Wednesday, September 30, 2009

Scrap VAT on imported goods for relief

Congress should scrap the imposition of value added tax on goods imported to the Philippines for humantarian and relief purposes.
This comes in the aftermath of Typhoon Ondoy, which has ravaged Metro Manila, and rendered thousands homeless, and in need of relief from all over the world.
The problem is, if relief goods are donated and brought to the Philippines, there is a VAT imposed, which is ten percent of the value of the goods imported.
The law, under Section 107 of the National Internal Revenue Code prevents the release of the goods unless the importer pays the VAT.
This happened recently in Dumaguete City.
Imported goods to be donated for the less fortuntate were left almost rotting and destroyed in the customs because of the VAT requirement.
Sayang, there are many from abroad who want to donate, but are dissuaded.
Nag-donate ug motabang na, bu-buwisan pa.
We note that the law imposes the tax on the "importer," meaning the Pinoy recipient, but in reality, it is still the donor abroad who pays the tax, because if it is for relief, you do not expect the recipient of the relief items (the typhoon victims or NGO relief distributors, for instance) to pay the tax.
We drafted a bill to change this provision.
Our thinking is not a blanket eradication of VAT on donated items from abroad.
Since government also needs the revenues.
But only those donated items for humantarian and relief purposes are to be exempt from VAT.
We hope the law will be changed soonest.
There are countless, generous hearts out there.
Government should make it easier for them to give.

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