THE semiconductor and electronics industry warned that local players will incur revenue losses from the recently implemented tax regulation on exports.
Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi), in a recent letter to the Trade department, said the Revenue Regulations (RR) 9-2021 by the Bureau of Internal Revenue (BIR) is already adversely affecting the industry.
Based on RR 9-2021, a 12-percent value-added tax is set to be imposed on exports and sales of services by June 27. These items were not taxed previously as stated in Republic Act 10963 or the Tax Reform for Acceleration and Inclusion Law.
“As of writing, we have already received information from some members that volumes from domestic constructive exporters will be transferred to foreign suppliers due to additional cost caused by the 12-percent VAT,” Seipi President Danilo C. Lachica said. “Despite the risks of lost export revenues and increased unemployment, the BIR has so far been unresponsive regarding our request for reconsideration.”
He was also seeking a clarification as the new revenue regulation contradicts a section of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. It notes that the sale of goods and services that are directly and exclusively used in registered activity should not be subject to VAT.
“We understand that there are outliers who abuse the VAT zero-rating but penalizing the industries will only decrease the competitiveness of the Philippines for investors,” Lachica added.
Previously, the Philippine Exporters Confederation Inc. (Philexport) called on the government to prevent the new tax regulation from becoming an additional burden.
Sergio Ortiz-Luis, Philippine Exporters Confederation (Philexport) president said that both the exporters and micro, small and medium enterprises (MSMEs) will potentially be affected by RR 9-2021.
He said the implementation procedures and requirements, particularly on filing for VAT refunds, worry the companies. He said that it could “consume more time and money, both of which they are short of.”
The exporters’ group is seeking for a “a favorable and urgent response on these issues” as it seeks to recoup losses and maintain operations amid the pandemic.
Image credits: Nonie Reyes