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Philippines Should Rein In Tax Breaks, Says IMF

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

08 September 2015


The International Monetary Fund (IMF) has welcomed efforts by the Government of the Philippines to strengthen revenue collections.

The Fund noted in its 2015 Article IV consultation report for the country that additional revenue will be needed to support higher spending on infrastructure and social needs. To that end it supported ongoing tax administration reform that has improved arrears collection, value-added tax (VAT) compliance, and filing rates by large taxpayers. These gains should more than offset the negative effects from the lower oil prices and slightly increase the tax-to-gross domestic product (GDP) ratio in 2015, it said.

The report encouraged authorities to pursue revenue-enhancing reforms to compensate for any revenue lost through the planned reduction in corporate and personal income tax rates. In particular the IMF suggested reviewing tax incentives, reducing certain VAT exemptions, and increasing fuel excises. It estimated that a revenue increase of 2-3 percentage points of GDP is attainable.

The IMF said that it supports the Department of Finance's efforts to amend the bank secrecy law to allow the tax authorities access to individual bank deposit information and make tax evasion a predicate crime for money laundering in order to improve the efficiency and equity of revenue collection efforts.

TAGS: compliance | Finance | tax | economics | value added tax (VAT) | tax compliance | tax incentives | fiscal policy | revenue guidance | law | gross domestic product (GDP) | International Monetary Fund (IMF) | corporation tax | Philippines | tax rates | tax reform | individual income tax | Tax | Tax Evasion

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