EXPORTERS were relieved when the government decided to suspend a recent revenue regulation imposing tax—which is seen as an additional burden to already struggling businesses—on certain transactions.
The Philippine Exporters Confederation Inc. (Philexport) welcomed the government’s move to suspend the implementation of Revenue Regulations (RR) 9-2021, which imposed 12-percent value-added tax (VAT) on exports and sales of services. These items were not taxed previously as stated in Republic Act 10963 or the Tax Reform for Acceleration and Inclusion Law.
Philexport President Sergio R. Ortiz-Luis, Jr. said the deferment of the RR issued by the Bureau of Internal Revenue (BIR) is a “very welcome decision after severe cost and delivery pressures from many other export-related issues.”
“The deferment of RR 9-2021 with the concurrence of [Finance] Secretary Carlos Dominguez III is a big relief for direct and indirect exporters to continue their normal business operation procuring from local suppliers. We will await the issuance of the BIR revenue memorandum circular soon,” Philexport Chairman George T. Barcelon added.
Philexport had sought the immediate suspension of the RR as this will further impact the exporters’ cash flows while making local raw materials and services more expensive.
The export industry stakeholder previously sent letters to BIR and the Department of Finance to convey such concerns. Ortiz-Luis said he also noted the conflict in the provision of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act which grants zero rating on local purchases, and previous issuances.
The Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi) had also previously appealed the RR as the local players will likely incur revenues losses with its implementation.
Seipi President Danilo C. Lachica, in a recent letter to the Trade department, said they “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.”
Philippine Economic Zone Authority Director General Charito Plaza, however, earlier said she still wants the BIR to scrap the new tax regulation for exports altogether. She said zero VAT incentive is also being offered to other countries’ economic zones and free port zones, making the local industry competitive.
Last week, the Finance department clarified that RR 9-2021 will be repealed and replaced so the exporters will still enjoy the zero VAT perks on local purchases of goods and services. The new policy, aimed to be issued this month, will be parallel to the provision of Create.