Foreign firms oppose VAT refunds

March 12, 2015 at 12:15

The Joint Foreign Chambers is supporting the position of the Trade Department to establish a system for tax incentive management and transparency under House Bill 2942, especially provisions that are considered anti-foreign investments.

The group said in a letter to the Congressional committee on ways and means that incentives are granted for private purposes, and not for public purposes as intended by the amounts in the appropriations law.

“We are not aware of any country in the world that includes the amount of fiscal incentives granted in its annual appropriations law,” JFC said in its letter

The group also expressed concern the requirements imposed under the bill would cause additional burden to foreign investors and not be good for the country’s national competitiveness.

It cited the issue on value added tax claims, a decade-long concern that has hounded foreign investors and affected business confidence.

The Trade Department stressed in a position paper that the refund system was an “operational nightmare to the Japanese and European investors.” VAT refunds are provided for under the General Appropriations Act.

Foreign investors are trying to recover more than P15 billion worth of pending claims for VAT refund, including investments by local companies.

At least half of the P15-billion claim was made by the Philippine Banana Growers Exporters Association.

Another is the case of San Roque Power Corp., which invested in a power project upon the prodding of the national government in exchange for duty- and tax-free importation of capital equipment as an incentive.

Source: https://manilastandardtoday.com/2015/03/02/foreign-firms-oppose-vat-refunds/