The Department of Finance (DOF) on Thursday recalibrated the refund mechanism for those paying the value-added tax to allow for greater efficiency and collection.
A senior official said the reforms will ensure all refund claims from exporters and other qualified entrepreneurs are completed and paid out within 90 days of submission as required under the Tax Reform for Acceleration and Inclusion Act or TRAIN.
According to Finance Undersecretary Karl Kendrick Chua, the adjustments include the setting up of a special trust account in the general fund sourced from the 5 percent of the total VAT collection of the Bureaus of Internal Revenue (BIR) and Customs (BOC) from the immediately preceding year to ensure money availability for VAT refunds; basing revenue targets set for the next fiscal year on net of VAT refunds; a plan to conduct a risk-based post audit to do away with the tedious process of auditing claims before giving a refund and implementation of an electronic invoicing and receipts system
“So, all these together will allow the refund process to be better. We changed the incentives so that the refund system can be better given,” Chua said.
He is optimistic the reforms will positively impact the current VAT refund process.
“For 30 years since we started the VAT in 1988, we’ve done the refund so badly because the incentive to give refund is not there,” he said.
“We think that we should just implement the VAT as it should be: as a consumption tax. You pay the VAT when you import or you buy a product and then when you export, you get a refund,” he added.
Chua also said since the beginning of the year salaried employees already enjoyed personal income tax exemptions for the first P250,000 in taxable income and significant tax cuts for those earning above the cited amount.
The TRAIN reduced the tax rate both for estate and donor’s taxes from the high 20 percent to a flat six percent rate.