The FINANCE department is reviewing an ordinance from the Bureau of Internal Revenue (BIR) that charges 12% VAT on previously exempt raw materials and packaging materials sold by local manufacturers to exporters.
“We will review it and we will implement it in accordance with the law. Well, the law is unfortunately not very fair … We will strictly enforce it, as we swore, “said Finance Minister Carlos G. Dominguez III at a forum of the Financial Executives Institute of the Philippines (FINEX) on Wednesday.
Exporters and foreign chambers last week called on the government to repeal Revenue Regulations (RR) No. 9-2021, saying this would further dampen investor sentiment and force companies to import their commodities instead.
In a separate Viber message to reporters, Mr Dominguez said the review should be completed before the end of the month.
Dominguez said the regulation was “technically postponed” as the CREATE tax rules did not come into effect until July and the deadline for VAT returns was the end of the third quarter.
The director general of the Philippine Economic Zone Authority (PEZA), Charito B. Plaza, had asked the BIR to postpone the effectiveness of the regulation while the review was ongoing.
“The postponement of the VAT RR and eventually the removal of its inclusion in CREATE is a big breather for exporters and domestic MNEs (multinational corporations) who are suppliers to exporters,” Ms. Plaza said on Wednesday in a Viber embassy.
“This will lead to the realization of PEZA’s goal of realizing the production, manufacturing and export-oriented economy of the country and transforming the country into an independent, self-sufficient and resource-generating economy. dependent economy and make the Philippines a contributor to the global supply chain, ”she added.
BIR previously defended the regulation, saying it was in line with the Acceleration and Integration Tax Reform Act (TRAIN), which requires the agency to collect the 12% VAT once the 90-day refund system is in place.
However, exporters argued that the issue was in conflict with certain provisions of the newly enacted Business Recovery and Tax Incentives For Businesses (CREATE) Act, which maintains the zero tax rate for exporters. – BMLaforga