Marcos to BIR: Don’t slap ‘tax variant’ on healthcare supply manufacturers

Senator Imee Marcos on Friday sought to protect local manufacturers of personal protective equipment (PPE) and other medical supplies from a “tax variant” that the Bureau of Internal Revenue (BIR) released in June.

The chair of the Senate economic affairs committee was referring to BIR Regulation 9-2021 that revokes a 12 percent value added tax (VAT) exemption on the sale of raw materials, packaging supplies and other services to export-oriented manufacturers that include critical healthcare suppliers.

“This mutation of tax regulation threatens to cancel gains some exporters have already made toward economic recovery and will push them back into a critical state,” Marcos said.

She cited the case of garments exporters that had been able to survive the Covid-19 pandemic’s economic onslaught by adapting their production to the manufacture of PPE, surgical masks and other medical goods.

But Marcos said that their meager profits averaging less than 5 percent may be wiped out by the new BIR regulation imposing the VAT.

Marcos has been advocating tax exemptions for local makers of critical healthcare products during a health emergency, as proposed in Senate Bill 1708 or the “Healthcare Manufacturing and Pandemic Protection Act.”

The bill will not only attract foreign investors but also preserve local jobs, she said.

“During health emergencies, local sales of critical healthcare goods produced by exporters will be treated as export sales. So, these will be exempted from VAT, duties and fees, with export incentives kept intact,” Marcos explained.

If demand during a health emergency so requires, manufacturers in special economic zones can devote as much as 80 percent of their production to local sales which will be credited to their export sale requirements under government rules.

The Marcos bill also mandates the government to procure healthcare supplies from local manufacturers first, as long as their bid prices do not exceed a foreign bidder’s lowest bid price by 25 percent.

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