Finance dept rejects varied VAT cap rates
Finance dept rejects varied VAT cap rates
THE Department of Finance has rejected a proposal from the business community to set different limits for input value-added tax (VAT) credits for various industries, citing that varying the rate could lead to abuse and tax leaks, a department official said.
The VAT law that expanded the tax coverage effective last November allows taxpayers to claim input VAT credits of up to the equivalent of 70 percent of their output VAT.
Some business leaders had lobbied for a VAT cap of over 70 percent, saying the existing rate was anti-growth. They said VAT caps rate should not be uniform but based on industries’ ability to generate profits.
“It is difficult to have different rates because some businesses may … make it appear that they are covered by a rate more favorable for them,” Finance Undersecretary Gil Beltran said.
Input VAT is the amount of VAT that a company shoulders every time it purchases goods or services at prices that include the 10 percent VAT. Input VAT is deductible from the tax liability, or output VAT.
More: money.inq7.net