Some P286-billion local purchases by companies registered with the Philippine Economic Zone Authority (PEZA) may be lost in favor of imports with the imposition of a 12-percent value-added tax (VAT) which could diminish the value of the country’s indirect or constructive exports.
In her presentation at a forum hosted by the American Chamber Commerce of the Philippines, PEZA director-general Charito Plaza said the local purchases of goods and services in 2020 helped the realization of $9 billon constructive and indirect exports of PEZA enterprises of goods and services.
Last year’s purchases were down 17 percent from $345.2 billion in 2019 when the constructive exports amounted to $4 billion,
Plaza said the agency stands firm in its official positions that Revenue Regulation No. 9-2021 is contrary to the provisions of the Corporate Recovery and Tax Incentives for Enterprises law which specifically provides for that VAT exemption of registered enterprises under Section 294 of the said law.
“His regulation rejects the separate custom territory principle and the cross border doctrine fully recognized and established by the Supreme Court in the cases of CIR vs. Seagate Technology (Philippines), G.R. No. 153866 dated 11 February 2005 and CIR vs. Toshiba Information Equipment (Philippines), Inc., G.R. No. 150154 dated 09 August 2005,” Plaza said.
Plaza said the Court of Tax Appeals could be a recourse in stopping the implementation of the regulation but that PEZA would exhaust all means to settle the matter.
PEZA is set to meet with Finance Undersecretary Antoinette Tionko on the matter.
“Maintaining the status quo on VAT and the separate customs territory of the economic zones could be our best bet in attracting more investments into the ecozones under the CREATE regime,” Plaza said.
