MARIVELES, Bataan — A provision in the Tax Reform for Acceleration and Inclusion (TRAIN) Law will possibly affect registered locators in the country’s freeports and economic zones on their Zero Value Added Tax (VAT) privilege, the Freeport Area of Bataan chairman said Wednesday.
“The effect of the TRAIN Law on locators depends on the second package. The first package focuses more on how to increase the take home pay of employees and higher collections for the Bureau of Internal Revenue,” FAB chairman Emmanuel Pineda said.
The second package of the new law, he said, is on investments. He said that investment promotions in Clark (Pampanga), Subic (Zambales), Bataan and the Philippine Economic Zone Authority as one have convinced Congress to maintain and not to remove the Zero VAT rate enjoyed by investors in freeports and economic zones.
Pineda said that Congress has passed the law retaining the Zero VAT rate but that the Department of Finance wanted it to be taxed.
“And President Rodrigo Duterte vetoed it,” the FAB chairman said laughing. He said that registered investors in freeports and economic zones are free from VAT in their purchase of materials for their companies in domestic territory or local markets.
“Our advocacy is for locators to make use of local components in their factories but if the privilege will be removed, they will resort to importing where the tax is duty-free. Our intention is good because we want the investors to avail more from the local market,” Pineda said.
He said that meanwhile, BIR has issued an advisory for a status quo that the Zero VAT rate is still in effect until the release of implementing rules of the TRAIN Law.
“We are still lobbying and hopeful that congress will still consider it and the President to take back his veto and no longer remove the Zero VAT rate so more investments will continue coming in,” the chairman said.
Pineda said, however, that the President has his last say and they will respect the decision. FAB has informed locators that they were still issuing Zero VAT rate certificates.
“We told them that it may possibly be removed so they will be prepared,” he said.
The Freeport in Mariveles, Bataan that became operational in 2010 has 128 multi-national companies with 37,455 workers under its employ as of December 31, 2017.
Investments rose from P5 million in 2010 to P6 billion in July 2017.
