20 March 2012

Judge halts VAT collection on econzone oil imports

Business locators in this free-port zone rejoiced after a regional trial court (RTC) issued a temporary restraining order (TRO) stopping the Bureau of Internal Revenue (BIR) from implementing additional taxes on petroleum products imported into special economic zones.

The order, which was issued on Friday by RTC Branch 58 in Angeles City, Pampanga, directed Finance Secretary Cesar Purisima and BIR Commissioner Kim Jacinto-Henares “to cease and desist from implementing/enforcing the assailed Revenue Regulation No. 2-2012 for the duration of 20 days.”

Presiding Judge Philbert Iturralde also set a hearing on a plea for a writ of preliminary injunction for March 21, and presentation of the petitioner’s evidence on March 29.

The court issued the TRO on a petition filed by Rep. Carmelo Lazatin of the First District of Pampanga and found merit in the motion because of its urgency as the assailed regulation would have taken effect 15 days after its publication.

Danny Piano, president of the Subic Bay Freeport Chamber of Commerce (SBFCC), said Subic Bay Freeport businessmen objected to the imposition of additional tax on petroleum products because the new regulation was in conflict with the tax-free regime in Subic under Republic Act (RA) 7227.

If implemented, the new regulation would have increased gasoline pump prices here by about 12 percent and also resulted in a bureaucratic nightmare, Piano added.

“The good news, albeit temporary, is that there is now a temporary restraining order on the revenue regulation,” he told SBFCC members in a letter on Friday. “The chamber will continue to work to have the revenue regulation rescinded or revoked permanently.”

The Subic chamber wrote a letter to President Aquino on March 7 expressing its opposition to the BIR regulation, saying that RA 7227, which created the Subic Bay Freeport Zone, specifically provided that the Subic Special Economic Zone shall be operated and managed as a separate customs territory.

This provision ensured the “free flow or movement of goods and capital within, into and exported out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment,” the SBFCC said.

It added that RA 7227 stated that aside from the 5-percent tax on gross income, “no taxes, local and national, shall be imposed within the Subic Special Economic Zone,” and that, “in case of conflict between national and local laws with respect to tax exemption privileges in the Subic Special Economic Zone, the same shall be resolved in favor of the latter.”

The Subic chamber also told the President that RR 2-2012’s provision calling for a “joint supervision over the facilities with the BIR, through the assignment of revenue officers,” simply adds another layer of bureaucracy, which has the potential for more corruption. (Henry EmpeƱo, Business Mirror)