Export organizations which account for two-thirds of foreign exchange revenues, are seeking the immediate resolution of the status of their value-added tax (VAT) exemption, saying failure to do so will have detrimental effects to these three sectors in sustaining their growth potential.
The Information Technology Business Processing Association of the Philippines, Semiconductor and Electronics Industries of the Philippines Inc. and the Confederation of Wearable Associations of the Philippines in a joint statement yesterday said they keenly await the decision of the Fiscal Incentives Review Board on the VAT- zero rating of their members.
The groups said a solution has been promised by the end of the month which also coincides with the end of the first taxable quarter.
“As exporters, these three industries have claimed VAT zero-rating on their purchases consistent with existing local regulations and globally accepted principles allowing for the sectors to remain competitive,” the groups said.
According to the groups, most of the government agencies involved in resolving the issue believe there is clear basis for all purchases of exporters to be without the 12 percent VAT, given that this is not only allowed by the rules but is more importantly critical in ensuring that the prices at which the services and goods offered are able to remain competitive in the international market.
“The same issue has also given rise to confusion on the part of the various industries engaged as suppliers of goods and services to the export sectors, such as the providers of healthcare, power, raw materials, and other integral services. It is believed that the failure to address the VAT issue may have a crippling consequence on the parts localization initiatives of exporters and particularly affect their local suppliers wh(ich) will be more at risk should they lose their market,” the groups added.
The groups said based on their discussions, the investment promotion agencies such as the Philippine Economic Zone Authority , Board of Investments, Clark Development Corporation, Authority of the Freeport Area of Bataan, among others, are deemed to be in the best position to determine and endorse list of goods and services eligible for VAT zero-rating purchased by exporters from local suppliers.
The three export industries account for 69 percent of total exports of goods and services at $83 billion and contribute 20 percent.
Combined, these groups employ 2.5 million direct and 6.75 million indirect workers.
