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Philippines Set To Enact Tax Reform Bill By Year-End

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

05 October 2017


FIlipino lawmakers are expected to soon sign off on a long-awaited tax reform bill to bring about personal income tax regime reform and broaden the value-added tax base.

The Tax Reform for Acceleration and Inclusion Act (TRAIN) Bill is the first tax reform package of President Rodrigo Duterte's multi-year Comprehensive Tax Reform Program.

In its current form, the TRAIN Bill would slash personal income tax rates, provide that income tax thresholds will be regularly increased to prevent "bracket creep," and expand the value-added tax base, specifically by removing exemptions for cooperatives, low-cost housing, renewable energy, and for senior citizens except for medicine.

The Bill also provides for an increase in fuel excise taxes and taxes on vehicles, among other things.

The House of Representatives passed the TRAIN Bill as House Bill No. 5636 on May 31. It was then approved by the Senate Ways and Means Committee as Senate Bill No. 1592 on September 22 and has been passed to the Senate.

In a September 22 statement, the DoF Secretary of Finance Carlos Dominguez III welcomed the committee's endorsement, stating: "We hope the Senate will pass the TRAIN on 3rd reading before going into recess in mid-October, the bicameral conference to conclude in November, and the President to sign the bill into law by December 15, 2017. This schedule will allow us to implement the tax reform on January 1, 2018, so that the benefits of the reform can be felt at the soonest possible time."

The tax reform package has gained support from the Philippines' business community, including the American Chamber of Commerce of the Philippines, which on September 29 said: "The American Chamber of Commerce of the Philippines (AmCham) strongly supports the comprehensive tax reform legislation of the Duterte Administration in its overall goals," calling it "highly progressive, consumption-based, and providing incentives for people to work, save, and invest."

The next stages of the comprehensive reform plan will cover corporate income taxes and the modernization of fiscal incentives, in the first quarter of 2018. Thereafter, the Government will then table changes covering property taxation, capital income taxation, and environmental and luxury taxation from the second quarter of 2018.

TAGS: Finance | tax | investment | business | property tax | law | luxury tax | Philippines | tax thresholds | legislation | tax rates | tax reform | Tax

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