Volume XXVII No. 5
Europe Matters – a lot
ECCP 11th Annual Golf Challenge
34 Foreign Investment
Moving Forward with Europe
NCR and Convergys Emerge as ECCPCebu Football Cup Champions
Meeting with Central Bank Governor Tetangco
ECCP Energy Committee Meeting with DOE USec. Layug
Meeting with the Department of National Defense
Meeting with Energy Sec. Almendras
16 Retirement & Healthcare
Europe matters – a lot
Why Smart employees Underperform 7 Hazards to Avoid
Meeting with IMF’s Dennis Botman
Meeting with DFA Sec. del Rosario
30 GREEN BUSINESS
Meeting with Chief Justice Corona
What’s On with the SMART Cebu Project
Eco-design Consultancy Commence
Post-tax filing preparation reminders
The handling of Philippine Companies in Germany in regard to VAT
Bosch in the Philippines A proud heritage spanning 80 years
Liquigaz: Improving Air Quality, Improving Lives
Marriott Hotel Manila awarded Hotel of the Year
Integrity Run Highlights Need for Ethical Behavior
36 tax corner
39 MEMBERS’ CORNER
28 Special Feature
Retirement & Healthcare Coalition Action Plan
Will “corporate layering” for nationalized areas of investments be a thing of the past?
10 BUSINESS REVIEW
Meeting with the Department of National Defense
he ArangkadaTeam met with the management of the Department of National Defense (DND) last May 13. The DND briefed us on security challenges, the state of insurgency, key accomplishments, the Philippine Defense Transformation and the AFP’s internal peace and security plan. We discussed security issues of certain investor groups (i.e. wind farms, mining, agriculture, etc.) and agreed to meet from time to time in order to assure investors. We also addressed the issue of corruption and offered closer cooperation between the DND, AFP and the Integrity Initiative.
Meeting with Energy Sec. Almendras
Meeting with IMF’s Dennis Botman
n May 16, the Integrity Initiative Team met with Secretary Almendras. Coming from the private sector and being in government now, he fully understands the challenges and opportunities in creating change. He fully supports our endeavor to get government to agree that government departments, agencies and GOCCs only deal with companies that have signed the Integrity Pledge. He also supports that government biddings have to be transparent and that bidders must sign an integrity pact.
ay 25 - We discussed the recommendations laid down in Arangkada – The Philippine Business Perspective. Dennis Botman explained that the major activities of the IMF in the Philippines are directed towards the macro economic targets and the reform of the tax administration. Since the beginning of the year, an IMF expert is working with the BIR, funded under the Millennium Challenge Cooperation. We discussed major tax concerns, including common carriers tax, excise tax, the tax credit certificate system, and the advantages of a potential ‘blue lane’, the expansion of the large taxpayers group, the rate of withholding tax, the review of the VAT rate. Other issues discussed were the anti-trust legislation, the rationalization of fiscal incentives and the taxation of natural resources.
Europe matters – a lot By Art Villasanta
eeing no further than the end of their noses can’t be said of Filipino businessmen now pressing the government to expand business relations with Europe, the world’s wealthiest market that has quietly evolved into the Philippines’ most important business partner in the 21st century.
In 2009, Philippine exports to the EU came to $8.4 billion as against imports of $3.7 billion for a positive trade balance of $4.7 billion. Last year, Philippine exports to the EU last year amounted to $7.9 billion, a 40 percent jump over 2009. Imports from the EU came to $5.4 billion.
A growing call among Filipino businessmen for trade talks with Europe seems to be driving home the point that Europe matters to the Philippines in a big way. This welcome focus comes five years after the European Union (EU), the 27 nation common market that is essentially today’s Europe, became the Philippines’ largest export destination, displacing the USA.
Manufactured products comprise most of the Philippines’ exports to the EU, but its share has fallen from over 90 percent earlier this decade to around 85 percent in recent years. This drop is largely explained by a cut in exports of electrical and electronic products (including semiconductors), from almost 80 percent to nearly 60 percent in recent years.
