Marcos assures foreign investors of gov't support, vows to address tax issues
President Ferdinand Marcos Jr. assured foreign investors of government support as he met with the executives of Marubeni Corp, Austal Ltd, and Tsuneishi Heavy Industries (Cebu), Inc. (THI) in Cebu City on Friday to discuss updates on their business activities in the Philippines.
On the sidelines of the ABAC Meeting in Cebu, the President assured the business firms that the government is addressing the issues raised by those companies and investors.
“We’re working on those issues and ...we will be introducing the amendments for the CREATE law to take care of this,” Marcos told Marubeni’s executives in referring to the Corporate Recovery and Tax Incentives for Enterprises Act.
“If you have your own amendments with you, we’d like to see, we will be happy to look at one. I want to hear from everyone what their ideas are, or even just, from your experience in other countries, what has worked for you,” the President said.
Among the issues raised by Marubeni are: 12-percent VAT (Value Added Tax) imposed on indirect exporters supplying goods and services to export-oriented enterprises; non-refund of VAT incurred by the DMEs (domestic market enterprises) on their local purchases; tedious documentary requirements, slow process; and, unpredictability on VAT refund claims.
As a response, the government said the proposed amendment to the CREATE Act and the Implementing Rules and Regulations (IRR) will allow the sales of indirect exporters to export-oriented enterprises to be subject to VAT zero-rating, provided such sales are directly and exclusively used in the registered project or activity of the exporters.
Under the proposed amendment to the CREATE Act IRR, the DMEs under the five percent gross income tax regime will have an option to register as VAT taxpayers, allowing DMEs to charge output VAT to domestic customers, or to receive a refund from the Bureau of Internal Revenue (BIR).
The BIR also issued several directives to streamline the procedures and reduce documentary requirements for filing and processing VAT refunds.
Marubeni Corp., with 2022 Philippine revenue of P20.7 billion, started overseas activities in Manila in 1909 as a trader of textiles and abaca.
The company’s primary line of business in the country encompasses infrastructure development; investments in power, water, heavy equipment, healthcare, large-scale import and export of commodities, among others.
Austal, the world’s largest aluminum shipbuilder, is seeking clarification on the 12-percent VAT exemption on locally built vessels. It operates industry-leading shipyards in Australia, the US, Philippines, and Vietnam.
On the President’s meeting with THI, the chief executive said he will talk to the environment secretary regarding its project in Cebu.
The company has land reclamation plans to expand its business in Cebu, involving 32-hectare reclamation at the northern side of their current reclamation area in Buanoy, Balamban, Cebu. THI obtained its reclamation permit in 2008.
“I’ll talk to Secretary and I think that they’re undergoing that review process now. Because we have to be very careful,” Marcos said during the meeting with THI officials.
THI is a Philippine Economic Zone Authority (PEZA)-registered Ecozone Export Enterprise engaged in shipbuilding and ship repair at the West Cebu Industrial Park (WCIP) in Balamban, Cebu.
It has invested P11.90 billion since its registration in September 1998 and employs 801 direct employees and provides jobs to around 10,000 individuals through its subcontractors.
The company has built a total of 337 vessels as of July. Presidential News Desk
