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Traders seen as main beneficiaries of food import liberalization

FARMERS and fishermen are not reaping the benefits of the liberalization in food imports, with much of the value captured by traders, participants in a food security forum said on Monday.

“Farmers’ losses are significant and far outweigh any gains of consumers,” National Manager Raul Q. Montemayor of the Federation of Free Farmers said in his virtual presentation. “Pro-import policy and consumer bias of government has exacerbated the problems of farmers.”

In the forum hosted by Tugon Kabuhayan, Mr. Montemayor said the rice tariffication law has largely benefited importers and traders while subjecting farmers to intense competition from imports, putting pressure on their earnings.

“There is no significant improvement in production volume, yield, cost of production, and competitiveness despite support from Rice Competitiveness Enhancement Fund (RCEF) and tariff proceeds,” he said, referring to some of the features of the law, which calls for rice imports to pay tariffs which then go towards funding programs that make domestic farmers more productive.

“We haven’t seen any significant changes since the law was passed. In the two years that the law came into effect, it resulted in a P56-billion loss for our farmers. This should have lowered the retail price and passed the savings on to the consumers. Instead, the importers and traders pocketed the difference,” Mr. Montemayor added. 

The Philippine Statistics Authority estimates that 31.6% of farmers and 26.2% of fisherfolk are classified as poor. These percentages are equivalent to about 5.5 million farmers and 4.6 million fishermen.

Philippine Tilapia Stakeholders Association President Jon G. Juico said imports have affected fishermen as well.

“The tilapia farmgate price in Central Luzon is about P64-65, compared to P80-85 pesos last year. That’s why so many fishermen here in Central Luzon cannot compete and are driven further into debt,” Mr. Juico said. “We used to harvest twice a year, but now due to the pandemic we only harvest once a year. Tilapia is always abundant here in Central Luzon, but if this trend continues many fish farmers will stop producing.”

In October, 60,000 metric tons (MT) of galunggong (round scad) and mackerel were imported and sold in public markets. The government authorized the imports to ensure adequate supply during the three-month closed season and keep inflation in check.

Prudenciano U. Gordoncillo, a lecturer at the University of the Philippines Los Baños, said producers need to diversify in order to be more resilient against imports.

Mr. Gordoncillo added that the Philippines focuses too much on rice, and that farmers need to explore other crops.

“Corn used to be the primary source of carbohydrates in the Visayas and Mindanao, then it was replaced by rice,” he said. “But rice is harder and more expensive to produce than corn. Nutrition-wise, corn, cassava, gabi, and rice are the same. They are all carbohydrates. We shouldn’t just rely on one commodity.” — Luisa Maria Jacinta C. Jocson

Treasury announces second-round auction for seized European cars

PHILSTAR FILE PHOTO

THE Bureau of the Treasury said it will conduct a second-round auction for imported European cars that had been seized by the Bureau of Customs (BoC).

The vehicles are a Ferrari Scuderia 430, a 2001 Porsche Boxster, a 2001 Mercedes Benz SLK350, a 2001 Mercedes Benz SLK55, and a 2011 Mercedes Benz E220.

No bids were received during the first round.

The BoC had set a floor price for the smuggled vehicles at P29 million.

The BoC’s previous practice was to destroy such smuggled cars. — Luz Wendy T. Noble

Fuel marking revenue tops P330 billion

PHILIPPINE STAR/KRIZ JOHN ROSALES

DUTIES AND TAXES generated by the fuel marking program totalled P330.286 billion as of Dec. 9, according to the Department of Finance.

The program, which started in 2019, has resulted in the marking of 33.539 billion litters of fuel as a deterrent to smuggling.

Some P300.47 billion in duties and taxes were generated by the Bureau of Customs, while P29.81 billion resulted from the imposition of excise taxes.

Some 24.63 billion liters were marked in Luzon, while 7 billion and 1.8 billion liters were marked in Mindanao and the Visayas, respectively.

Diesel accounted for 60.92% of all fuel marked while gasoline and kerosene accounted for 38.55% and 0.53%.

