July 15, 2021

Business organizations are urging the government to rescind the new BIR rule.

Several industry organizations have urged the government to rescind the Bureau of Internal Revenue’s (BIR) Revenue Regulation (RR) 9-2021, which would levy a 12-percent value-added tax (VAT) on formerly zero-rated products and services.

Rey Untal, president of the Information Technology and Business Process Association of the Philippines (IBPAP), said at a joint news conference on Tuesday that the new BIR rule is “hurtful and detrimental to companies” since it would impose extra taxes on export-oriented industries.

Under RR 9-2021, products and services supplied to export-oriented businesses, including raw materials, packaging supplies, and property leases, will no longer be excluded from the 12-percent VAT.

“As a result, we, together with our colleagues in the export sector, have immediately put forth our plea, our demand for the repeal of RR 9-202,” Untal added.

Dan Lachica, president of the Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI), said the business organization wrote to Trade Secretary Ramon Lopez to assist the sector in resolving the BIR’s concerns.

According to Lachica, sourcing raw materials and packaging supplies from overseas sources would be cheaper than from local providers under the new legislation.

In his letter to Lopez, he said, “We have already received information from certain members that volumes from local constructive exporters would be moved to international suppliers owing to the extra cost imposed by the 12-percent VAT.”

He said that the RR 9-2021 would deter foreign investors from investing in the Philippines if they are involved in export operations.

The new regulation would cost the economy up to PHP28 billion in income and 10,000 to 50,000 jobs in the electronics sector alone.

Maritess Jocson-Agoncillo, executive director of the Confederation of Wearable Exporters of the Philippines (CONWEP), has questioned the timeliness of the BIR rule in light of the pandemic’s difficulties to the economic climate.

“We respectfully urge that the government not alter the rules of the game. In the same briefing, she said, “We have not yet recovered from the economic effect of the epidemic.”

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