BIR revising VAT regulations on Japan ODA projects, says Finance chief

The Bureau of Internal Revenue (BIR) is now revising the regulations on the withholding system for value-added tax (VAT) on projects funded by Japan's Overseas Economic Cooperation Fund (OECF).

In a statement on Friday, the Department of Finance (DOF) said Finance Secretary Carlos Dominguez III told Japanese businessmen at the Philippine Investment Forum in Tokyo on Wednesday that the Philippines is taking into account the concerns raised by the Japanese government and contractors of OECD-funded projects.

“I have also instructed our commissioner of the Internal Revenue to prioritize the resolution of the issues on VAT on Japanese contractors undertaking official development assitance (ODA) projects,” the Finance chief said.

Finance Assistant Secretary Mark Dennis Joven of the Revenue Operations Group said the issue involves Revenue Memorandum Circular 45-2015.

According to the circular, Japanese contractors of OECF-funded projects cannot include in its billing the 12-percent VAT that will be assumed by the Philippine government.

Under the final withholding tax system, the Philippine government shall assume the final VAT at the rate of 5 percent of the gross payment.

However, in the exchange of notes between the Philippines and Japan on OECF-funded projects the Philippines will assume all taxes imposed on Japanese contractors.

Aside from revising the VAT system for OECF projects, Dominguez said the government has also taken initial steps to stamp out corruption, cut bureaucratic red tape, and simplify the tariff rules to entice investors from Japan and other countries to set up shop in the Philippines.
 
“This is a fine time for looking at the Philippine economy as an investment destination,” he said.
 
“The opportunities are many and the possibilities are large. The Philippines is an economy that is finally ready for more regionalization,” he added.
 
Public-private partnerships and other investment opportunities are in store for Japanese businesses in such sectors as transportation, banking, energy and tourism.

“There are numerous investment possibilities open to our regional partners,” he said.

“We have expanded our public-partnership program to include unsolicited proposals from potential investors. The energy and transport sectors are key areas needing more investments. Our banks are seeking new partners. Our primary industries are open to joint ventures," he added.

"The macroeconomic policies are well in place. The fiscal reforms are business-friendly. Doing business in my country will surely be easier over the next few months," Dominguez said. — Ted Cordero/VDS, GMA News