DOF plan to shield small firms from impact of oil tax hike
To ease the impact of potentially higher oil prices on small businesses once the government implements higher excise on petroleum, the Department of Finance has proposed to increase their value-added tax (VAT) threshold to P3 million or almost double the current level.
Separately, Senator Juan Edgardo “Sonny” Angara, who chairs the Senate ways and means committee, reiterated Tuesday that the plan to reduce the VAT exemption of senior citizens and persons with disabilities (PWDs) would not see the light of day in Congress despite its inclusion in the DOF’s tax policy reform program proposal.
Angara said he had “strong reservation on the proposal to lift the VAT exemptions on senior citizens and PWDs.”
Angara said he had sponsored Republic Act (RA) No. 10754 exempting PWDs from VAT which was signed into law only last March. RA 9994 or the Expanded Senior Citizens Act of 2010, which exempted senior citizens from VAT, was also authored by Angara.
Angra said these laws were there because the government could not provide for the needs of senior citizens and PWDs.
In a statement, the DOF said indigent senior citizens and PWDs would be protected through direct and indirect social protection measures.
“The DOF is looking at lifeline subsidies for low-income electricity consumers to protect them from the impact of the proposed increase in the excise tax on petroleum products,” Finance Undersecretary Karl Kendrick T. Chua said.
Chua said the DOF was also looking to raise the VAT threshold on goods and services of micro and small enterprise to P3 million from P1.9 million.
“The protection comes from the increase in their VAT threshold to P3 million so micro and small enterprises with gross sales of at most P3 million will not be affected by the broadening of the VAT base. They will of course still pay the percentage tax,” said Chua. —Ben de Vera
