Davao City gov’t launches tech group for digital revenue system integration House panel to resolve VAT issue of indirect exporters

The House Ways and Means Committee is eyeing to introduce amendments to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law and other relevant sections of the Tax Code to resolve issues regarding the value-added tax (VAT) exemption on importation and VAT zero-rating on local purchases in freeport zones.

During the committee hearing on Monday, Albay Representative Joey Salceda, panel chair, said it would remedy the inconsistencies between the CREATE law and its corresponding administrative issuances in connection with the classification of freeport zones as a separate customs territory and the availment of corresponding tax incentives.

He said the implementing rules and regulations of the CREATE Law limited the applicability of the VAT exemption on importation and VAT zero-rating on local purchases by a regis- ment, hardware, or consultancy services. tered export enterprise.

Thecity government of Davao has issued an executive order (EO) creating a Technical Working Group (TWG) to oversee the digitalization of the city’s revenue-generating application systems.

The CREATE Law, he added, does not distinguish between an export enterprise and a domestic market enterprise and used the term “Registered Business Enterprises”.

Citing reports from the Bureau of Internal Revenue (BIR), Salceda said that there are 4,136 registered export enterprises, which he noted is a “small portion of the universe” of those affected by the change in VAT treatment.

“The entire downward linkages of the export sector, especially small businesses with few resources for VAT refund applications, are bearing the costs,” Salceda said. “And of course, if they are unable to refund their costs, our export prices go up, costing us our competitiveness.”

According to House Resolution 490, the cross-border doctrine for ecozones and freeport zones has been rendered

EO 3, Series of 2023, signed by Mayor Sebastian “Baste” Duterte on February 2, 2023, aims to integrate the Business Permit and Licensing System (BPLS), Real Property Tax Administration System (RPTAS)/Tax Mapping System, Integrated Infrastructure Permit System (IIPS), and Online Payment Sys- tem into a centralized portal, the Davao City Citizens’ Service Portal, where residents can access various services offered by the city government.

The Aboitiz Group has expressed its commitment to assist the City Government of Davao in achieving this goal through collaboration in software develop-

The TWG is mandated to ensure efficient coordination between the City Government of Davao and the Aboitiz Group for this project. It shall oversee the digitalization of the city’s revenue-generating systems through integration with the Davao City citizens’ Service Portal.

The group consists of the city mayor as (chairperson), the city Administrator as co-chairperson, and the city treasurer as vice chairperson). The members are representatives of the City Information Technology Center, City Legal Office, Permits and Licensing Division (Business Bureau), City Assessor’s Office, Office of the City Planning and Development (coordinator), Office of the City Engineer, Office of the City Building Official, City Accountant’s Office, and the Sangguniang Panlungsod Committee on Information and Communication Technology.

The TWG is also tasked to oversee and manage all