Europe is unquestionably vital to the Philippines. It’s this country’s largest export market (over 20 percent of total exports); its largest foreign investor; its third largest trading partner and its fifth largest import source. As world leader in the sustainable or “green” movement, Europe has both the experience and technologies such as “smart grids” that can assist the Philippines do more with what it has while protecting the environment. The EU is the Philippines’ only major trading partner that has had a consistently negative balance of trade with the Philippines over the past few years, which is both heartening and surprising.
Trade in services has been modest but is growing. Exports and imports are almost equal, both breaking the $1.4 billion level in recent years. Exports in 2008 consisted mainly of transport (40 percent), travel services (23 percent) and other business services including BPO (23 percent) and communications (five percent). Ambassador and Head of Delegation of the European Union in the Philippines Guy Ledoux said he is enthusiastic about the growing importance of EU-Philippines economic relations, noting that the EU, as the world’s largest market and the world’s largest source of FDI, played its role in supporting the Philippines economic recovery.
The handling of Philippine Companies in Germany in regard to VAT By Peter Neuberger, MerzArnoldWuepper, Rechtsanwalt, Tax & Consulting Senior
erman tax law again and again poses an obstacle to the economic relations between Germany and the Philippines, which the companies have to overcome. This applies in particular to VAT. The handling of crossborder transactions is frequently characterised by uncertainty, as it is easy to get lost in the jungle of German and European regulations. Below we will attempt to shed some light on that. The tax rates - The VAT rate in Germany amounts to 19%. For some goods and services, such as books, magazines and food, a reduced tax rate of 7% applies. That puts Germany still below the European average. In a few EU countries, tax rates of up to 25% are levied. The registration procedure Philippine companies seeking to supply or purchase goods or services within Germany have to be registered with the German authorities. They are then given a so-called “Umsatzsteueridentifikationsnummer” or UStID (VAT ID). The ID forms part of the European system for settling the VAT. The competent authority for issuing the VAT ID is the “Bundeszentralamt für Steuern“ (Federal Central Tax Office) based in Saarlouis. Since, however, prior to filing an application, it is necessary to register with the Berlin Neukölln Inland Revenue, which is responsible for all value-added tax purposes re-
ment of the VAT paid may then be requested by means of the socalled input tax deduction, if the recipient of the goods supplied is an entrepreneur, since, according to German law, ultimately only the end user has to bear the tax.
garding Philippine companies, it is also recommended that the application for a VAT ID to be issued be filed with that authority. The Inland Revenue office passes on the application to the Federal Central Tax Office. In this way, unnecessary written communications with multiple authorities are avoided.
Corresponding applications are to be filed with the Federal Central Tax Office no later than within six months of expiry of the calendar year. An application may only be filed if the amount of the refund is at least € 500 (during the fiscal year, min. € 1,000). In addition, the applicant must prove that he or she is an entrepreneur. For this purpose, the Federal Central Tax Office requires an official confirmation by the Philippine authorities.
Import turnover tax as a transitory item - If a Philippine company purchases goods from Germany, these export transactions are taxfree in Germany.
B2B or B2C? - It becomes more complicated if it is not goods that are supplied, but something else, e.g. a service. The tax liability then depends upon where the service was performed. Accordingly, a service which was performed in Germany is taxed in Germany and a service which was performed in the Philippines is taxed in the Philippines.
Items supplied by the Philippines to Germany, on the other hand, are subject to the German import turnover tax. The party liable to pay the tax in these cases is the importer, which usually already has to pay the tax upon importing the goods. However, reimburse-
In principle, the following applies: Should the recipient of the service be a company (a so-called "B2B" or "business-to-business" transaction), the recipient's Head Office is deemed the place where the service is performed. Should, however, a service be provided to
a consumer (a so-called "B2C" or "business-to-consumer" transaction), the service provider's Head Office is deemed the place where the service is performed. There are, however, yet other special German and European regulations which may be applied, which are to be observed in individual cases. Simplification through the "reverse charge" procedure - Should services be performed in Germany by Philippine companies, in so far as it is a company the German recipient must notify the VAT to the German authorities, may, however, simultaneously claim it as input tax (the so-called "reverse charge procedure"). In that way, both the Philippine service providers and the German tax authorities save a great deal of effort and expense. If in doubt, obtain information in advance -The foregoing tips naturally only provide a rough overview of the fiscal circumstances in Germany. In case of doubt, it is advisable to clarify whether VAT requires to be paid in Germany prior to providing the supplies or services. At a tax rate of 19%, the planned profit margin can otherwise quickly be used up. Information on taxation in Germany can be obtained from the German tax authorities or specialised firms of lawyers and tax accountants. Information requests can also be coursed through ECCP.
