Metro Manila (CNN Philippines, July 13) — Export-oriented companies urged the Bureau of Internal Revenue (BIR) to revoke a new rule that charges a 12% value-added tax on export products and transactions which were previously VAT-free.
In separate letters sent to the finance and trade departments and to the BIR, the Semiconductor and Electronics Industries in the Philippines Foundation (SEIPI), the Confederation of Wearable Exporters of the Philippines (CONWEP), and the Pilipino Banana Growers and Exporters Association asked the government to repeal BIR Revenue Regulation 9-2021 issued in June.
Under the new policy, raw materials, packaging supplies and services rendered or sold to export firms engaged in manufacturing, processing, packing or repacking are now subject to VAT after years of exemption. Also covered are the sale of services and lease of properties for companies that produce export goods.
“We kindly request the government not to change the game. We have not recovered from the economic impact of the pandemic,” CONWEP executive director Maritess Jocson-Agoncillo said in a press briefing on Tuesday.
She noted that garment makers barely generate a 4% margin, which would easily be erased if they are made to pay the 12% VAT.
Other business leaders warned that the new rule will scare new investors and take away thousands of jobs. Factories will likely resort to importing their supplies as it would still end up cheaper than the additional tax.
SEIPI president Dan Lachica said that for the semiconductor industry alone, trade worth ₱10 billion to ₱28 billion could be plucked out of the country.
“Instead of (local) businesses being able to generate revenue, this will disappear. This will be transferred to suppliers that will service the multinational companies in the Philippines,” Lachica added. “Of course, when these companies lose business, guess what? There will be a reduction in headcount. By our estimation, we’re looking at anywhere from 10,000-50,000 people.
The business groups said they appealed to the BIR and other government agencies as early as June but they have not received any reply. CNN Philippines also reached out to BIR for comment but has yet to receive a response.
The tax bureau was earlier under fire for charging higher duties on private schools amid the COVID-19 pandemic.
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