Manila Bulletin

Exporters press VAT issue resolution this month

By BERNIE CAHILES-MAGKILAT

The three largest export sectors in the country – the IT-BPM, semiconductor/electronics, and garments/wearables industry – said that failure of the government to resolve the value added tax (VAT) on their local purchases by end March this year would have detrimental effects to their sustainability.

“The inability to address this serious and pressing matter by the end of March will have detrimental effects to these three sectors particularly in sustaining their growth potential,” the groups said in a joint statement issued Tuesday, March 21. The three export sectors groups are the Semiconductor and Electronics Industries in the Philippines Foundation, Inc., IT and Business Process Association of the Philippines, Inc., and the Confederation Wearables Exporters of the Philippines.

The VAT issue currently being finalized by the government through the Fiscal Incentives Review Board (FIRB).

“A solution has been promised by the end of the month which also coincides with the end of the first taxable quarter. As exporters, these three industries have claimed VAT zero-rating on their purchases consistent with existing local regulations and globally accepted principles allowing for the sectors to remain competitive,” the statement added.

According to the statement, in several meetings among representatives of the three export sectors with government officials, there is strong agreement that the VAT is the biggest issue they are all currently facing.

The understanding of the sectors, the said, is that most of the government agencies involved in resolving the issue believe that there is clear basis for all purchases of exporters to be without the 12 percent VAT, given that this is not only allowed by the rules but is more importantly critical in ensuring that the prices at which the services and goods offered are able to remain competitive in the international market.

They also said that Investment Promotion Agencies (IPAs) such as the Philippine Economic Zone Authority (PEZA), Board of Investments (BOI), Clark Development Corporation (CDC), Authority of the Freeport Area of Bataan (AFAB), among others, are deemed to be in the best position to determine and endorse list of goods and services eligible for VAT zero-rating purchased by exporters from local suppliers.

Already, the exporters said the zeroVAT issue has also given rise to confusion on the part of the various industries engaged as suppliers of goods and services to the export sectors, such as the providers of healthcare, power, raw materials, and other integral services. It is believed that the failure to address the VAT issue may have a crippling consequence on the parts localization initiatives of exporters and particularly affect their local suppliers who will be more at risk should they lose their market.

Business

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2023-03-22T07:00:00.0000000Z

2023-03-22T07:00:00.0000000Z

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