With new tax rule, exporters want VAT refund in cash
THE Philippine Exporters Confederation Inc. (Philexport) has asked the government to include a provision allowing full cash refund of value-added tax (VAT) in a new tax regulation imposed on exports.
Philexport President Sergio R. Ortiz-Luis, Jr., in a recent statement, made the proposal following the release of Revenue Regulations (RR) 9-2021 by the Bureau of Internal Revenue (BIR).
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.
The exporters are seeking full refund of the VAT in cash in lieu of tax-credit certificates, which indicate the amount allowed to be decreased in tax payment.
“Furthermore, enterprises are pushing to have a provision included in RR 9-2021 on the full VAT refund in cash—not in the problematic tax credit certificates—within the 90-day timeframe for BIR to process and grant claims for VAT refunds,” the exporters’ group said.
Ortiz-Luis explained that an “efficient refund system through cash will help lessen the burden of this new policy.”
The Philexport official said that a track-and-trace system should be in place to prevent previous VAT refund system anomalies from emerging again.
“Exports account for some 30 percent of the country’s GDP [gross domestic product] and failures in this refund system will be a disincentive to exporters,” he said.
With the exporters already reeling from the impact of the pandemic, the local industry also called on the government to prevent the new tax regulation from becoming an additional burden.
Ortiz-Luis 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 “a favorable and urgent response on these issues” as it seeks to recoup losses and maintain operations amid the pandemic.
The Philexport official pointed out that one of the concerns raised by the exporters is the requirement to physically file for VAT refunds at the BIR’s VAT Credit Audit Division in Quezon City.
“This is the exporter/taxpayers’ money that they are refunding. Imposing difficult processes is not fair, considering that there is cost of money and the negative impacts on their cash flows, particularly of MSMEs,” he said.
Ortiz-Luis “suggested that until an electronic system for filing is developed, the BIR should decentralize the processing of VAT refunds by setting up VCAD branch offices that can decide and act on VAT refund applications and even release the funds.”
Exporters also flagged the need to keep and duplicate numerous documents, which they see as an “unnecessary” burden on their part.
“Exporters also noted that the pro-export and pro-MSME statements by the government leave much to be desired, since regulations such as this provide contradictory impacts on them,” the group added.
Meanwhile, Ortiz-Luis said exporters and exports should always be a permanent beneficiary under the Strategic Investments Priorities Plan (SIPP), which enumerates sectors and activities allowed to be granted incentives based on the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
The investment plan hopes to boost creation of high-skilled jobs, attract foreign investments, promote export diversification and ramp up developments in the countryside. It will provide fiscal and non-fiscal support on certain industries to support said goals.
The SIPP, as stated in the recently issued implementing rules and regulations of CREATE, should be submitted for approval to the President not later than October 1 of the third year of its effectivity. The approved investment plan will have validity of three years from issuance.
According to the Philippine Statistics Authority, the country’s total trade as of April 2021 reached $57.83 billion, which is 20.7 percent higher than $47.9 billion in the same period last year.