Philippines Rules Out VAT Hike In Budget

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

18 August 2016

The Philippines will improve the efficiency of its value-added tax regime, by reining in exemptions, rather than hike the headline rate.

The Government had earlier proposed that the headline rate could be raised by as much as three percent in the Budget, released on August 17, 2016, to 15 percent from 12 percent. As negotiators discussed the Budget outline, a proposal for a lesser, two-percent hike had been put forward but in the end it was agreed that the tax's base should be broadened and the 12 percent rate retained.

The Philippines VAT regime is far less efficient than other countries in the region due to the existence of about 30 exemptions for different goods and services. It is proposed that exemptions will be retained only for basic goods and necessities, including many foodstuffs.

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