By ANGELA CELIS and IRMA ISIP
The Department of Finance (DOF) said it will review the Bureau of Internal Revenue’s (BIR) revenue regulation (RR) which identifies transactions slapped with 12-percent value added tax (VAT), but were previously zero-rated.
The review paves the way for the deferment of the imposition of the VAT as contained in RR 9-2021 issued to implement the provisions of the Tax Reform and Acceleration and Inclusion Act (TRAIN) which provide that certain transactions previously considered zero-rated shall be subject to 12 percent VAT.
The review also comes after calls were made by industry groups seeking clarification on the RR’s conflicting provision with the subsequent tax reform, Corporate Income Tax and Incentives Reform Act (CREATE) and its implementing rules and regulations that retain the VAT zero-rating on local purchases of registered business enterprises.
“We will review it (RR 9-2021) and we will implement it according to the law. Now the law, unfortunately, is not very fair, there is one law in TRAIN and there is another provision in CREATE ,” Carlos Dominguez, DOF secretary, said in a virtual briefing yesterday.
“We will implement it strictly as we are sworn to do,” he added.
In a text message to reporters, Dominguez said that the review will be accomplished shortly, or within the month.
Asked to confirm reports that the implementation of the RR will be deferred, Dominguez said that this is “technically correct.”
“VAT returns are quarterly. So if we start implementing CREATE this quarter July, it’s technically deferred to this quarter and returns are due 25th day after the end of the third quarter,” the finance chief said.
Industry sources said the deferment took effect yesterday but that it is not retroactive to June 27.
One source said the DOF will look at how to ease the transition, Charito Plaza, director general of the Philippine Economic Zone Authority, said the agency has yet to receive official communication on the deferment.
Plaza said PEZA is hopeful of the total repeal of the RR “to be assured not just of the deferment but of continuity of the zero VAT incentives provided to “separate customs territory” of the PEZA law.
