|
Friday, September 16, 2005
Cebu biz groups remain opposed to input VAT cap
By Jessica B. Natad
Sun.Star Staff Reporter
Despite protests from the business community, the government is pushing through with the imposition of a 70 percent cap on input value-added-tax (VAT) credits under the VAT reform law (R-VAT).
The provisions of Republic 9337, including the 70 percent cap on input tax, remain unchanged except the law is now called R-VAT. It was named the expanded value-added tax law before the Supreme Court issued a temporary restraining order on July 1 mandating the Arroyo administration to defer its implementation.
During the Cebu-leg of the R-VAT domestic road-show, Department of Finance Undersecretary Emmanuel Bonoan said the provision on the 70 percent cap on input tax crediting is functional, as it prevents companies from gaining profit through the VAT they have collected through the sale of products or services.
The companies, which serve as VAT collectors, are obliged to give the VAT to the government.
Input tax refers to the VAT due on or paid by a VAT-registered person or entity on the importation of goods or local purchases of goods, properties or services, including the lease or use of properties, in the course of trade or business.
In the past, companies could deduct from their output VAT the total amount of their input VAT.
With the R-VAT law placing a cap of 70 percent on the input VAT that companies can claim as credits, businesses will be forced to either absorb the 30 percent cost of the VAT or pass it on to consumers through higher prices.
Close down
During the roadshow, Perla Capangpangan, a representative of the Petron and Caltex dealers in Cebu, again asked the government to increase the 70 percent cap on input tax, as this would reduce the already minimal profit margin of three percent of most, if not all, oil dealers.
“If we will absorb (the remaining input tax), we will close down,” she said.
In an interview, Cebu Chamber of Commerce and Industry (CCCI) president Robert Go told Sun.Star Cebu that the chamber stands strong in its position of not supporting the R-VAT if the government will not scrap the 70 percent cap on input tax.
“We are still against this provision because it will affect the traders, which comprise distributors, petroleum dealers and many small and medium enterprises, who have less than three percent margin. In fact, all stores in the downtown area will be affected,” he said.
Go said the chamber’s position paper on its opposition to the provision, which it passed in July, remains valid.
In its position paper, the CCCI said some companies earn as low as one percent of the retail price of the goods they sell.
It also gave the example of companies selling cement, steel bars, roofing materials and paint, which are sold at a loss, at break even or earning only a two- to four-percent gross profit if they are fortunate.
Fuel prices
It also cited gasoline stations which, it said, place only a three percent mark-up on their purchases from petroleum companies.
The position paper was signed by Go, Jay Yuvallos, president of the Cebu Furniture Industries Foundation Inc., Janet Chua, president of Fame Foundation Philippines Inc., Carlos Co, Visayas vice president of the Philippine Chamber of Commerce and Industry (PCCI) and Jose Ng, regional governor-Visayas of the PCCI in behalf of “the Cebu business community.”
(September 16, 2005 issue)
Write letter to the editor. Click here.
Join the Sun.Star message board. Click here. |
|
[return to top]
[home]
[network page]
|
LOCAL NEWS
BUSINESS
OPINION
SPORTS
LIFESTYLE
FEATURE
SUPERBALITA
WEEKEND
|
