(Good news construction contractors...) BIR favors lifting 5% VAT, 12% levy reimposition on POW PDF Print E-mail
Monday, 14 August 2017 11:48

Good News to Contractors engaged in the construction industry.

The Bureau of Internal Revenue (BIR) has ruled favorably to the petition of three local groups of contractors for lifting the 5% value added tax (VAT) and reimposing the 12% levy in preparation of program of works (POW) and approved budget for the contract (ABC) on government infrastructure projects.

BIR Commissioner Cesar Dulay in a ruling dated August 8, 2017 copy of which was provided Manuel L. Verrar., incumbent president of Los Contratistas dela Ciudad de Zamboanga which states that: “In view of the forgoing, the appropriate VAT rate to be used by the DPWH in the preparation of the ABC and POW is 12%.”

Raymond C. Go, National Constructors’ Association of the Philippines or NACAP vice-president for Mindanao and regional director, welcomed the decision as he disclosed that the initiative was taken by his office together with the local chapter of the Philippine Institute of Civil Engineers or PICE headed by past president Engr. Edmond T. Dimaano.; Los Contratistas dela Ciudad de Zamboanga president Manuel L. Verrar Jr. and Contratista’s former president Engr. Noel L. Loon.

Go said the three groups in a letter dated April 8, 2015 addressed to then DPWH Secretary Rogelio Singson jointly expressed objection to D.O. No. 22 series of 2015 and lately D.O. No. 197 series of 2016 issued by Sec. Mark Villar imposing 5% VAT on all POW and ABC instead of 12% as required by law on government projects.

Engr. Loon in a letter dated October 28, 2016 addressed to new DPWH Secretary, thru its regional director Jorge U. Sebastian, reminded that R.A.9337 otherwise known as the VAT law of 2015 provides a fixed 12% levy on POW and ABC. Furtheremore, Loon and the group stated that VAT computation under D.O. No.22 series of 2015 “is not only illegal but unjust and detrimental to contractors bidding for projects with government agencies.” They also pointed out that “a mere department order can not supersede or repeal any existing law.”

Almost three years of relentless communication and follow up yielded this positive result/’said Go in an exclusive interview.

The NACAP head who served as incumbent board chairman of the group wondered what will the government do with the 7% under computation of the ABC and POW that former Secretary Singson and Secretary. Villar disclosed to have reached approximately Php 30 billion.

He concluded by paraphrasing an old line saying “no person including the government can enrich itself at the expense of others including constructors.” (Ller Enriquez)