EDC lauds the Department of Finance (DOF) and Bureau of Internal Revenue (BIR) on deferring the implementation of Revenue Regulation (RR) no. 9-2021, which levies 12% VAT on indirect exports pending issuance of an amendatory regulation. BIR will provide the transition process for those who already paid the 12% VAT while the RR was in effect from June 27 to July 21, 2021.

DOF and BIR granted the petition of the grappling MSMEs passionately echoed by Albay Rep. Joey Salceda during the Committee Briefing on Ways and Means on July 21, 2021. The solon added that we are not yet over the pandemic hence suggested it is best deferred as a way of support to the sector.
The said RR requires 12% VAT on indirect exports, previously rated at 0%. It aimed to implement an enhanced VAT refund system as per the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Stakeholders mainly probed BIR’s compliance with the three (3) conditions set in its refund system as follows: 1) Granting of refunds within 90 days from the date of application starting from those who applied in 2018; 2) All pending VAT refund claims as of December 31, 2017, shall be fully paid by December 31, 2019; and 3) Establishment of the VAT refund center. Further guidelines were stipulated under RMO 47-2020.

Furthermore, legislative concerns were also examined. The TRAIN Law enabled the 12% VAT but, the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act exempted them from said tax. However, the 12% VAT was then again included under the CREATE Implementing Rules and Regulations (IRR). Thus, the need to review and amend the said IRR.

The refund process is also an issue because it will be manually done, and claims are centralized at the VAT Credit Audit Division (VCAD) in Quezon City.

Given the concerns that would cripple the export industry, DOF and BIR recently reviewed the regulation and deferred it pending corrective legislation. –MRJ