Merchants support VAT on digital transactions
Through Jenina P. Ibañez, Journalist
PHILIPPINE RETAILERS call for immediate approval of a bill that would impose a 12% value added tax (VAT) on digital transactions in the country as the industry sees increasing competition from foreign e-commerce companies which are not subject to local taxes.
The Philippine Retailers Association (PRA) said in an email on Saturday that there were no taxes on foreign e-commerce Firms has created a foul play Fidomain for retailers and registered distributors in the Philippines.
“Although we pay VAT and customs duties, foreign sellers on digital platforms can deliver their products or services to customers door to door without taxes or customs laws,” said PRA Vice President Roberto S Claudio.
The industry group’s objections are directed to foreign online sellers who are able to deliver goods to the Philippines without being registered or doing business in the country and not paying the appropriate customs duties and VAT.
These foreign online retailers, he said, are able to sell in the local market without resorting to foreign investment or local jobs.
Mr. Claudio asks the Ministry of Finance to validate the income from sales of foreign online transactions.
“The retail industry will eventually lose revenue due to a level playing field, competing with foreign online vendors who do not pay (duties in accordance with) our customs laws. Ultimately, government tax revenues from (local) retailers will be reduced over time, ”he said.
The House of Representatives last week approved Bill 7425, which amends sections of the 1997 National Internal Revenue Code, at third and final reading.
Gabriela party list representative Arlene D. Brosas voted against approving the measure, saying it is a tax burden on ordinary Filipinos struggling amid the protracted pandemic.
In supporting the tax measure, PRA’s Claudio also recommended that “strong” implementing rules and regulations be drafted to ensure that all digital transactions have receipts. He cited problems with counterfeit products, false advertising and product warranties that persist.
“The bill can be further refined and this can be addressed in the (implementing) rules and regulations as to who can be exempted. How will this be monitored and how can compliance be achieved, as well as the penalties to be imposed, ”he said.
Last month, the PRA called for expedited vaccine deliveries as the industry loses sales and cash reserves after three major lockdowns declared to curb the spread of the coronavirus pandemic.