04 March 2019
By Patricia G. Blacer | Export Assistance and Business Matching Division (EABMD) | DTI-Export Marketing Bureau
Published also in Business Mirror
THE Export Marketing Bureau (EMB) of the Department of Trade and Industry (DTI) offers free accreditation of exporters under the Export Development Act’s (EDA) export incentives provision.
This service is for export-oriented enterprises whose export sales comprise more than 70 percent of their total annual production.
The EMB submits and endorses a list of accredited exporters to the Bureau of Internal Revenue (BIR)’s Audit Information, Tax Exemption and Incentives Division for their record. The endorsement, together with the certificate of accreditation, is used by the companies as proof of their qualification in the EDA’s zero-rated value-added tax (VAT) incentive.
The VAT zero-rating will also benefit the exporter’s supplier of raw materials and packaging supplies when they apply for the said claim with the BIR. This reinforces the competitiveness of exporters by reducing the purchase cost of their raw materials and packaging supplies.
Another benefit of the EDA accreditation is that exporters can avail themselves of the free Client Profile Registration System, the foremost requirement of the Bureau of Customs (BOC) for exporter-companies. CPRS is part of the electronic-to-mobile (E2M) Customs Administration of the BOC. All exporters are issued with an online account through any of the BOC’s value-added service Provider, namely Ekonek, Intercommerce, and CDEC, in which the platform allows companies to electronically submit export declarations through VASPs. Exporters are required to renew their CPRS annually.
The EMB’s requirements for EDA accreditation includes an accomplished application form, a notarized affidavit of compliance with the Minimum Wage and Social Security System (SSS) laws, copy of the company’s audited Financial Statement immediately preceding the taxable calendar year, and original copies of bank certifications summarizing the inward remittances or export sales payment of the company’s buyers for the preceding year.
Apart from the EMB, the Cebu and Manila offices of the Philippine Exporters Confederation (Philexport) are also deputized to process EDA accreditation applications. The applications are processed within one week from receipt of the complete set of documents, and the accreditation certificate is valid for one year. Monthly endorsements are forwarded to the BIR, after consolidating the list of approved applications nationwide.
Conversely, under Republic Act 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) law, and its provisions vetoed by the President, sale of raw materials or packaging materials to a local export-oriented enterprise with export sales exceeding 70 percent of total annual production is no longer qualified as a zero-rated sale.
More so, sale to registered companies in processing zones, bonded warehouses of export-oriented manufacturers, and those transactions considered export sales under the Omnibus Investments Code of 1987 are no longer entitled to VAT zero-rating. Similarly, the BIR issued Revenue Regulation 13-2018 citing the regulations implementing the VAT provisions under TRAIN.
However, this new provision shall only take effect upon the successful establishment and implementation of an enhanced VAT refund system by the BIR and BOC which has yet to be established. Therefore, all provisions under the National Internal Revenue Code are on status quo, and sales of raw materials and packaging materials to export-oriented enterprise still qualify as zero-rated sales.