Business groups: Repeal of 12% VAT on local purchases by exporters


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MANILA, Philippines – Business groups want the Bureau of Internal Revenue (BIR) to repeal the imposition of 12% value added tax (VAT) on local purchases by exporters and indirect exports, claiming its implementation implementation could lead to job losses and discourage investment in the country.

In an online press conference, the business groups, consisting of the Information Technology and Business Process Association of the Philippines, Semiconductor and Electronics Industries of the Philippines Foundation Inc. (SEIPI), the Confederation of Wearable Apparel Exporters of the Philippines (CONWEP) and Pilipino Banana The Association of Producers and Exporters and the Association of Ecozones of the Philippines have said they are calling for the BIR Revenue to be repealed. Regulations 9-2021, which came into effect last month.

Other groups that joined the event were the Philippine American Chamber of Commerce, Canadian Chamber of Commerce in the Philippines, European Chamber of Commerce in the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc., the Korean Chamber of Commerce of the Philippines; and the Tax Management Association of the Philippines.

SEIPI Chairman Dan Lachica said his group wrote a letter to BIR Commissioner Caesar Dulay and other government officials, including Commerce Secretary Ramon Lopez, regarding industry concerns about RR 9-2021, which imposes 12% VAT on transactions from exporters that were previously VAT zero-rated, such as export sales of raw materials and packaging, outsourced services such as processing, the manufacture or repackaging of goods to be exported, and the services of contractors and subcontractors.

Lachica said this VAT would be passed on to export-oriented manufacturing industries and, if refundable, it would take years to process.

“This will drastically reduce the ease of doing business and discourage investors,” he said.

In view of the 12% VAT surcharge, some SEIPI members are already considering transferring volumes from domestic suppliers to foreign suppliers.

“The rough numbers I’ve compiled would basically involve moving something like P10 billion to P28 billion, which is about two percent of our local added value to suppliers outside of the Philippines,” he said.

In addition to declining revenues for local suppliers, he said there would be an estimated downsizing of 10,000 to 50,000 workers.

“We call on the DOF, the BIR, our legislators, our Cabinet to influence the BIR to revoke this policy,” he said.

For her part, CONWEP Executive Director Maritess Agoncillo said the garment industry wants the government to reconsider the implementation of RR 9-2021 as the industry has yet to recover from the economic impact of the pandemic, as factories are not yet operating at full capacity.

In December last year, she said more than 20,000 workers had been made redundant by members of the group.

“Currently we are seeing new rules that may affect our competitiveness… Can we ask for a break on RR 9-2021? We call for the urgent repeal of this, ”she said.

PHILEA President Francisco Zaldarriaga said RR 9-2021 is a fatal blow to the economy and its implementation is untimely as businesses have yet to bounce back from the effect of the pandemic.

IBPAP President and CEO Rey Untal said RR 9-2021 is seen to affect information technology – the growth of business process management.

“We are getting positive moves towards growth, which is a good step forward, but we are also facing headwinds like this BIR issue and the working from home issue… If we don’t fix them quickly, it t is one step forward and two steps back. And while we haven’t done a detailed assessment of what impact this will have on growth, I can assume that with the two combined, we can easily grow 50% less than we originally planned. “, did he declare.

He said IBPAP seeks to grow five percent this year and maintain that next year.

Undersecretary of Commerce Ceferino Rodolfo said last month that the Ministry of Commerce and Industry had conveyed business concerns about RR 9-2021 to the DOF.

“We raised this issue with the DOF and we might expect them to call a Revenue Memorandum Circular (RMC) soon. I think it’s a clarification of RR 9-2021 that would fix this problem. So we should expect this to come out soon, ”he said.

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