Personal Tax Reduction Measure Debated In Philippines

by Mary Swire, Tax-News.com, Hong Kong

27 February 2009

Minimum wage earners in the Philippines could be set to lose out on a significant tax concession if government lawyers are successful in blocking a petition from the Senate.

According to the Office of the Solicitor General (OSG), the Tax Exemption Law which gives increased tax allowances to individuals earning less than PHP150,000 (USD3,074) annually cannot be implemented on a retroactive basis, something which two of the country's leading Senators are currently campaigning against.

Solicitor General Agnes Devanadera argued that:

"While the law allows full-year tax exemption, the law took effect middle of 2008, thus, exemption should be for half of 2008 only."

However, the Senators in question - Francis Escudero and Mar Roxas II - are trying to convince the government that, despite the law coming into effect half way through 2008, the fact it is a full-year tax exemption means that it should apply to revenues earned for the 6 months prior to its introduction in order for individuals to gain the full benefit.

The law, which came into effect on June 17, 2008, awards the country's minimum wage earners with a PHP50,000 (USD1,024) personal tax exemption, alongside an exemption of PHP25,000 (USD512) for each child.

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