The American Chamber of Commerce of the Philippines (AmCham) is supporting moves to amend the country’s zero value-added tax (VAT) rating perk for registered businesses, citing that it takes an inordinate amount of time to get tax refunds from the government.
Last week, AmCham Philippines executive director Ebb Hinchcliffe told reporters that they are backing the Philippine Economic Zone Authority (Peza) in its drive to have the tax policy revisited.
“The refunding of that VAT is taking forever,” he said when asked to explain the problem with the tax scheme.
The AmCham official cited as example VAT refunds for jet fuel taking two years to as much as five years—nearly as long as one presidential term—for registered businesses to collect.
“For some reason, it’s taking way too long,” Hinchcliffe said, adding the same issue is true for VAT refunds on fast moving consumer goods and pharmaceutical purchases by Peza-registered firms.
The Philippine Chamber of Commerce and Industry (PCCI) has made a similar call for a review of the investment promotion agency’s zero VAT incentives, citing that the Corporate Recovery and Tax Incentives for Enterprises (CREATE), which was signed in 2021, complicated the procedures availing of the incentive.
The CREATE act limited the application of the tax perk to local purchases of goods that are exclusively and directly used in the registered project or activity of the registered firm.
Another bureaucratic level
Peza-registered firms which used to enjoy the tax incentive are now required to submit paperwork proving that they satisfy the conditions provided for under the revised tax law.
PCCI president George Barcelon said that while Peza-registered firms can refund their VAT payments on purchased goods, the procedure added another bureaucratic level to a previously straightforward availment of the incentive.
Peza Officer in Charge and Deputy Director General for policy and planning Tereso Panga told investors earlier this month that they are working on addressing this issue, along with other measures intended to make the Philippines more attractive to investors.
Panga said they have received complaints from registered firms, some of which have filed cases with the Court of Tax Appeals.
The Peza official said they are also working toward other reforms, such as allowing registered firms to adopt work-from-home policies without transferring to the jurisdiction of the Department of Trade and Industry’s Board of Investments.
From January to September of this year, Peza has attracted almost P40 billion in investments spanning 148 new and expansion projects.