CLARK FREEPORT — The Bases Conversion and Development Authority and the Clark Development Corp. have vowed to take up with the Department of Finance and the Office of Government Corporate Counsel a controversial provision of the implementing Rules and Regulations drafted by the Bureau of Internal Revenue for the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Law, the Clark Investors and Locators Association (CILA) said Sept. 22.
CILA met in round-table discussions with newly appointed BCDA president Aileen Anunciacion R. Zosa and CDC president Agnes VST Devanadera at the Midori Hotel here Sept. 19 tackling diverse issues but the highlight zeroed in on the controversial provisions of Revenue Regulation (RR) No. 21-2021 and Revenue Memorandum Circular (RMC) No. 24-2022.
CILA president Cristopher A. Magdangal pointed to a provision of the IRR that removes the value-added tax (VAT) exemptions of businesses in freeport zones not involved in exports. CILA said there are many businesses, particularly in Clark and Subic, that are in hospitality and entertainment and other industries not directly engaged in exports.
CILA argued that the BIR regulation is “beyond the explicit intent of the CREATE Law,” which is supposed to provide incentives to businesses, including those in special economic zones.
When asked about the appreciation on the dialogue, CILA advocacy committee chairman Dr. Irineo Alvaro said: “It was serious and cordial but at the end of it,
what is important is that we were in agreement that a department regulation can never be above and beyond what the law provides.”
BCDA’s Zosa promised that she will make representations with the DOF on the issues presented by CILA.
For her part, Devanadera, a former justice secretary, said the CDC will prioritize studying the inconsistencies of the law vis-a-vis its IRR and further vowed to refer it to the OGCC for its opinion on the matter. She also revealed that she already discussed the issue with former president and now House senior deputy speaker Gloria Macapagal-Arroyo who vowed to lead congressional action to harmonize the law with its IRR.
Before the dialogue, CILA was poised to file a suit questioning before the Court of Tax Appeals the IRR of the BIR, contending that the removal of VAT exemptions in non-exporting enterprises in special economic zones will impact tremendously on the hospitality, entertainment and gaming industries .
“Furthermore, the local supply chain will be greatly affected as locators have to seek competitive prices abroad instead of the usual practice of sourcing it to the local industries outside the zone, thus, eventually will yield negative impact to the local economy.” said Alvaro.