Export consolidators are seeking inclusion in the Strategic Investment Priorities Plan (SIPP) of exports service to avail of incentives.
Tomas Medina, president of the Philippine Export Service Providers and Consolidators Association Inc., said it has asked the Board of Investments (BOI) to consider listing this activity in the SIPP saying this is one way of making small companies competitive after the Bureau of Internal Revenue removed the exemption from the 12 percent value added tax (VAT) on indirect exports.
By listing in the IPP, the consolidators and indirect exporters will become exempted from VAT upon purchase of goods from the micro, small and medium enterprises.
Medina said while the BIR allows refund of the 12-percent VAT, processing takes years
Based on his computation, the removal of the exemption on indirect exports and sale of services plus the high cost of raw materials and the weak foreign exchange has made their exports 25 percent more expensive than exports of neighboring countries.
Medina said listing their sector in the BOI SIPP 2023 as support service is the fastest way to restore the VAT exemption since it will take two years to amend the Corporate Recovery and Tax Incentives for Enterprises Act.
The export consolidation sector has an estimated export value of $1.5 billion to $1.8 billion annually, including indirect exports of food, personal care products, handicrafts, jewelry and garments.
“We are a channel of small indirect exports to big markets,” said Medina.
Businesses use consolidators to ship smaller volumes especially for local foods like dried mangoes, bottled sardines, bagoong etc. and furnishings and furniture.
“Nobody buys th(ese) in full container load,” said Medina.
Medina consolidation is not just trading and its players incur cost for marking, documentation, certification, promotion, shipment. – Irma Isip
