Philexport is concerned about the VAT on indirect exports
(The Philippine Star) – June 27, 2021 – 12:00 am
MANILA, Philippines – The Philippine Exporters Confederation Inc. (Philexport) has urged the government to ensure that the implementation of the 12% VAT on indirect exports does not become an additional burden on exporters and micro, small and medium-sized enterprises (MSME).
In a June 22 letter to BIR Commissioner Cesar Dulay, Philexport President Sergio Ortiz-Luis Jr. said exporters and MSMEs had “very serious concerns” about the impact of the regulation on revenues. 9-2021 which must be quickly dealt with.
Law RR 9-2021 imposes a VAT of 12% on exports and the sale of services previously at 0% VAT, as provided for in the Law of the Republic 10963 or the Law on Tax Reform for Acceleration and inclusion (TRAIN) which is to come into effect today.
One of these major concerns is the requirement to physically file VAT refunds with the VAT Credit Audit Division (VCAD) of BIR in Quezon City.
“It is the money of the exporters / taxpayers that they reimburse. Imposing difficult processes is not fair, given the cost of money and the negative impacts on their cash flow, especially MSMEs, ”Ortiz-Luis stressed.
He suggested that until an electronic filing system is developed, the BIR should decentralize the processing of VAT refunds by creating VCAD branches that can decide and act on VAT refund claims and even release funds. .
Another issue raised is the need to keep and duplicate large documents, which companies see as another unnecessary and additional process that shifts the burden of proof onto their shoulders.
Ortiz-Luis suggested that the BIR instead publish rules on the automatic assessment of VAT refunds when input VAT exceeds output VAT in the case of exporting MSMEs without further need for separate forms and additional evidence.
“Exports represent some 30 percent of the country’s GDP and the failure of this reimbursement system will be a drag on exporters,” he said.
The link between the incentives and the Strategic Priority Investment Plan (SIPP) is also called into question, as the trade chief said priority investment sectors could change depending on leadership.
Exporters / exports should be a permanent beneficiary of SIPP, Ortiz-Luis said.
In addition, companies are pushing for a provision to be included in RR 9-2021 on the full refund of VAT in cash – and not in problematic tax credit certificates – within the 90-day deadline given to the government. BIR to process and grant VAT refund requests.
Politics was one of the main topics of the recent general assembly of members of Philexport, where exporting members expressed their frustration, anger and confusion with this new directive, noting that it seems to facilitate the task of regulators to solve problems such as smuggling, while leaving exporters and MSMEs to deal with the negative impacts on them.
Philexport opposed the imposition of VAT on exports during consultations on the TRAIN law, which entered into force in 2018. He stressed that the abolition of zero VAT for indirect exports would harm the whole the exporting community and local industries. The industry is trying to develop and strengthen itself.