CEBU, Philippines - The Philippine Institute of Certified Public Accountants (PICPA-Cebu Chapter), and the Mandaue Chamber of Commerce and Industry (MCCI) will soon pass a position paper to formalize their reaction on the bills that affect the business sector, especially the Simplified Income Tax Return Audit (SITRA) and the Value Added Simplified Tax (VAST).
These bills, introduced by Representative Hermilando I. Mandanas, who is also the chairman for the committee of budget and appropriation at the House of Representatives stirred mixed reactions from the Cebu business community.
During his recent visit to Cebu, Mandanas represented his bills, emphasizing the SITRA and VAST proposals to the business sector, saying both could help alleviate the country’s bid to increase revenue generation.
The VAST, which will replace the existing VAT (Value Added Tax) requirement, is expected to generate additional revenue to the government of at least P50 billion a year, Mandana said.
On the other hand, PICPA-Cebu in particular is positioned to pass its position paper to emphasize its opposition in some bill’s specifications, saying the six percent VAST rate must be reviewed since it will not give a favorable environment for the industry tax payers.
VAST is an indirect tax and the amount of tax may be shifted or passed on to the buyer, transferee or lessee of the goods, properties, or services.
According to PICPA-Cebu this law, is seen to cripple the entire business chain, and the six percent tax will be collected in every transaction, up until the product for instance will be purchased for consumption by customers.
In the bread making for instance, a six percent tax will be collected from the flour manufacturer, another six percent the government will get from the flour trader, and similar system will be implemented down from the bakery, to the retail chain, and eventually to customers.
“The six percent VAST rate will ultimately burden the consumers more, “said PICPA-Cebu treasurer Rhemier R. Mora, adding that the compounded tax collection will ultimately be passed on to the end consumers or users.
For its position paper, PICPA will request the bill’s author—Mandanas to retain the current amendments and incorporate a lower rate to encourage compliance and declaration of correct sales.
Meanwhile, MCCI president Eric Mendoza said that the VAST looks like one of the most effective ways to eradicate corruption, however the organization still has to review the bills introduced by Mandanas, specifically the controversial VAST, and will soon submit its position paper.
The SITRA bill on the other hand, seeks to enhance the collection of income tax without necessarily increasing the income tax rate. An income taxpayer will have an option to be exempted from income tax audit and/ or investigation by registering with the Bureau of Internal Revenue (BIR) and by paying a certain amount higher than his prior year income tax payment.
Among the two sensitive bills, the VAST is the most controversial among the business players in Cebu.
In the next few days, both PICPA-Cebu and MCCI will submit their respective recommendation to Mandanas especially on the VAST Bill.
Mandanas, on the other hand said that he is soliciting sound suggestions and recommendations from the business sector, including the pro-active business groups in Cebu. (FREEMAN)