Help needed from gov’t: Exporters feeling pinch from 12% VAT on local inputs

By Billy Begas

House Committee on Ways and Means chairperson and Albay Rep. Joey Salceda is working with the Bureau of Internal Revenue (BIR) and the Department of Finance (DOF) to address the concerns of stakeholders on the imposition of 12% value added tax (VAT) on the local materials used to create export goods.

Salceda said the spirit and the letter of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act is to encourage exporters to use local materials to help local businesses.

“That’s straightforward. So, at the bare minimum, that rule has to be applied, instead of imposing the 12% VAT on all local inputs,” Salceda said.

Stakeholders raised concern on BIR Revenue Regulation 9-2021, which imposes 12% VAT subject to refund on local inputs to exported goods.

RR 9-2021 imposes 12% VAT on certain transactions that were previously not taxed. The RR took effect on June 27, 15 days after its issuance on June 12.

Salceda noted that the problem in using the VAT refund system is the mandatory audit for all applicants.

“That’s a lot of court cases coming, because the BIR audit program subjects all applicants for refund to an audit. And they can be audited for everything. That’s not worth it. Even the CMTA (Customs Modernization and Tariff Act) provides for a de minimis value so that imported goods valued at P10,000 and below are no longer subject to duties and taxes. We can explore that for small exporters. It’s just not worth it to look at each one,” he pointed out.

Salceda said he will file a measure after talking with the BIR, DOF and concerned stakeholders.

“The approach we’re taking here is solutions oriented, so I want to talk to all sides of the debate, and then work closely with the tax policymakers, rather than hold inquiries where we embarrass people without getting a good solution to the problem at hand,” he said.

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Source: Latest Politics News Today (Politics.com.ph)