The program deters smuggling by injecting a special dye into fuel to signify that the shipment is tax-paid. The absence of the dye is deemed prima facie evidence of smuggling.

In November, the House Committee on Ways and Means approved a bill seeking to suspend or reduce the excise tax on some fuel products for six months amid rising global oil prices.

In September 2020, the government started collecting a fuel marking fee of P0.06884 per liter, inclusive of value-added tax on manufactured, refined and imported petroleum products. — Luz Wendy T. Noble

VAT Zero-rating for Registered Business Enterprises

Almost two years into the COVID-19 pandemic, businesses worldwide are still slowly trying to recover from the effects of the economic downturn. Business establishments, both in the goods as well as the services industries, have been hit with massive losses and considerable expenses as a result of non-operation during the lockdowns.

To help corporate taxpayers deal with the losses, Congress passed Republic Act 11534 or the Corporate Recovery and Tax Incentives for Enterprise Act (CREATE). The most welcome provision of the CREATE Act is the reduction of the corporate income tax. However, the flipside of the law is the rationalization of the fiscal incentives of registered business enterprises (RBEs). One of the key incentives available to RBEs is the value-added tax (VAT) zero rating of their local purchases.

Prior to CREATE, the provisions of the TRAIN Law limited the zero-rating of local purchases of export enterprises. This portion of the TRAIN Law was implemented by Revenue Regulations No. 9-2021 issued by the Bureau of Internal Revenue (BIR) in June. However, due to various representations by exporters and their suppliers, RR 9-2021 was deferred by RR 15-2021 in July. Since then, taxpayers have been eagerly awaiting revenue regulations that harmonize the VAT zero-rating provisions of both TRAIN and CREATE.

On Dec. 7, the BIR issued Revenue Regulations 21-2021 (RR 21-2021), which provided additional guidance on the VAT zero-rating of local purchases of goods and services by RBEs enjoying incentives.

The new issuance clarified that the VAT zero-rating on local purchases is to be enjoyed by the RBEs coterminous with their income tax incentives, which can run for a maximum of 17 years from the date of registration, unless otherwise extended under the Strategic Investment Priority Plan (SIPP). Further, the zero-rating for existing registered export enterprises located inside ecozones and freeport zones are qualified for VAT zero-rating until the expiration of the transitory period. This period can run until the end of the income tax holiday (ITH) if the enterprise was granted only ITH, or 10 years from the effectivity of CREATE if the enterprise was granted both ITH and the 5% special income tax incentive.

Under CREATE, the VAT zero-rating on local purchases of goods and services by RBEs applies only to goods and services that are “directly and exclusively used for the registered project or activity” and without which the registered project or activity cannot be carried out. This requirement has been the subject of debate and discussion among tax authorities, RBEs, and their suppliers.

To this end, RR 21-2021 expanded the examples of goods and services that qualify as “directly and exclusively used.” For goods, it refers to sale of raw materials, inventory, supplies, equipment, packaging materials and goods to a registered export enterprise. For services, it refers to the sale of services, including the provision of basic infrastructure, utilities, and maintenance, repair, and overhaul of equipment. The enumeration is by way of example, which is not an exclusive listing.

Hence, the revenue regulations require that the VAT zero-rating on local purchases be granted upon the endorsement of the concerned Investment Promotions Agency or IPA, in addition to the documentary requirements of the BIR. IPAs are government agencies in charge of granting and administering tax and non-tax incentives. They include the Philippine Economic Zone Authority (PEZA), the Board of Investments (BoI), and the Subic Bay Metropolitan Authority (SBMA).

Finally, the regulations state that their provisions are immediately effective and cover transactions entered during the third quarter of taxable year 2021 and onwards.

While RR 21-2021 provided additional guidance on the new rules on zero-rating, a lot of questions posed by RBEs and their suppliers remain unanswered. For instance, what happens to a transaction which has been subjected to VAT and for which a VAT invoice or official receipt (OR) has already been issued by the supplier? Can the supplier reverse the transaction and report it as zero-rated if it qualifies under the requirements of RR 21-2021?

