The Bureau of Internal Revenue started the collection of value added tax on local purchases by exporting companies to raise additional P33.7 billion for the government coffers.
The Philippine Economic Zone Authority said over the weekend that BIR through Revenue Regulation 9-2021 started collecting VAT from activities that previously had zero VAT-rating. Local purchases of PEZA-registered companies amounted to P280.9 billion in 2020.
“PEZA locators have started paying the 12-percent VAT on the local purchases. PEZA has started collecting VAT on our sale of power, lot rentals and transaction fees from locators,” it said.
PEZA said despite the new revenue regulation, it remained hopeful that the VAT exemption on intra/inter-zone sales of locators such as sale of goods and services from one locator to another would be retained.
The collection of VAT from previously non-VATable activities was mandated by the Tax Reform for Acceleration and Inclusion law and reiterated in the implementing rules and regulations of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
The IRR provided for the collection of 12-percent VAT from local purchases of PEZA companies from goods and properties that were previously considered as non-VATable goods, subject to BIR and PEZA requirements.
“Also, as we operate our own public ecozones and provide services to all our locators. We will now be forced to impose VAT on our direct transactions with locators. Word we got is that the BIR is drafting a revenue memorandum circular which will be with the CREATE and TRAIN provisions including the 12 percent in terms of the passed-on VAT,” PEZA said.
PEZA said it would request for the deferment of the new BIR measure “as this will severely impact on the viability the companies’ operations in the country especially at this time of pandemic and recession.”
Subjected to VAT are the sale of raw materials or packaging materials to a non-resident buyer for delivery to a local export-oriented enterprise; sale of raw materials or packaging materials to export-oriented enterprise whose export sales exceed 70 percent of total annual production; and those considered export sales under EO 226, or the Omnibus Investment Code of 1987, and other special laws of the Tax Code.