Twenty business groups held a press conference yesterday in a last ditch effort to stop the implementation BIR Revenue Memorandum Circular 54-2014, which prescribes new rules for VAT refund claims or up to 120 days only plus 30 day appeal period after which the refund application is deemed denied.

The business groups are represented by 7 foreign chambers, four exporters groups, five industry associations, and four professional organizations for a total of 20 business organizations.

In reaction, BIR Commissioner Kim Jacinto-Henares denied she was deliberately withholding repayments, and suggested the business groups had greatly overestimated the amount of reclaimable VAT. “If they feel their rights have been trampled upon, the code says they should go to the Court of Tax Appeals,” she said.

Rina Manuel, president of Tax Management Association of the Philippines, said the estimated VAT refund claims that may be wiped out from the investors could hit at least P15 billion.

“At the very least around P15 billion in VAT refund claims based on national budget but the figure is much higher given it has accumulated all these years say 5 years, 10 years or longer,” said Manuel.

The business groups have put emphasis on the retroactive application of the new RMC saying it will impact on claims filed long before the RMC was issued.

They stressed it is unfair to make changes retroactively.

“The taxpayer should have the option, if does not have the means, weighing costs to go to court, to continue the administrative option  and should not lose that option. There should be non-retroactivity,” she said.

Nobuo Fiji, vice president of Japan Chamber of Commerce of the Philippines, lamented the fact that they have been waiting for the refunds for over six long years only to be issued with the RMC. The VAT refund issue is also being discussed under the Philippines-Japan Economic Partnership Agreement.

“No other manufacturer would come only to be choked by this revenue circular,” he said noting of the promotions they did for the Philippines as an investment destination.

Steve Atig, executive director of the Banana Growers Exporters Association, said they have yet to recover from the impact of Typhoon Pablo that devastated 25 percent of the country’s banana plantations in 2012.

“We were hoping for the tax refund to rehabilitate. Instead of facilitating, the BIR memo circular is dousing hopes of exporters to get billions of pesos of tax refund. We are not out for a fight but what we need is assistance,” he said.

He said the Philippines ranked second only to Ecuador as world’s biggest exporter of bananas just because Ecuador gets all government assistance unlike the Philippine banana players.  Henry Schumacher, vice president of the European Chamber of Commerce of the Philippines, said business is shortchanged.

“How will you explain that to future investors, to shareholders,” he said.

To restore investor confidence and ensure national competitiveness, the groups  strongly recommended that government withdraws RMC 54-2014 and uphold the taxpayer’s right to an administrative appeal process.

The group, however,  welcomed the Department of Finance’s invitation for the private sector to take part in a technical working group that will study and propose enhancements to the VAT refund application process, including the review of prescribed documentary requirements under said RMC. 

Source: Manila Bulletin