Zubiri says VAT refund problems in PH discourage Japanese investors

Some Japanese firms have subtly signified their plans to transfer their respective businesses to other countries because of the persisting Value-Added Tax (VAT) refund problem in the Philippines, said Senate President Juan Miguel Zubiri on Wednesday.

Senate President Juan Miguel “Migz” F. Zubiri Senate PRIB file photo / Joseph Vidal

MANILA, Philippines — Some Japanese firms have subtly signified their plans to transfer their respective businesses to other countries because of the persisting Value-Added Tax (VAT) refund problem in the Philippines, said Senate President Juan Miguel Zubiri on Wednesday.

Zubiri, during the opening of the Senate plenary deliberations on the proposed national budget for 2024, said the country is indebted to several Japanese firms.

“[W]e owe them billions of pesos already and they’ve already threatened, there are threats that they might move shop to other countries,” said Zubiri.

“These are already locators here. I don’t know if you’re aware of this. These are already locators here,” he told his fellow senators.

READ: PCCI cheers move to relax VAT refund requirements

Citing an example, Zubiri said Itochu Corporation, which runs DOLE Philippines, has about 15,000 employees. If the firm pulls out of the country, thousands of employees would be affected, said the Senate chief.

According to Zubiri, he was able to discuss the problem “lengthily” with the Executive Secretary of Japanese Prime Minister Fumio Kishida.

READ: Gatchalian files VAT refund bill: It’s time to incentivize foreign tourists

Zubiri said the previous administration made it clear that the Philippines will pay VAT first and then refund when exporting, but the senator pointed out where the problem lies: the Philippine government does not refund VAT.

The Senate chief said he has promised Japanese Prime Minister Kishida that the Congress will amend the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) Law to address the issue.

“Now, prospectively, ayusin natin Congress, I committed and the Prime Minister was very happy. He shook my hand and he thanked me and we’re going to see him again [in] December,” said Zubiri.

(Now, prospectively, let’s fix it in the Congress. I committed and the Prime Minister was very happy. He shook my hand and he thanked me and we’re going to see him again in December.)

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