Electronics group opposes 5% VAT

posted June 21, 2017 at 09:29 pm
by  Othel V. Campos
Electronics and semiconductor companies oppose the imposition of a 5-percent value-added tax on locally-sourced materials under the proposed tax reform measure.

The Semiconductor and Electronics Industry of the Philippines Inc. said the 5-percent VAT, if imposed, would hurt the local suppliers and micro, small and medium entrepreneurs reliant on the sector.

“This will make importation for multinational locators inside economic zones a lot cheaper. The tendency for them is to import all their requirements since importation will be more cost effective compared to local sourcing. That will kill our local suppliers,” SEIPI president Dan Lachica said in a news briefing during the 14th Philippine Semiconductor and Electronics Convention and Exhibition.

Part of the incentives given to economic zone locators include vat-exempt sourcing of local materials.

Lachica said the 5-percent VAT would go against the local policy of helping MSMEs reach a higher level of competence by increasing the local content of products for export.

“We will support the government initiatives but our campaign really is ‘please let us not kill the local suppliers’,” he said.

Former SEIPI president and Fastech Synergy president Saturnino Belen said that despite the Finance Department’s guarantee of VAT refund, electronics and semiconductor companies were wary of the proposed measure.

“I cannot understand why the government will impose tax that it vows to refund within 90 days. In the first place if the industry is not here, the situation is revenue neutral. It’s the same thing if the industry and its VAT-exempt which is status quo,” he said.

“If the items we’re talking here, are produced for local consumption, by all means subject them to the same tax,” he said.

Belen said the government should “not paint all electronics and semicon companies with the same brush,” as most of them were posting marginal sales due to competition and lack of value-adding.

Belen said the measure would compromise the country’s position as a preferred investments destination.

The sector grossed $28.8 billion in exports, but $22 billion were spent on imports.

Topics: Electronics and semiconductor companies , value-added tax , VAT , Semiconductor and Electronics Industry of the Philippines Inc. , 14th Philippine Semiconductor and Electronics Convention and Exhibition
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