The Bureau of Internal Revenue (BIR) has moved to keep exporters’ transactions zero-rated for value-added tax (VAT) by releasing its draft revenue regulation (RR) on the subject and holding consultations with stakeholders.
The draft RR came after the suspension of the implementation of RR No. 9-2021 issued in June, which slapped a 12-percent VAT on local purchases of exporters operating within economic zones.
Export-oriented firms have been seeking the repeal of RR 9-2021. In view of the exporters’ position, the BIR last month deferred the revenue regulation’s implementation. To recall, the BIR said RR 9-2021 was based on the earlier Tax Reform for Acceleration and Inclusion (TRAIN) Act implemented in 2018.
But the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act signed by President Duterte in March already exempted exporters from the TRAIN Law’s levy.
In the draft new RR, the BIR noted that the implementing rules and regulations of the CREATE Law mandated that “the VAT exemption on importation and VAT zero-rating on local purchases shall apply only to goods and services directly and exclusively used in the registered project or activity of a registered export enterprise, during the period of registration of the said registered project or activity with the concerned IPA (investment promotion agency).”
“The direct and exclusive use in the registered project or activity refers to raw materials, inventories, supplies, equipment, goods, services and other expenditures necessary for the registered project or activity without which the registered project or activity cannot be carried out,” the BIR said, citing CREATE’s implementing guidelines.
The draft RR listed down the specific goods, properties, as well as services that were covered by the zero-rated sales rule.
The Department of Finance had said the new RR would cover sales to exporters during the third quarter of 2021.