The Philippine Economic Zone Authority (Peza) is eyeing to embark on a so-called reverse-trade fair this year in a bid to lessen the country’s dependence on imports.
Peza Director General Charito B. Plaza said this reverse-trade fair approach is aligned with the agency’s effort to minimize import dependence of local manufacturers.
“We will display the importations of our industries to let local suppliers know that these are being imported and there could be a chance that they can supply these to the industries instead. This will enhance the business capability of local suppliers,” Plaza told reporters in a recent interview.
This strategy of import substitution, however, may hit a snag as this is currently a point of contention in the recently passed tax-reform law.
To recall, the President Duterte vetoed at the last minute the zero-rating on goods and services sold to goods and services to separate customs territory and tourism enterprise zones.
Peza earlier lobbied to maintain the zero-rating tax treatment earlier in the year during the bill’s deliberation in Congress to keep the cost of input materials to keep ecozone exporters competitive.
Annual local purchases of inputs by Peza-registered locators are estimated to amount to at least P24 billion, an amount that will be lost to importations if the value-added tax (VAT) exemption is removed, Plaza said
She earlier warned this move will kill local suppliers and small and medium enterprises in the value chain of exporting industries.
Peza Deputy Director General Harriet Abordo, said, however, they will stand by a Supreme Court (SC) ruling which countered this veto provision and upheld the zero-rating of sales of goods and services to Peza.
Albeit Abordo did not specify a case, a 2010 SC decision on a case on a VAT refund of the Bureau of Internal Revenue to Toshiba Information Equipment (Phils) upheld the latter’s right to credit/refund on domestic purchases of goods and services attributable to zero-rated sales.
Adorbo said they have a different interpretation from that of the finance department, and will abide by their own.