Foreign businessmen in the country are restless over what they view as another example of changing of the rules in the middle of the game after the Supreme Court (SC) prevented some firms from claiming their tax refund as guaranteed by law.

Henry Schumacher, vice president for external affairs of the European Chamber of Commerce of the Philippines (ECCP), said over the weekend that actions of the SC are undermining  efforts of the government and the Joint Foreign Chambers (JFC) to  bring more investments into the country.

"The business environment remains super bureaucratic, business unfriendly, and investment incentives are often not delivered," Schumacher added.

"Emphasis is always put on convincing new investors to invest here. Unfortunately, it is often forgotten that you have to treat ‘old’ investors well too," he said.

According to Schumacher, the government should realize that foreign companies that have placed hundreds of millions of dollars in investments in the country are the “ambassadors” for other companies that are looking to establish operations in the Philippines.

He cited the $1.2-billion investment poured into the country by San Roque Power Corp. (SRPC) to build in Pangasinan province one of the largest hydroelectric power plants in Asia and provide 411 megawatts to the Luzon grid.

In February the SC en banc ruled that SRPC is not eligible to claim P483.8 million in refunds based on technicalities.

"The decision of the SC concerns us as there are more than 100 other companies that are in the same position as them.  In other countries, refunds are given to companies after several weeks.  Here in the Philippines, holding them for more than 10 years has been the trend," Schumacher said.

The Japanese Chamber of Commerce and Industry of the Philippines, of which SRPC is a member, echoed Schumacher’s views in recent discussions with the Department of Finance.

SRPC initially got a favorable decision from the Court of Tax Appeals (CTA) and the SC but the decision was reversed after the Bureau of Internal Revenue (BIR) commissioner filed a motion of reconsideration.

In reversing its decision, the SC cited SRPC for not following Section 112(D) of the 1997 National Internal Revenue Code.

The provision specifies the BIR commissioner "shall grant a refund or issue the tax credit certificate for creditable input taxes within 120 days from the date of submission of complete documents in support of the application."

"As a business community, we are worried as technicalities has overruled the justified refund of the VAT and  because the ruling was made retroactive. This is unfair. If the Supreme Court feels that new rules have to be established then, we appeal they do it prospectively."

Schumacher said the JFC will bring the issue to the attention of the Economic Cluster of the Cabinet and the National Competitiveness Council.  The business community will also ask the Department of Trade and Industry to assist and provide more security to investors.

Aside from the ECCP, the JFC counts the American, Australia-New Zealand, Canadian, Japanese and South Korean foreign chambers along with the Philippine Association of Multinational Companies Regional Headquarters as its core members.

Source: Business Mirror; Second Frontpage; 22 April 2013