The Philippine Chamber of Commerce and Industry (PCCI) said it supports Senate Bill 2654, or the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill.
PCCI president Enunina Mangio said in a letter to Senate committee on ways and means chairman Sherwin Gatchalian that the CREATE MORE bill is crucial for the survival and growth of businesses, particularly small and medium enterprises (SMEs). The bill is also seen to attract more foreign direct investments (FDIs).
Mangio pointed out inconsistencies in the CREATE Act specifically the limit on the applicability of value added tax exemption on importation and VAT zero-rating on local purchases by registered export enterprises.
“This situation not only disincentivizes local suppliers of manufacturers inside freeport zones; it also puts manufacturers/exporters at a disadvantage as they must now absorb the VAT passed on to them by their local suppliers, and which they pass on to the consumers making them uncompetitive in the global market,” she said.
PCCI said that under the CREATE Act, the VAT exemption incentive is supposed to be granted to “registered business enterprises “ in general. The law does not distinguish between export enterprises and domestic market enterprises operating within separate customs territories, it said.
The group said the distinction between export and domestic enterprises prevents some businesses from availing certain incentives, including the 10-year 5-percent tax on gross income earned (GIE) as specified in the CREATE Law.
The PCCI said it also supports CREATE MORE’s proposal to improve the country’s tax refund process. While the law requires the Bureau of Internal Revenue (BIR) to process VAT refund or tax credit claims within 90 days, the actual processing time takes an average of years, it said.
“VAT refunds represent money owed by the government to businesses. These are taxpayers’ money that are stuck with the government, instead of being used to generate economic activities. The inefficiencies in the VAT refund system make it more expensive to do business in the Philippines compared to other countries,” said PCCI director for taxation, investment policy and promotion Benedicta Du-Baladad.
