While it welcomes the issuance of a revenue regulation (RR) clarifying value-added tax (VAT) incentives for exporters, the Philippine Economic Zone Authority (PEZA) said remaining issues hounding ecozone locators should also be addressed.
Tereso Panga, PEZA director-general, in a statement said RR No. 3-2023 issued recently by the Bureau of Internal Revenue streamlined and clarified the guidelines on VAT zero rating/exemption of registered business enterprises (RBEs) on goods and services that are directly and exclusively used in their registered activity.
“This gives justice to the true intent and spirit of the CREATE (Corporate Recovery and Tax Incentives for Enterprises) law which is to incentivize qualified investments while instituting fiscal reforms in the investment promotions agencies (IPAs’) grant of incentives to investors,” Panga said in a message to reporters.
But Panga said PEZA is awaiting issuance of similar guidelines on other enterprises that support export locator companies such as ecozone developers, warehouse facilities providers, utilities, environmental facilities operators so that their incentives will be restored as well.
Panga said under the revised RR, allocation of expenses is still required if goods and services will be used by both production and non-production, such as electricity consumed by administrative units, and are still subject to VAT.
According to Panga, the RR supercedes previous administration’s issuances which limited the grant of incentives to qualified projects/activities of RBEs.
“The restoration of our ecozone export-oriented locators’ incentives… will improve their bottomline and capacity to reinvest in the country,” Panga said.
The RR implements a negative list, which limits to six cost items the VAT-able goods and services to be imposed on RBEs: janitorial services; security services; financial services; consultancy services; marketing and promotion; and goods used or services rendered for administrative operations such as human resources, legal and accounting.
This will encourage more exporters to source more from the local market instead of importing from abroad to sustain their operations, given the wider coverage of allowable goods and services for VAT zero rating, Panga said.
Panga also sees the RR giving IPAs a stronger role investment facilitation and exercise of regulatory functions over RBEs as these agencies will issue the certification in availing of the VAT zero rating incentive.
“We will continue to collaborate with our partner agencies and industries as we try to restore the incentives for support to export activities and address the remaining industry issues,” Panga said. – Irma Isip
