Japanese firms question BIR circular

Japanese companies in the Philippines have urged the Bureau of Internal Revenue to “withdraw” a circular that adversely affects their right to negotiate for value added tax (VAT) refunds.

Nobuo Fujii, vice president of the Japanese Chamber of Commerce and Industry of the Philippines Inc. (JCCIPI), said the group wanted Revenue Memorandum Circular 54-2014 revoked as it prohibits companies from negotiating with the BIR for tax refunds, as provided under the current Tax Code.

The circular contained clarifications on the application for VAT refund/tax credit, as made by the Supreme Court in relation to the case of the BIR and San Roque Power Corp.

JCCIPI secretary general Masazumi Nishizawa earlier noted that the circular would mainly affect construction and logistics companies, particularly those who are negotiating with the BIR for their claims covering the last three to five years.

“Before, a company, following the submission of  documents to BIR on VAT refund, could choose whether they will file or continue to negotiate with BIR. But the new circular states that a company can no longer do that. And if the BIR doesn’t answer within the 120 day period, the claims are automatically considered denied, after which you have to file before the CTA,” Nishizawa had explained.

Fujii, along with Japanese Ambassador Toshinao Urabe and other representatives from the JCCIPI and the Japan External Trade Organization, had briefed Trade Secretary Gregory L. Domingo regarding the

issues taken up in the latest subcommittee meeting for the Philippines-Japan Economic Partnership Agreement (PJEPA).

The Japanese delegation likewise aired serious concerns regarding claims for tax refunds.

The Department of Trade and Industry, for its part, has committed to discuss with the BIR the concerns raised by these Japanese companies.