Exporters laud suspension of 12% VAT on purchases

MANILA, Philippines — The Philippine Exporters Confederation (Philexport) welcomes the government’s move to suspend the imposition of the 12 percent value added tax (VAT) on exporters’ local purchases, saying this will provide relief to the sector amid the pandemic.

In a statement, Philexport president Sergio Ortiz-Luis Jr. said the deferment of Bureau of Internal Revenue (BIR) Revenue Regulations 9-2021 is a “very welcome decision after severe cost and delivery pressures from many other export-related issues.”

For exporters, the 12 percent VAT on indirect exports would not just squeeze their cash flow but also make local raw materials and services more expensive.

Prior to the issuance of RR 9-2021, local purchases of raw materials and services were VAT zero-rated.

“The deferment of RR 9-2021 with the concurrence of DOF Secretary Carlos Dominguez III is a big relief for direct and indirect exporters to continue their normal business operation procuring from local suppliers. We will await the issuance of the BIR revenue memorandum circular soon,” Philexport chair George Barcelon said.

Philexport has been strongly pushing for the immediate suspension of RR 9-2021 given its impact on the exports sector.

In a letter to BIR Commissioner Caesar Dulay last month, Ortiz-Luis raised exporters’ concerns on the requirements under RR 9-2021, particularly the filing for VAT refunds which would take time and entail costs.

Ortiz-Luis also sent a letter to Dominguez earlier this month, asking for the suspension of the implementation of RR 9-2021 due to its adverse effects on the exports industry.