Philexport Calls Government for Clarifications on VAT on Indirect Imports
The Philippine Exporters Confederation (Philexport) calls on the government to clarify and ensure that the implementation of the 12% VAT on indirect imports does not become a burden for exporters and micro, small, and medium enterprises (MSMEs).
On June 22, Philexport President Sergio Ortiz-Luis Jr. sent a letter to Bureau of Internal Revenue (BIR) Commissioner Ceasar Dulay expressing his concerns regarding the possible effects of Revenue Regulation (RR) No. 9-2021.
Under RR 9-2021, a 12% VAT is imposed on exports and sales of services. It was previously at 0% VAT as contained in Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Law.
The major concern circulated around the requirement to physically file for VAT refunds at the BIR’s VAT Credit Audit Division (VCAD) in Quezon City.
Ortiz-Luis expressed, “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.”
Ortiz-Luis suggested that BIR should decentralize the processing of VAT refunds by setting up VCAD branch offices that can decide and act on VAT refund applications.
In the letter, Ortiz-Luis raised another issue concerning the unnecessary need to keep and duplicate voluminous documents to comply with RR No. 9-2021.
He suggests that 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.
He noted, “Exports account for some 30% of the country’s GDP and failure in this refund system will be a disincentive to exporters.”
Ortiz-Luis also questions the linking of the incentives to the Strategic Investments Priorities Plan (SIPP), given that the Department of Trade and Industry (DTI) Secretary Ramon Lopez said the priority investment sectors may change depending on leadership.
Ortiz-Luis noted that exporters and exports should be a permanent beneficiary under the SIPP.
Furthermore, enterprises are pushing to have a provision included in RR No. 9-2021 on the full VAT refund in cash within the 90-day timeframe for BIR to process and grant claims for VAT refunds.