How about those transactions which were subjected to zero-rating? What type of BIR documentation is required in addition to the endorsement of the IPA? Will the BIR be issuing additional regulations that will enumerate such documentary requirements referred to in these latest regulations? Or were the regulations merely referring to the issuance of a zero-rated VAT invoice or official receipt? What type of endorsement will be issued by the IPA, and should such endorsement be furnished to the supplier before the transaction? If so, what happens to transactions made in the third quarter of 2021 which have already been completed but without such endorsement by the IPA?

There are definitely a lot of compliance issues that the change in rules has spawned. In addition, there are also some principle-based issues that taxpayers are now confused about. Did the change in the VAT zero-rating remove the legal fiction that ecozones and freeport zones are non-customs territories? Have we abandoned the cross-border doctrine that the tax authorities and the Courts used to apply when deciding VAT questions involving ecozones and freeport zones?

Questions abound as we enter new VAT regimes under CREATE. Such an adjustment period is expected every time we adopt new rules and regulations. Hopefully, the taxpayers will be better guided by the regulations issued by the BIR. Taxpayers really have no choice but to adapt to the changes in rules and regulations. Otherwise, they will be facing deficiency taxes and penalties for noncompliance.

As we draw nearer to the close of this year, we look forward to a new year filled with optimism and expectation that the issues surrounding the VAT zero-rating on local purchases of RBEs will be fully resolved. More importantly, we look forward to a new year with the fervent hope that this pandemic will soon be a poignant and distant memory.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for competent professional advice.

 

Reese F. Rivera is an associate from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Daily cases fewer than 100 for first time since 2020

PHILIPPINE STAR/ MICHAEL VARCAS

By Kyle Aristophere T. Atienza, Reporter

DAILY coronavirus infections in Manila, the capital and nearby cities have dropped for the first time to fewer than 100 since March 2020, when the main island of Luzon was locked down to contain the pandemic, according to researchers from the country’s premier university.

The capital region had an average of 91 daily coronavirus infections from Dec. 6 to 12, fewer than 105 a week earlier, the OCTA Research Group said in a report on Monday.

“The seven-day average in the National Capital Region decreased to fewer than 100 for the first time since March 22 to 28, 2020,” OCTA fellow Fredegusto P. David tweeted.

The average daily attack rate in Metro Manila fell to less than 1 at 0.64 a day for 100,000 people, while the coronavirus reproduction number was 0.39, the group said. “The test positivity rate was just 0.9%.”

Last week, Metro Manila’s attack rate was 0.74 a day for 100,000 people. The region’s reproduction rate was 0.34, while its positivity rate was 1%.

OCTA said Metro Manila remained at “very low risk” from the coronavirus.

Twelve cities and one municipality in Metro Manila were classified as “very low risk,” while four others were considered “low risk,” the group said.

The cities of Caloocan, Las Piñas, Mandaluyong, Parañaque, Marikina, Pasig, Navotas, Valenzuela, San Juan, Manila, Pasay, Taguig and the municipality of Pateros were considered “very low risk.” Muntinlupa, Quezon City, Malabon, and Makati were at low risk from the virus.

Metro Manila is under Alert Level 2, the second most lenient lockdown level. The government is set to announce new quarantine levels on Dec. 15.

Experts have been urging the government to delay relaxing virus restrictions in Metro Manila, which accounts for a third of the country’s economic output, and other parts of the country amid the threat of the Omicron variant first detected in South Africa.

The Department of Health (DoH) reported 360 coronavirus infections on Monday – the second lowest daily tally in 17 months — bringing the total to 2.84 million.

The death toll hit 50,341 after 61 more patients died, while recoveries increased by 519 to 2.78 million, it said in a bulletin.

There were 11,083 active cases, 782 of which did not show symptoms, 4,292 were mild, 3,662 were moderate, 1,948 were severe and 399 were critical.

