Gov’t to amend CREATE law, says Marcos

• President Ferdinand Marcos, Jr. assured investors his administration will amend the Corporate Recovery and Tax Incentives for Enterprises Act

• Investors raised issues with CREATE in meetings with the President on the sidelines of the APEC Business Advisory Council meeting in Cebu City on July 28

• The proposed amendment will allow zero VAT on sales of indirect exporters to export-oriented enterprises provided sales are directly and exclusively used in the activity of exporters

The government will amend the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, according to President Ferdinand R. Marcos, Jr.

He gave the assurance after speaking with executives of Marubeni Corp., Austal Ltd, and Tsuneishi Heavy Industries (Cebu) Inc., on the sidelines of the APEC Business Advisory Council (ABAC) meeting in Cebu City on July 28.

Among issues cited by Marubeni are the 12% value-added tax (VAT) on indirect exporters supplying goods and services to export-oriented enterprises; non-refund of VAT on local purchases by domestic market enterprises; and “tedious” documentary requirements, slow process and “unpredictability” of VAT refund claims, Presidential Communications Secretary Cheloy Garafil said in a statement.

Marubeni, with P20.7 billion earnings in 2022, began its overseas activities in Manila in 1909 as a trader of textiles and abaca.

Garafil quoted Marcos as telling the Marubeni executives “the proposed amendment to the CREATE Act and its implementing rules and regulations 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.”

Meanwhile, Austal, the largest aluminum shipbuilder with a shipyard in Cebu, is seeking clarification on the 12% VAT exemption on locally built vessels. It operates shipyards in Australia, the US, and Vietnam, aside from its Philippine shipyard. Philippine Economic Zone Authority-registered Tsuneishi plans to reclaim 32 hectares on the northern side of its current reclamation area in Buanoy, Balamban, Cebu.

“We’re working on those issues and …we will be introducing the amendments to the CREATE law to take care of this,” Garafil quoted Marcos as saying.

The President urged investors to send in their suggested amendments and experiences from other countries so these may be reviewed by the government.

Under the proposed amendment to the CREATE Act, domestic market enterprises under the 5% gross income tax regime will have an option to register as VAT taxpayers, allowing them to charge output VAT on domestic customers, or to get a refund from the Bureau of Internal Revenue (BIR).

The BIR has already issued several directives to streamline the procedures and reduce documentary requirements for filing and processing VAT refund claims.

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