Memberâ€™s Corner New mEMBERS JOBSDB PHILIPPINES INC. Suite 905-907 Taipan Place, Emerald Avenue, Ortigas Center Pasig City Tel. No. : 914-8000/ 637-3333 Fax. No. : 914-8001 Primary Contact : Ms. Jayjay Viray Managing Director Services : Online Job Portal
ACACIA HOTELS MANILA 5400 East Asia Drive cor. Commerce Avenue Filinvest Corporate City, Alabang Muntinlupa City Tel. No. : 842-3711 Fax. No. : 403-8847 Email : firstname.lastname@example.org Primary Contact : Ramon E. Martinez General Manager Services : Hotel Service, Food and Beverage ACE HARDWARE PHILIPPINES SM Corp. Office Building B JW Diokno Blvd. MOA Complex Pasay City Tel. No. : 552-7217 Fax. No. : 552-7212 Email : www.acehardware.com Primary Contact : Johnny O. Cobankiat Services : Retail Sale APHROCHEM INTERNATIONAL TRADING No. 44 Tupoz St. Pasig City Tel. No. : 861-5736 Fax. No. : 642-2001 Primary Contact : Nathalie Choy Business Development Director Services : MD Sterilizing and Disinfecting Solutions, ZAPP, Alcogel ; Retail and General Merchandise DE VERE & PARTNERS PHILIPPINES LTD. Suite 1006, 88 Corporate Center Sedenu Street, CBD Salcedo Village Makati City Tel. No. : 846-2545 Fax. No. : 552-2837 Email : email@example.com Website : www.devere-group.com Primary Contact : Paul Thompson Manager Services : Independent Financial and tax saving advice FILINVEST PREMIERE SALES GROUP Rizal Drive cor 29th St. Bonifcio Global City Taguig , Metro Manila Tel. No. : 856-7321 Primary Contact : Alvin A. Bobadilla VP - Sales and Marketing Services : Real Estate JAMILA AND COMPANY SECURITY SERVICES 81 JCI Corp. Center, Lantana St. Cubao Quezon City Tel. No. : 411-9000; 722-9516 Fax. No. : 414-9798 Email : firstname.lastname@example.org Website : www.jci.com.ph Primary Contact : Sergio S. Jamila President Services : Security Services Provider
JS PHILIPPINES GLOBAL CORPORATION Unit 3 #88, Amang Rodriguez Jr. Avenue, Santolan Pasig City Tel. No. : 681-8228; 682-2881 Email : email@example.com Website : www.jspgc.com Primary Contact : Jordan S. Pascual President/ CEO Services : Import/Export/Distribution KSEARCH ASIA CONSULTING INC. 22/F Corporate Center Building 139 Valero St., Salcedo Village Makati City Tel. No. : 817-0322; 894-1350; 810-0821 Fax. No. : 893-6259 Email : firstname.lastname@example.org Website : www.ksearchasia.com Primary Contact : Manuel R. Guillermo President and Managing Director Services : Executive Search Services M2.0 COMMUNICATIONS 94 Scout Castor Brgy. Laging Handa Quezon City Tel. No. : 332-1031; 376-6643 Fax. No. : 332-1031 loc 108 Email : email@example.com Website : www.m2comms.com Primary Contact : Magtangol A. Roque Managing Director Services : Advertising NOKIA (PHILIPPINES), INC. 20/F & 40/F Philamlife Tower 8767 Paseo de Roxas 1227 Makati City, Metro Manila Tel. No. : 754-1500: 754-1600: 754-1777 Fax. No. : 754-1576 Website : www.nokia.com Primary Contact : Benoit Michael Marie Nalin General Manager Services : Importer, Sales & Marketing, System & Service Integration & Training Services UNISON COMPUTER SYSTEMS 120 E. Rodriguez Jr. Ave. cor Ortigas Ave. Brgy. Bagong Ugong Pasig City Tel. No. : 620-2988 Fax. No. : 638-2885 Email : firstname.lastname@example.org Website : www.unison.com.ph Primary Contact : Willy O. Sy President Services : authorized and certified HP and Dell PC service center
Liquigaz: Improving Air Quality, Improving Lives