The agency said 97% of the reported cases occurred from Nov. 30 to Dec. 13. The top regions with cases in the past two weeks were Metro Manila with 65 cases and Calabarzon and Western Visayas with 32 each.

It added that 15% of the reported deaths occurred in December, 43% in November, 38% in October, and 5% in September.

The Health department said two duplicates had been removed from the tally, one of which was reclassified as recovery, while 49 recoveries were relisted as deaths.

It added that 147 patients had tested negative and were removed from the tally. Four laboratories did not operate on Dec. 11, while five failed to submit data.

The agency said 23% of intensive care units in the Philippines were occupied, while the rate for Metro Manila was 25%.

Meanwhile, Health Secretary Francisco T. Duque III denied claims that the government had missed an opportunity to get 50 million syringes from the United States, saying the price set by the supplier had gone over the approved budget.

He issued the statement after Foreign Affairs Secretary Teodoro L. Locsin, Jr. said the need for the syringes had been discussed in Washington but Philippine agencies refused to discuss the matter.

Taking the deal, which priced 50 million syringes at P411.5 million or about P2.38 apiece, would have violated the Government Procurement Reform Act, Mr. Duque told GMA Network’s Super Radyo.

“What Locsin wanted was for us to accept the price of the supplier,” he said in Filipino. “But that’s not allowed by law. We are not stupid to do that. We have a law for that — Republic Act 9184.”

“What he’s saying does not make sense. We backed out because we could provide the budget,” Mr. Duque added. “Why should we follow that? We will be charged with graft.”

Mr. Locsin tweeted at the weekend that Health officials had offered to buy syringes at 4.7 cents each, which he described as hallucinatory because no one makes “special Pfizer low dead volume syringes that cheap.”

“We’re not exactly poor as you’d know if you knew what we’ve been paying for vaccines,” Mr. Locsin said in response to a Twitter user’s comment that the Philippines should accept the deal if it was a donation.

The government is set to take delivery of 52 million doses of coronavirus vaccines this month, vaccine czar Carlito G. Galvez, Jr. said.

Japan backs Manila in sea dispute with China, says DFA

REUTERS

JAPAN’S new foreign minister is backing the Philippines in its sea dispute with China and supports the 2016 ruling by a United Nations-backed tribunal that voided China’s claim to more than 80% of the South China Sea, according to Philippines’ Department of Foreign Affairs (DFA).

Japanese Foreign Minister Hayashi Yoshimasa spoke with his Philippine counterpart Teodoro L. Locsin, Jr. on Wednesday on the phone, in which he opposed unilateral attempts to change by force the status quo in the East and South China Seas, DFA said in a statement on Monday.

Japan’s demonstration of support sends a message of respect for outcomes of diplomatic and legal processes and strengthens the legal order over the seas, Mr. Locsin said in the statement.

He cited President Rodrigo R. Duterte’s statement from a previous summit that “there can be no other acceptable basis for a just maritime order but the law, particularly the 1982 United Nations Convention on the Law of the Seas.

“All countries big and small must adhere to the rule of law faithfully and consistently. Otherwise, there will be chaos.”

This comes after Chinese ships blocked and discharged water cannons on Philippine supply ships at the Second Thomas Shoal, which the country calls Ayungin.

The South China Sea, a key shipping route, is subject to overlapping territorial disputes involving China, Brunei, Malaysia, the Philippines, Taiwan and Vietnam.

During the discussion, both Japan and the Philippines reaffirmed their commitment to strengthen their strategic partnership that included cooperation not only in maritime security and safety but also on coronavirus pandemic response and the Mindanao peace process, DFA said.

Japan has provided the Philippines with more than three million doses of Japan-manufactured AstraZeneca Plc vaccines in support of the country’s vaccination program. In 2020, Japan was the Philippines’ top source of development assistance.

This year marks the 65th anniversary of diplomatic relations and the 10th anniversary of the two countries’ strategic partnership, the agency said.

The Philippines last month said it would not remove a ramshackle Navy ship grounded on Second Thomas Shoal, rejecting a Chinese demand days after it blocked a Philippine resupply mission.

