Recto assures Japanese investors of clearer VAT rules

MANILA, Philippines — The Department of Finance (DOF) is confident that amendments to the country’s fiscal incentives system will address key concerns of Japanese investors.

The Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill intends to remedy disparities in the Duterte-era CREATE Act to expand and refine current fiscal and nonfiscal incentives offered to investors.

In particular, the bill is set to make the value-added tax (VAT) system more simple and transaction-based, while also improving its refund process.

READ: PCCI calls for CREATE MORE legislation

“It solves Japanese investors’ long-standing concern about value-added tax (VAT) refunds by exempting export-oriented enterprises from paying the latter,” Finance Secretary Ralph Recto said in a statement at the Philippine Economic Briefing in Tokyo yesterday.

“It will help give birth to more thriving economic corridors in every corner of the Philippines,” Recto added.

The briefing in Japan, organized by the DOF and the Bangko Sentral ng Pilipinas (BSP), was attended by around 500 Japanese business leaders, investors and government officials.

Policy reforms

The finance chief also pitched other economic liberalization policies that the country has introduced in recent years.

These include amendments to the Retail Trade Liberalization Act, which lowers the minimum paid-up capital requirement for foreign retail corporations; changes to the Public Service Act to allow full foreign ownership of public services, such as telecommunications, airports, and shipping; and amendments to the Foreign Investments Act.

READ: BIZ BUZZ: More investments from Japan

“These reforms, along with the country’s booming economy and the strategic complementarities of Japan and the Philippines, make the latter the most strategic safe haven for Japanese investors,” Recto added.

Latest data from the BSP showed Japan’s net direct investments to the Philippines amounted to $137.91 million in the January to-March period, the largest among Asian countries.