The Bureau of Internal Revenue (BIR) has issued a resolution suspending the implementation of Revenue Regulation (RR) No. 9-2021, which imposed 12 percent value-added tax (VAT) on certain exporter transactions that were previously taxed at 0 percent.
In Revenue Regulation 15-2021 signed by Finance Secretary Carlos Dominguez on July 27, BIR Commissioner Caesar Dulay told all internal revenue officials, employees and others concerned that the new RR shall take effect immediately.
“In view of the continuing COVID 19-pandemic and its impact to the export industry, the implementation of Revenue Regulations (RR) No. 9-2021 dated June 9, 2021 is hereby deferred until the issuance of an amendatory revenue regulations,” the regulation said.
The RR was issued in line with the provisions of Republic Act (RA) 10963 or the Tax Reform and Acceleration and Inclusion Act (TRAIN) that certain transactions previously considered zero-rated shall be subject to 12-percent VAT upon satisfaction of two specific conditions.
But Section 5 of Rule 18 of the recently-signed Implementing Rules and Regulations (IRR) for fiscal incentives under the Create law provides that VAT zero-rating on local purchases of registered business enterprises (RBEs) may still apply provided such locally-purchased goods and services are directly and exclusively used in the registered project or activity of the RBE during the period of registration of the registered project/activity of the enterprise.
For his part, House Committee on Ways and Means Chairman Joey Sarte Salceda thanked DOF and BIR for suspending the RR pending the Congress corrective legislation.
“I am working with the BIR and the DOF to make sure that we have corrective legislation that works. Until we have a refund system that is as seamless as that of Singapore’s or Japan’s, where you get your refund the minute you prove it, we should not experiment with onerous systems such as what would have happened if the RR were not deferred,” he said.
“The BIR RR suspending RR 9-2021 also indicates that the suspension lasts until new rules are issued. Rest assured that I will continue to advocate for a tax administration system that is fair while those rules are being drafted,” he added.
If this partnership between tax policymakers and tax administrators continues, Salceda sais the prospects are bright for more tax reforms in the final year of the Duterte administration.