DOF suspends 12% VAT on exporters

DOF suspends 12% VAT on exporters

The Department of Finance (DOF) and Bureau of Internal Revenue (BIR) have agreed to suspend the implementation of Revenue Regulation 9-2021, which imposed a 12-percent value-added tax (VAT) on certain exporter transactions that were previously taxed at 0 percent.

The suspension of the BIR regulation comes after a briefing facilitated by the House Ways and Means Committee on Wednesday with concerned government agencies and stakeholders.

Albay Rep. Joey Salceda, committee chair, sad the decision to suspend the implementation of the regulation would l help the country’s export industry “get the breather it needs” to recover.

“The DOF and the BIR held talks with me over the weekend. We were supposed to have a hearing on Monday, but we deferred the briefing to Wednesday out of deference to the Secretary (referring to DOF’s Carlos Dominguez), whose decision was to suspend the regulation first pending corrective legislation,” Salceda said.

RR 9-2021 was issued pursuant to the provisions of Republic Act 10963 or the Tax Reform and Acceleration and Inclusion Act (TRAIN), which provide that certain transactions previously considered zero-rated shall be subject to 12 percent VAT.

This upon satisfaction of two conditions: the successful establishment and implementation of an enhanced VAT refund system, and that all pending VAT refund claims as of Dec. 31, 2017 shall be fully paid in cash by Dec. 31, 2019.

With the decision to suspend, the following transactions will revert to their zero-rated status:

-Sale of raw materials or packaging materials to a non-resident buyer for delivery to a local export-oriented enterprise

-Sale of raw materials or packaging materials to export-oriented enterprise whose export sales exceed 70 percent of total annual production

-Processing, manufacturing, or repacking goods for other persons doing business outside the Philippines which goods are subsequently exported

-Services performed by subcontractors and/or contractors in processing, converting, or manufacturing goods for an enterprise whose export sales exceed 70 percent of total annual production.

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