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Philippines Committed To Tax Simplification

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

26 October 2015


The Government of the Philippines has assured taxpayers that it is taking steps to simplify and improve the country's tax system as it comes under increasing pressure to ease the tax burden on businesses and make the tax system more competitive.

The Government's assurance came after members of Congress pointed out the country's poor showing in the most recent Paying Taxes Index by PwC, which allows multinational companies to compare how easy or difficult it is to comply with business taxes around the world.

"The Government is continuing to find ways to simplify and make more convenient the filing of taxes," Communications Secretary Herminio Coloma Jr told reporters on October 19.

The 2015 Paying Taxes Index places the Philippines in 127th place in the league table of 189 jurisdictions, with companies expected to make 36 separate tax payments, a process which takes 193 hours per year on average. The index also shows that companies pay a total tax rate, the sum of income, labor and other taxes, of 42.5 percent.

Certain lawmakers and the business community have become increasingly vocal in their pleas for the Government to reduce personal and corporate income taxes, and reform the tax code.

In a statement issued on October 18, Senator Francis Escudero said that the Philippines tax system was one of the world's most "tedious." Referring to the PwC ranking, he added: "The Philippines is just three notches above Sierra Leone and 12 notches above Sudan in the rankings. In fact, it's even easier to pay taxes in Iraq, Iran, and Afghanistan. What does that say about us?"

"How can we encourage investors to come and put their money here when a third of that will go to taxes that will be difficult to pay?" Escudero asked.

In a warning to the Government last month, the Joint Foreign Chambers of the Philippines pointed out that high income tax rates are damaging the country's competitiveness, with the Philippines charging the highest rate of corporate tax and the second-highest rate of personal income tax among the ASEAN-6, which also includes Indonesia, Malaysia, Singapore, Thailand, and Vietnam.

However, in August 2015, the Government indicated that it is not seeking to introduce any major new tax measures during the final year of President Benigno Aquino's term in the interests of maintaining tax stability.

TAGS: tax | business | interest | law | Iraq | Philippines | Singapore | Sudan | Thailand | tax rates | Afghanistan | Indonesia | Malaysia | Sierra Leone | Iran | Vietnam | Communications | Tax

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