The Senate is eyeing remedial legislation mandating stricter reportorial requirements to plug loopholes in the value-added tax (VAT), a major source of revenue used to bankroll various government projects, Sen. Juan Edgardo M. Angara affirmed on Wednesday.
“Let us zero in on those abusing it,” said Angara, Senate Ways and Means Committee chairman, referring to various sectors allowed to claim VAT exemptions.
Angara clarified the committee’s position, as he allayed concerns that ongoing Congress deliberations to amend the existing law could lead to upward adjustments in current VAT rates.
“We are conducting the VAT review sector by sector,” Angara told reporters, adding, “There will be no VAT increase. In fact, we are worried about its effect on housing.”
Sen. Joseph Victor G. Ejercito also sought to allay fears that ongoing deliberations on the tax reforms could result in amendments to ensure higher VAT collections by lifting current exemptions enjoyed by certain sectors, as proposed by the House of Representatives.
Ejercito, who chairs the Senate Committee on Urban Planning, Housing and Resettlement, assured that the Senate would insist that VAT exemptions stay for low-cost housing, saying, “We will work out reporting requirements with the housing agencies.”
He added that there are other affected sectors that need to be consulted, indicating the Senate will be conducting more hearings on a Senate counterpart measure of House Bill (HB) 5636 expanding the VAT base. Under HB 5636, the VAT base is proposed to be expanded by “limiting exemptions to raw food and other necessities, such as education and health.”
As proposed in the House bill, other VAT exemptions to be removed include that sale of socialized housing but only upon establishment of a housing-voucher system to benefit buyers of socialized housing; sale of low-cost housing; sale of residential lots valued at P1.9 million; sale of house and lot and other residential dwellings valued at P3 million; and lease of residential units with monthly rental of up to P12,800.
A primer on HB 5636 provided to the Senate also proposed to increase the VAT threshold from the current P1.9 million to P3 million; retain the zero rating of indirect
exporters until the establishment and implementation of an enhanced VAT refund system; and a general repeal of all special laws granting VAT exemption.
The house bill, however, retains the VAT exemptions of senior citizens, persons with disabilities and cooperatives.