House panel OKs resolution to probe gaps between tax law and collection
Albay 2nd District Rep. Joey Salceda, who chairs the House Committee on Ways and Means, which tackled the resolution. (INQUIRER FILE PHOTO)
MANILA, Philippines — The House Committee on Ways and Means approved on Monday a resolution seeking to probe inconsistencies in the imposition of taxes on registered business enterprises (RBEs) in special economic zones.
The committee, which is headed by Albay 2nd District Rep. Joey Salceda, tackled House Resolution (HR) No. 611.
That resolution seeks to review the implementation of Corporate Recovery and Tax Incentives of the National Internal Revenue Code of 1997 as amended by the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE)
HR No. 611 was filed by Bataan 1st District Rep. Geraldine Roman last Dec. 5, 2022.
The resolution states that the implementing rules and regulations (IRR) of the CREATE Law provides that the zero percent tax rates, in line with the amended Sections 106 and 108 of the Tax Code, can only apply to export enterprises, while the rest will be subjected to the 12 percent VAT.
Article continues after this advertisementThe Bureau of Internal Revenue (BIR) issued a similar regulation and memorandum tightening the provision of VAT zero-rating to business enterprises located within ecozones or freeport zones.
Article continues after this advertisementHowever, Roman said there was an inconsistency between the CREATE Law — particularly its IRR and the BIR issuances. Furthermore, the lawmaker said that the law and issuances did not make a distinction between domestic market enterprises and export enterprises.
“There appears to be some inconsistency between the CREATE Law, on one hand, and the CREATE Law IRR and the aforementioned BIR issuances, on the other,” Roman said in the resolution.
“In relation to the VAT exemption on importation and the VAT zero-rating on local purchases of goods and services directly and exclusively used in the registered project or activity, the CREATE Law, in using the term ‘registered business enterprise’, does not make any distinction between domestic market enterprises and export enterprises,” she added.
Meanwhile, Salceda said that the law did not distinguish whether enterprises were inside or outside the economic zone or whether, as Roman pointed out, the product was for export or domestic consumption.
Aside from Roman, Senior Deputy Speaker Gloria Macapagal-Arroyo also filed a similar resolution — House Resolution No. 490 — saying that an inquiry to the concerned agencies would “ensure the stability of RBEs located inside freeport zones and prevent the mass exodus of investors which is detrimental to the CREATE Law objectives.”
