the country’s GDP (gross domestic product) and failures in this refund system will be a disincentive to exporters,” he said.
Questions in SIPP
Also being questioned is the linking of incentives to the Strategic Investments Priorities Plan (SIPP), as the trade leader said the priority investment sectors may change depending on leadership.
Under the Corporate Recovery and Tax Incentives for Enterprises (Create) law, an SIPP should be drafted that will identify priority projects or activities that shall receive incentives from the government.
Exporters/exports should be a permanent beneficiary under the SIPP, Luis said.
Luis said firms are also pushing to have a provision included in RR 9-2021 on the full VAT refund in cash – not in the problematic tax credit certificates – within the 90-day timeframe for BIR to process and grant claims for VAT refunds.
“An efficient refund system through cash will help lessen the burden of this new policy,” he said.
Source: https://www.manilatimes.net/2021/06/28/business/top-business/export-group-makes-appeal-on-12-vat/1804870