Electronics and semiconductor companies asked the Department of Trade and Industry to help clarify the issue of value added tax collection on previously non-VATable local purchases of exporting companies, after an unsuccessful attempt to get an audience with the Bureau of Internal Revenue.
The Semiconductor and Electronics Industry of the Philippines Inc. said in a letter to DTI Secretary Ramon Lopez, that the BIR was unresponsive to the group’s request for reconsideration, “despite the risks of lost export revenues and increased unemployment.”
“We understand that there are outliers who abuse the VAT zero-rating but penalizing the industries will only decrease the competitiveness of the Philippines for investors. In line with this, we humbly ask for your assistance in clarifying these concerns,” said SEIPI president Dan Lachica.
“The electronics industry is projected to grow at 7 percent in 2021 despite the pandemic, and we hope to continue this upward trend to further contribute to the country’s goal of a more resilient economy,” he said.
SEIPI revealed inside information that some of its members were already transferring volumes from domestic constructive exporters to foreign suppliers because of the additional cost caused by the 12-percent VAT.
SEIPI sent a letter to BIR Commissioner Caesar Dulay on June 17 regarding the industry’s concerns on the implementation of Revenue Regulation No. 9- 2021, which imposes 12-percent VAT on the transactions of exporters that were previously VAT zero-rated, such as export sales of raw materials and packaging, outsourced services, services by contractors and subcontractors, among others.
SEIPI highlighted its contributions to the country’s manufacturing sector. In 2020, the industry accounted for $39.67 billion or 62.2 percent of the country’s total commodity exports and employs over 3 million direct and indirect workers.
The group said the 12-percent VAT would be passed on to the export- oriented manufacturing companies, who, in the compliance to the measure, would need to allocate more resources and manpower to handle the long and arduous refund process, if refund would be allowed or possible.
“This will severely lower the ease of doing business and discourage investors,” SEIPI said.