The issue was brought to the attention of the Export Development Council (EDC) by Del Monte Corporation vice president Ignacio Carmelo Sison although he said that the matter has also been brought to the attention of the Department of Finance.

A check with the EDC indicated that the overseer and planning body on exports has been putting together a position paper on the new VAT law as applied to exports.

In a letter to PHILEXPORT accompanying the request to EDC to follow up the tax issue, Sison claimed that the EVAT regulation is a disincentive to exporters as it imposes additional VAT burden under the 70 percent cap rule on import VAT as applied.

At the same time, the option of exporters to claim for refund or tax credit on input tax related to exports also imposes an additional burden since they are unable to fully recover their input taxes immediately.

In his letter addressed to acting EDC chairman Thomas Aquino, Sison explained that as applied to goods and services sold in the domestic market, the 70 percent rule on input VAT clearly says that an enterprise could claim only up to 70 percent of its import VAT for every three months if the input VAT exceeds the output VAT.

He cited specific provisions on the implementing rules of the law on domestic-oriented industries.

On the other hand, the provisions of the law and regulations are unclear on whether any input tax attributable to zero-rated sales should be subject to the 70 percent cap rule, said Sison.

The difficulty of enjoying the tax incentive for exporters under the law again brought into sharp focus the continued suspension of a set of incentives tied to the expansion of an exporters sales under the Export Development Act of 1994.