The shoal lies within the Southeast Asian Nation’s exclusive economic zone “where we have sovereign rights,” Defense Secretary Delfin N. Lorenzana said.

“That ship has been there since 1999,” he separately told reporters. “If there was a commitment it would have been removed a long time ago.”

The Philippines and China have been in a fresh word war over the sea dispute after China blocked and fired water cannons at Filipino-manned boats that were carrying supplies for marine troops stationed at the shoal.

Troops intentionally grounded the BRP Sierra Madre — a World War II-era vessel acquired by the Philippines from the US in 1976 — at the shoal in 1999 to reinforce its sovereignty claims in the Spratlys.

A 1980s treaty on sea borders that China had signed awarded the exclusive economic zone to the Philippines in the 1980s, Mr. Lorenzana said. “China should abide by its international obligations that it is part of.”

He also cited the UN-backed arbitral award in 2016 that voided China’s claim to more than 80% of the  sea based on a 1940s map.  — Alyssa Nicole O. Tan

Gov’t sets up P20-M hatchery in Quezon 

THE BUREAU of Fisheries and Aquatic Resources (BFAR) has set up a P20-million multi-species machine hatchery in Perez, Quezon province to increase fry supply issues in the region. 

The hatchery is expected to produce 25 million pieces of milkfish fry annually and supply to cage operators in mariculture parks in Alabat, Padre Burgos and other municipalities of Quezon, it said in a statement on Monday. 

The bureau seeks to build more under the second phase of the project that will cost P15 million, it said. The hatchery will also be used to culture other species such as crabs and shrimps, the agency said. 

The bureau and local government of Perez started the project, which will also train people interested in putting up hatcheries, in June 2020. 

The hatchery seeks to lower the cost of fry and the operating capital of fish farmers. This paves the way for more nurseries and job opportunities in the community. 

The hatchery is one of 10 hatcheries in Quezon mandated by law. The bureau also plans to complete three mangrove crab nurseries in Lanao Del Norte and Catanduanes before the year ends. — Luisa Maria Jacinta C. Jocson 

Holcim workers may go on strike 

HOLCIM Philippines, Inc. has said it was working to resolve the labor dispute at its Misamis Oriental plant, adding that operations there would continue. 

In a stock filing dated Dec. 10 and posted on the Philippine Stock Exchange website on Monday, the listed cement maker said its labor union had voted to go on strike. 

“We wish to inform you that Holcim Philippines Workers Union-Federation of Democratic Labor Organization, the associate union of our plant in Lugait, Misamis Oriental with 90 members, voted yes today, Dec. 10, 2021, to go on strike on the grounds of bargaining deadlock,” Holcim told the Philippine Stock Exchange. 

“The company is exerting efforts to resolve this issue in coordination with labor authorities,” it added. 

Holcim said service of clients in Northern Mindanao would continue even if the strike proceeds. 

“It has also prepared a plan to sustain operations if the strike were to proceed,” it separately said in an e-mail. — Keren Concepcion G. Valmonte 

Senate urged to pass LGU tax bill 

PHILIPPINE STAR/ MICHAEL VARCAS

A CONGRESSMAN on Monday urged the Senate to pass a bill that will raise the share of local governments in national taxes to boost their autonomy. 

In a statement, Camariñes Sur Rep. Luis Raymund F. Villafuerte, Jr. said local government autonomy is the most important aspect of regional and national development. 

He added that the approval of the measure would free local governments from the “clutches of Imperial Manila” in providing essential government services. 

The House of Representatives has approved on third and final reading House Bill 10296, which will increase the share of local governments in national taxes to 50% from 40% by amending the Local Government Code of 1991. 

Two counterpart Senate bills are pending at the committee level. 

Mr. Villafuerte said passing the bill would “empower and challenge local government units (LGU) to use the additional allocation in providing better services.” — Russell Louis C. Ku 

Comelec: No expectations on when to resolve suits

THE COMMISSION on Elections (Comelec) does not expect to resolve all electoral lawsuits, including one that seeks to disqualify the only son and namesake of the late dictator Ferdinand E. Marcos, at a particular date and would take its time as needed, its spokesman said on Monday. 

