P2-B worth of projects affected by 5% VAT issue Print
Tuesday, 13 March 2018 12:02

By RG Antonet Go

More than P2-billion worth of projects in the first district are affected by a Temporary Restraining Order (TRO) refraining the Department of Public Works and Highways from implementing a 5% Value Added Tax in the preparation of budget costs for government projects.

First District Representative Celso Lobregat identified some of the affected projects as the road widening construction along Governor Camins and Veterans Avenue, a portion of the bypass road and a flood control project.

The decision also affects the two multi-million peso flyover projects along the junction of Veterans Avenue and Sta Cruz and the Labuan Limpapa Highway from the junction of Taupan road in barangay San Jose Gusu towards barangay Calarian.

“No projects are being bidded out because of the TRO that has been issued by the RTC,” Lobregat said.

Recall that  Los Contratistas dela Ciudad de Zamboanga sought for a declaration judgment regarding the validity of DPWH Department Order no. 197 series of 2016 otherwise known as the Revised Guidelines in the preparation of Revenue Circular 85-2017 issued on October 11, 2017. D.O. 197 requiring a 5% value added tax (VAT) rate in the preparation of the approved budget cost (ABC) for government projects.

The petitioners represented by its officers and board members, maintained that the revenue circular clearly mandates the use of the appropriate VAT rate pegged at 12% on ABC for government projects, with corresponding withholding of 5% final VAT on the government gross payment which the court seem to agree.

They said a continuing three year effort by them led BIR Commissioner Cesar Dulay to declare in his October issuance: “In view of the foregoing, the appropriate VAT rate to be used by DPWH in the preparation of the ABC and POW (program of work) is 12%. (R.G. A A. Go)