iquigaz Philippines Corporation, a wholly-owned subsidiary of SHV Gas of the Netherlands, was established in 1995. SHV Gas is the world leader in the distribution of Liquefied Petroleum Gas (LPG) and operates in 27 countries. SHV Gas is a subsidiary of SHV Holdings N.V., a privately owned Dutch company with more than 100 years of trading experience. In 2005, the Philippine government promised measures to promote the use of cleaner fuels. Liquigaz saw this as an opportunity to launch LPG as a fuel for cars. There was no alternative fuel in the Philippines at the time. The main taxi companies were quick to show interest in switching from gasoline to LPG. Currently, Liquigaz has a market share of about 50%, supplying through its own filling and allied stations. With the introduction of Autogas in the market, Liquigaz is launching other LPG Innovations that will address the government’s goal to provide cleaner alternative fuels in the market. First, Liquigaz is conducting a study about the usage of LPG in diesel-running vehicle higher than 200HP. Initially, this technology shall attract provincial bus and truck hauling companies with high fuel consumption because of its fuel savings and environmental benefits. Also, Liquigaz is promoting the conversion of diesel boilers to LPG. With the same economical and environmental benefits it provides, LPG is the best alternative energy source available in the market. Due to less emission of Nitro Oxide (NOx) and Particulate Matter (PM10) – harmful gases that have damaging effects on human health – the likelihood of impaired perception and thinking, drowsiness, slow reflexes, unconsciousness and even death are reduced. With cleaner air, people become
less susceptible to viral infections, respiratory diseases and dysfunctions such as lung cancer and asthma. Environmentally, LPG has had positive effects in improving air quality and, ultimately minimizing human health damage. Being the fastest growing LPG player in the country, Liquigaz is continually innovating LPG applications to ensure that the company is being sustainable in doing its business and serving its society. There are more LPG innovations in the pipeline that will surely help companies to achieve production efficiency and aid the government in improving air quality. Sources: www.liquigaz.com, www.autogas.com.ph, www.whylpg.com
Business Review Published by European Chamber of Commerce of the Philippines (ECCP) Main office: 19/F Philippine AXA Life Centre Corner Sen. Gil Puyat Ave. and Tindalo St., Makati City, Philippines Tel: (02) 845 1324, 759 6680 Fax: (02) 845 1395, 759 6690 Cebu branch: 3/F C. L. Center 14 Juana Osmeña St., Cebu City, Philippines Tel: (032) 253 3389 254 3765 254 3767 Fax: (032) 253 3387 E-mail: email@example.com ECCP is on the World Wide Web at: http://www.eccp.com
ECCP Board of Directors Hubert d’Aboville - President Erik Moeller Nielsen - Vice President Michael Raeuber - Vice President Cyril Rocke - Treasurer Edgar Chua - Director Richard Eldridge - Director Neil Elias - Director Rico Gonzales - Director Peter Labrie - Director Guenter Matschuck - Director John Miller - Director Bernard Poplimont - Director Jose Luis Romero-Salas - Director Bernhard Krueger-Sprengel - Director Richard Strollo - Director
Honorary Auditors KPMG Manabat Sanagustin & Co.
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communication, business continuity, soft skills, HR management, and quality management. We also provide local and international coaches. 8.
Business promotion – Promote your business to a targeted audience of senior business executives through the introduction of potential business partners, sponsorship of high-profile events, and promotion through the chamber’s publications and websites.
Trade fair participation – through its affiliate fairs&more, the chamber offers a wide range of trade fair services, from booth / pavilion design to stand construction, from marketing collaterals to pavilion management, from product selection to design support – in Asia, Europe, the Middle East and the United States.
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