THE Philippine Economic Zone Authority (Peza) and its registered export enterprises have appealed for a status quo on the implementation of BIR Revenue Regulation (RR) 9-2021, saying it “makes the Philippines unattractive to foreign investors.”
BIR RR 9-2021 identified transactions that shall now be subject to the 12 percent Value-Added Tax (VAT) which were previously taxed at zero percent, particularly those considered as export sales under Executive Order 226 or the Omnibus Investments Code of 1987 and other special laws.
“The additional VAT is an unnecessary expense that will make the Philippines unattractive to foreign investors,” Peza Director General Charito Plaza said in a press release.
The implementation of the BIR RR 9-2021 took effect on June 27, 2021.
Letter to DOF
In a letter to Department of Finance Secretary Carlo Dominguez III, Plaza, in behalf of its registered business enterprises (RBEs), has sought clarification regarding the issued RR in relation to the express provision of the recently passed Corporate Recovery and Tax Incentives for Enterprises Act (Create) Law or RA 11534.
“We would like to seek confirmation that local purchases of Peza export enterprises, whether from an export-oriented or domestic enterprise, shall be taxed at zero percent VAT subject to the condition required under the provisions of Section 295 of RA 11534 and Section 5 of its IRR,” she said.
The Director General noted, “The inclusion of the RR in the final draft of Create’s implementing rules and regulations and the amendment of the definition of ‘export sales’ in the law has created the impression and interpretation that sale to Peza RBEs shall be automatically subject to 12 percent VAT.”
Likewise, Peza has requested the deferment of the implementation of RR 9-2021 to give its export enterprises the opportunity and sufficient time to study the regulations before its implementation.
Furthermore, Plaza noted that the deferment will “provide the Investment Promotion Agencies and concerned government agencies the opportunity to institute mechanisms and procedures to effectively implement the new regulations particularly in ensuring that the condition set forth in the availment of the VAT zero-rating incentive shall be fully complied.”
Peza also expressed concern that the implementation of the RR will add to the burden of the RBEs and will in turn affect their overall competitiveness in the world market.
“Amid the pandemic, the Peza RBEs are the ones who helped keep the Philippine economy afloat. What we must do is to ensure that existing enterprises should stay and expand their operations instead of driving them away by removing their incentives and imposing another form of taxes,” Plaza said. (JOB)