Philippine Business Urges Tax Rethink

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

07 November 2001

Business groups in the Philippines headed by the Makati Business Club (MBC) are lobbying the Department of Finance to undertake a review of the government's tax reform agenda to increase its efficiency and fairness in order to attract more taxpayers and to address proposals for gross income taxation.

In particular the MBC Taxation Reform Task Force is concerned with the government's current voluntary assessment programme (VAP) fearing that the programme would be ignored by taxpayers who had already adhered to the tax rules and made payments. The initiative was introduced by the Bureau of Internal Revenue (BIR) in August until December this year to offer an anmesty to people who have attempted to avoid paying their taxes by granting them the privilege of last priority in the audit and investigation of all internal revenue taxes for the taxable year ending December 31, 2000.

The Task Force called upon the Finance Department to withhold penalties on taxpayers who pay up. It also suggested that the government extend the VAP deadline to give taxpayers more time to understand what is required of them, to prepare the forms and raise the necessary funds.

With regard to gross income taxation, the Task Force condemned the proposed change in the current 32 per cent corporate net income tax as untimely considering the poor state of the economy. But it offered other alternatives such as extending the withholding tax system, swift and more efficient prosecution and conviction of big tax evaders, accrediting tax agents and drafting initiatives to strengthen tax regulations and laws.

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