Mandanas files bill to change VAT system

MANILA, Philippines - Batangas Rep. Hermilando Mandanas has filed a bill seeking to change the value-added tax (VAT) system to a Value Simplified Tax (VAST) and reducing it from 12 to six percent for the same goods and services.

Under House Bill 1970, all exemptions under the VAT system would continue under the VAST.

The bill seeks to exempt from VAST senior citizens and retired members of the Armed Forces, Philippine National Police, Philippine Coast Guard, Customs police, and the Bureau of Jail Management and Penology.

Retired public school teachers who have served for at least 30 years and those who retired early due to disability in the performance of their duty would also be exempted from the VAST.

Mandanas said to simplify the collection system and reduce opportunities for corruption, the input tax provisions have been eliminated in the bill, including the presumptive deductions and tax credit refunds.

These deletions will increase tax collection efficiency, although the VAST rate will only be six percent, compared to the 12 percent VAT, he added.

Mandanas sought to raise the ceilings on sale or lease of goods or properties that will not be subject to VAST to further increase the exempt transactions.

Sales of sari-sari stores would be subject to VAST if annual sales exceed P2.5 million.

And if their total annual sales are below the new ceiling, the stores will be subject to only three percent.

Mandanas said real estate sales ceilings would be increased.

The sales of land below P2.5 million, or of house and lot below P3.5 million would not be subject to VAST.

The ceilings under the VAT system were only P1.5 million for land and P2.5 million for house and lot.

Even with the lowering of the tax rate from 12 percent to six percent, the tax collection efficiency will materially improve due to the simplification of the tax system and reduction of occasions for corruption in the collection of VAST, Mandanas said.