Tax breaks for makers of anti-COVID gear sought

A HOUSE leader on Wednesday underscored the importance for the country  to have an adequate and readily available supply of critical products  such as medicines, vaccines, personal protective equipment (PPEs)  and  ventilators needed in the continuing fight against the  coronavirus  disease-19 (COVID-19) pandemic.

To do so, Deputy Speaker and Camarines Sur Rep. LRay Villafuerte has  filed a  bill exempting from  the payment of taxes and customs duties  all goods  in the entire chain of the manufacture, production and  distribution of these products that have been in huge global demand  since the unprecedented health and economic crisis seized the world at  the onset of 2020.

Under House Bill (HB) No. 7135  or the proposed “Pandemic Protection  Act,”  Villafuerte also proposed that local-based manufacturers who  export these critical products be required to supply as high as 80  percent  of their goods to the domestic market.

“This measure promotes and protects the manufacture or production of  critical products, including repurposing of existing manufacturers,  and supply of critical services. This includes their entire supply  chain including their raw materials, packaging and its raw materials,”  Villafuerte  said in HB No. 7135.

Villafuerte said the intention  of the bill “is to be able to adopt  efficient and effective measures that will prevent the overburdening  of the healthcare system and, at the same time, develop the healthcare  and manufacturing industries by also preserving and generating  employment during the crisis.”

The tax breaks proposed under HB 7135 will last for three years or until the World Health Organization  (WHO) declares the end of the  pandemic, said Villafuerte,  who was the lead author in the House of  Republic Act (RA) No. 11469 or the Bayanihan to Heal as One Act.

Villafuerte was a member of the Joint Congressional Oversight Committee that monitored the implementation of RA 11469, and is  co-chairman of the social amelioration cluster of  the House Defeat  COVID-19 Ad Hoc Committee (DCC) chaired by Speaker Alan Peter Cayetano.

To ensure an adequate and responsive supply of critical products and  supplies during the pandemic, HB 7135 requires the government as procuring entity to  give preference and procure critical products  manufactured, produced or made in the Philippines.

The award  of the contract for such critical supplies “shall be made  to the lowest domestic manufacturer-bidder provided the bid is not  more than twenty percent (20%) in excess of the lowest foreign bid”  and  that the bidder  “has secured from the DTI a certification that  the products, articles, materials, or supplies are produced, made or  manufactured in the Philippines.”

Villafuerte said that as part of the HB 7135-proposed incentives for  manufacturers,  such local sales shall be classified as export sales  so the firms could meet their export requirements.

“As such, the corresponding treatment, exemption on duties, taxes and  fees, and other incentives warranted under the existing laws governing these export enterprises shall continue to apply,” his bill states.

These tax exemptions  on local sales also cover export enterprises  located in special economic zones (SEZs) with the status of separate  customs territory under relevant laws.