Seaweed industry seeks exemption from withholding tax

The Seaweed Industry Association of the Philippines (SIAP) is seeking exemption from the one-percent withholding tax being collected from seaweed farmers by the Bureau of Internal Revenue (BIR).

SIAP, in a letter to BIR Commissioner Guillermo L. Parayno, said seaweed farmers are bearing the brunt of having to comply with the issuance this year by BIR of Revenue Regulation 17-2003, which levies a one-percent witholding tax on raw seaweed.

"It is our contention that seaweed is outside the coverage of RR 17-2003, particulalry paragraph S., Section 2, because such variety as Eucheuma Cottonii and Espinosum, which are commercially cultured, are scientifically classified as non-food marine product," said SIAP president Benson Dakay.

Dakay said seaweed farmers should be accorded the same treatment as copra suppliers whose product was declared by the BIR as non-food and was exempted from RR 17-2003.

SIAP also cited the ruling of the Supreme Court under GR 198524 in 1994, which ruled that the imposition of the withholding tax regulations on agricultural products was limited to agricultural food products.

Dakay said most seaweed farmers have marginal incomes and a one-percent withholding tax will affect their income.

"This will discourage them from such livelihood and may prod them to go back to other illegal means of livelihood in the sea," said Dakay, whose company, Shemberg Marketing Corp., is one of the world’s biggest seaweed processors.

Dakay added that the Bureau of Fisheries and Aquatic Resources already cancelled its collection fees on seaweed because it was deemed as anti-poor since it reduces the income of seaweed farmers.

Seaweed farming is the livelihood of marginal fishermen, mostly from Tawi-Tawi, Sulu and Muslim Mindanao, providing moderate income to about 100,000 families. There are about 10,000 to 15,000 hectares of seaweed farms thriving in the shallow coastal waters located in various parts of the country where seaweed farmers are dependent on seaweed processors who purchase their farm products.