“I’ve said it over and over again that it will take as long as it takes,” Comelec spokesman James B. Jimenez told reporters at an online news briefing. “We don’t have expectations on that,” he said in Filipino. 

Mr. Jimenez also declined to speculate how long the disqualification case against former Senator Ferdinand “Bongbong” R. Marcos, Jr., who is running for president, will drag on once it gets appealed at the Supreme Court. 

It took the high tribunal sitting as the Presidential Electoral Tribunal five years to resolve Mr. Marcos’s election protest against Vice-President Maria Leonor G. Robredo. He lost to her by a hair in 2016.  

There are at least nine petitions seeking to disqualify Mr. Marcos from the presidential race. 

Meanwhile, the Comelec spokesman said postponing the 2022 elections to 2025 would violate the Constitution. 

The Coalition for Life and Democracy has asked the body to halt the May 2022 elections to 2025 because of a coronavirus pandemic. 

Mr. Jimenez said the year was a typographical error and the group had wanted the Comelec to defer the elections to 2023. This would still be unconstitutional, he added. 

He said the Comelec had released at least 30 resolutions to different parties and was still working on 70 more orders. He expected the body to release all resolutions by Dec. 13. 

In a related development, Mr. Jimenez said candidates for 2022 must have their social media accounts verified before they can put out political ads to ensure accountability. 

The Comelec wants to ensure that people get their information from a credible source. While a verified account could still be used to spread fake news, at least the owner could be held responsible, he added. 

He said anyone who objects to the policy could write to the commission to complain. “The people who are claiming to be disadvantaged over this, they already got verified,” he added. — Jaspearl Emerald G. Tan 

Senator seeks 1GB free data for poor 

REUTERS

POOR people should get at least a gigabyte of free data a month, a senator said on Monday as she sought the passage of a bill that seeks to lower internet rates in depressed areas. 

“Low-income end-users need more than just the occasional mobile promo, with internet access becoming a necessity just like water and electricity,” Senator Imelda “Imee” R. Marcos, who heads the Senate economic affairs committee, said in a statement.   

“Work-from-home arrangements, online education, e-commerce, and internet banking are here to stay,” she added.  

She pushed passage of Senate Bill 2102 or the Lifeline Rate for Internet Services, which will amend the Public Telecommunications Policy Act of the Philippines. 

“We are always fully supportive of initiatives that will enable us to provide telecommunication services to the general public because we know that given the rapid change and high dependence on technology in this day and age, internet access is key to economic development and poverty alleviation,” Aileen D. Regio, first vice-president and head of PLDT, Inc.’s Regulatory and Strategic Affairs, said in a mobile phone message.  

“We in fact have current plans that precisely address this need,” she added, even as she cited hurdles to their rollout in different areas of the country. 

The socialized pricing mechanism under the bill seeks to solve the slow expansion of free wi-fi access in poor areas and can already be put in place by the government and telecommunication companies, Ms. Marcos said.  

The measure is pending at a Senate committee. 

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Alyssa Nicole O. Tan 

DFA brings home 150 workers from Europe  

PHILIPPINE STAR/EDD GUMBAN

THE DEPARTMENT of Foreign Affairs (DFA) on Monday said the government brought home at the weekend about 150 migrant Filipino workers who got stranded in Europe. 

The workers arrived via Smartlynx Airlines Estonia, which flew from Amsterdam. Most of the passengers were seafarers, it said in a statement. 

The arrival of the workers is a first step in bringing home stranded Filipinos in Europe, Foreign Affairs Undersecretary Sarah Lou Y. Arriola said. 

DFA did not immediately respond to a WhatsApp question if any of the repatriates had come from a country where the more contagious Omicron coronavirus variant was present. 

The Filipinos are expected to undergo quarantine set by a government inter-agency task force. — Alyssa Nicole O. Tan 

 

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