Trade secretary Cristina Roque said domestic garment manufacturers and exporters have been complaining to the DTI about rising costs and tougher competition in the global market.
Roque recently discussed with domestic industry representatives their concerns. One of the proposals she received was to reduce the VAT to levels comparable to that of neighbouring countries, where significantly lower taxes are imposed on companies.
The Philippines is considering reducing value-added tax (VAT) and introducing more fiscal support to enhance the cost competitiveness of domestic garments.
The 12-per cent VAT rate in the country is the highest in the region.
Domestic garment manufacturers and exporters have been complaining about rising costs and tougher competition in the global market, Trade secretary Cristina Roque said.
The 12-per cent VAT rate in the Philippines is the highest in the region, while Thailand imposes only 7 per cent, Singapore 9 per cent for its goods and services tax, Malaysia 10 per cent for sales tax and 8 per cent for service tax, Indonesia levies 11 per cent, charging 12 per cent only on certain luxury goods.
The garment industry also requested expanded fiscal support for existing firms and subsidiaries to further enhance their competitiveness by keeping their products relatively affordable.
The department said garment companies could harness the incentives embodied under the CREATE MORE Act, under which new projects or registered subsidiaries of existing garment firms may avail of a cent-per cent deduction on power-related expenses and a 50-per cent deduction on direct labour costs.
Export-oriented companies may also qualify for VAT exemption if at least 70 per cent of their sales are exported, a domestic news outlet reported.
The government is taking a more concerted effort to help the garment industry meet shifting buyer requirements by advancing technology adoption, Roque added.
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