Vision
PCCI is the voice of Philippine business recognized by government and international institutions. As a proactive catalyst of development, PCCI promotes and supports the drive for globally competitive Philippine enterprises in partnership with government, local chambers, and other business organizations.
Mission
The main responsibility of PCCI is to provide focused advocacy for business growth and sustainable development by providing business services for the advancement of grassroots entrepreneurship, chamber development, international trade relations, business innovation and excellence, and operating efficiency. These will be achieved through a professional organization working in close cooperation with various stakeholders in public and private sectors.
House Committee on Ways and Means reviews BIR issuances on VAT-zero rating
Stress issuances are inconsistent with CREATE
The House Committee on Ways and Means chaired by Rep Joey Salceda held a public hearing on House Resolution No 490 to look into the imposition of VAT on the importation and local purchases of goods and services by Registered Business Enterprises (RBEs) in Special Economic Zones. The said policy was made effective by two issuances of the Bureau of Internal Revenue - RR No. 21-2021 and RMC No. 24-2022.
Under the said issuances, only those goods and services that are directly and exclusively used in the registered project or activity of Registered Business Enterprises (RBEs) qualify as VAT zero-rated on local purchases. Putting emphasis on the phrase “directly and exclusively used” when it comes to VAT zero-rating, RMC 24-2022 rules that whatever is purchased from a customs territory by an RBE cannot be merely attributable to its registered activity, it must be for direct and exclusive use, otherwise it is vatable.
The Philippine Economic Zone Authority (PEZA) and its locators, exporters and other stakeholder have pointed out that the issuances are inconsistent with the Cross Border Doctrine of the Omnibus Investments Code of 1987. The Doctrine mandates that no VAT shall be imposed to form part of the cost of the goods destined for consumption outside the territorial border of the taxing authority; a sale to an enterprise inside an economic zone is akin to a sale made to a foreign country hence a zero percent VAT is imposed. This is to give foreign investors the assurance that whatever is sold by a company inside the customs territory to a company located inside the economic zone is free of VAT.
The House Resolution points out that the two issuances completely ignore CREATE’s transitory provision that allows RBEs to continue availing of tax incentives granted to them prior to the effectivity of CREATE for a period of ten (10) years laws. Committee Chair, Rep Joey Salceda further stressed that the law did not make any distinction between export enterprise and domestic enterprise.
The Committee will prepare a Joint House Resolution on the reiteration on the intent of the CREATE Law and will convene a Congressional Oversight Committee or the House Committee to remedy the inconsistencies between CREATE and its corresponding administrative issuances. Elisha Isobel Sanchez