By means of Aubrey Rose A. Inosante, Reporter
The Philippines can increase its income Collections by expanding the tax with added value (VAT) and improving the tax administration, the World Bank said.
In an e-mail interview with Business worldCountry Director of the World Bank for the Philippines, Malaysia and Brunei Zafer Mustafaoğlu saidExpanded of exemptions and special rates. “
“The government could generate considerable reforms by improving tax administration and taking steps to broaden the VAT basis by changes in tax policy,” said Mr. Mustafaoğlu on 18 February.
VAT, an indirect tax that can be passed on to buyers, a form of sales tax has been imposed, barter, exchange or lease of goods or property and services.
Mr Mustafaoğlu said that the country must also tackle gaps for tax policy and possibilities to improve tax administration.
Wanted for Commentary, Ministry of Finance (DOF) Secretary Ralph G. Recto told Business world: “We are looking for ways to expand VAT basis and that includes VAT on digital services.”
President Ferdinand R. Marcos, Jr. In October, Republic ACT No. 12023, which imposes a VAT of 12% on digital service providers (DSPs), both resident and non -occupational resident.
It is expected that around P7.25 billion will be collected from this law this year, and another P21.37 billion in 2026 and P26.27 billion in 2029, De Dof said.
“Yes, we improve the tax administration. Tax administration also includes our digitization program. I disagree with the international monetary fund for VAT seniors. It is not in our value system, “Mr. Recto said.
In a report from 2022, the IMF had suggested that the Filipino government increased the VAT income by removing exemptions and zero rating, including those for seniors, who are entitled to a VAT exemption of 12% granted by the extensive Senior Citizens Act.
In the meantime, minimal Government Thinkers (Manila) said President Bienvenido S. Lease, Jr. That although he agrees with the World Bank that the Philippines must broaden the tax basis, he believes that the VAT rate should be reduced instead.
“But for me, the VAT base is broadening by reducing the rate of 12% with many exempt sectors up to 7-8% with zero exempt sector except rough agricultural and fishing products,” said Mr. Loss.
The VAT percentage of 12% of Philippines is relatively higher compared to Southeast and East Asian countries, he said.
China imposes 13%VAT for the sale and import of general goods, this was followed by Indonesia, which is 12%, and Cambodia, Malaysia, Vietnam (standard percentage) and LAOS at 10%. Singapore’s VAT is 9%, while Thailand has a percentage of 7%.
Myanmar does not have VAT, but places a commercial tax on ranging from 0-15% as a sales tax on goods and services.
Other countries such as South Korea levy a VAT of 10% on goods and services, while Japan’s VAT is 10%. Hong Kong has no VAT, tax and service tax or sales tax.
Eleanor L. Roque, fiscal principal sum of P&A Grant Thornton, said that almost all transactions are already subject to VAT and that increasing taxes find the most vulnerable.
“Other exempt transactions such as the sale of certain food products are exempt because increasing their costs due to VAT is harmful to our vulnerable population,” she said Business world via an e-mail statement.
Mrs. Roque suggested that regulators should concentrate on improving compliance with the taxpayer and simplifying tax rules.
She also argued that the Philippines are not “less loaded” compared to the Association of Southeast Asian countries.
In the meantime, Jose Enrique said “Sonny” A. Africa, executive director of Think Tank Ibon Foundation, that expanding the VAT base would distort the consumption patterns of households with a low income.
“Especially in the context of the Philippines with such broad gaps in income and wealth, the design of the tax system must be rigorously accompanied by considerations of equity and not only by income collection,” he said.
He noted that the dependence on the Government of VAT has increased considerably, because in 2023 it was 18.9% of BIR income from 7.9% in 1989 in 2023.
Mr Africa said that instead the government should impose higher tax rates on luxury goods such as luxury cars, jewelry, designer energy and other high-end products in the “inherent regressive VAT system”.
However, he noted that the government must provide VAT exemptions for food and agricultural products, educational services, health care, specific goods for seniors and people with disabilities and reading materials.