DTI seeks dialogue with DOF, BIR on tax refund issue

MANILA, Philippines - The Department of Trade and Industry (DTI) intends to meet with the Department of Finance (DOF) and Bureau of Internal Revenue (BIR) to discuss concerns raised by Japanese businessmen on a circular covering rules for filing tax refunds.

Trade undersecretary Adrian Cristobal Jr. told reporters yesterday the DTI wants to meet with officials of the DOF and BIR amid concerns of Japanese businesses on the tax agency’s circular on rules for filing tax refunds.

“I think the Japanese delegation has expressed themselves very clearly that it is a very serious issue. It is a very serious issue and they perceive it to be as unfair, so we will look into the matter and take it up with the BIR and DOF,” he said.

Of particular concern is the BIR’s Revenue Memorandum Circular (RMC) 54-2014 summarizing the rules on filing and processing of applications for value-added tax (VAT) refund or tax credit issued by the BIR last month.

Under the RMC which applies to all pending claims for VAT refunds, the BIR has a period of 120 days to decide whether to grant or deny an application.

If no action is taken by the BIR within the 120-day period, it would be deemed a denial of the application.

In case of full or partial denial of the claim for tax refund, the RMC stated that the affected taxpayer could file an appeal in two ways: file the petition with the Court of Tax Appeals within 30 days from the receipt of BIR decision or file the claim within 30 days from the expiration of the 120-day period, if no action is taken by the BIR.

“There was  a concern on the retroactive effect of their claims, that is why I said we have to look into it,” Cristobal said.

Japanese Chamber of Commerce and Industry of the Philippines, Inc. (JCCIPI) executive director Nobuo Fujii told reporters the group wants the BIR to withdraw the circular.

“That is unfair to us. Anyway, we are requesting to withdraw such kind of RMC,” he said.

JCCIPI secretary general Masazumi Nishizawa said the group opposes the RMC because it removes the right of taxpayers to negotiate with the BIR for VAT refunds.

As the rules apply to pending claims, Nishizawa said all the negotiations conducted by Japanese companies claiming refunds with the government would be useless.

The concerns were raised during a meeting of officials from the Japanese Embassy and private sector with Trade Secretary Gregory Domingo held yesterday to get an update on discussions during the meeting of the Sub-Committee on Improvement of Business Environment under the Philippine-Japan Economic Partnership Agreement held in June.

The VAT refunds are among the key concerns of Japanese enterprises doing business here.

As an incentive to investors, firms could claim refunds from the government for the advanced VAT payments made for imports of items used for goods they export.

A TCC serves as proof of a company’s claim for tax credits. They are granted either to exporting firms that are entitled to duty-free privileges or to those that have tax refunds.

“The positive side is that in the 2014 GAA (General Appropriations Act), there is P15.3 billion of TCC conversion and tax refund which is enough to cover up outstanding TCCs amounting to P7 billion,” Cristobal said.