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Philippines Signs Off Value-Added Tax Break For PWDs

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

05 December 2016


Judy Taguiwalo, Philippines' Department of Social Welfare and Development Secretary, has signed off on Republic Act 10754 to provide a 20 percent value-added tax (VAT) discount to persons with disabilities (PWDs).

According to a government statement, the Act provides a 20 percent discount or VAT exemption for a wide range of goods and services, including: accommodation, restaurants, recreation centers, medicines and special foods, medical and dental services, diagnostic and laboratory fees and the professional fees of attending doctors, domestic air and sea travel, land transportation travel, and funeral and burial services.

The measures, approved by the nation's former president in March, are part of a comprehensive tax reform plan intended to fund increased spending on infrastructure and welfare, to drastically reduce poverty in the country. It includes cuts to personal income taxes primarily for the benefit of wage earners and other low-income Filipinos, along with measures to offset the projected revenue losses from the lower tax rates, such as by expanding the fuel excise tax and automobile tax and broadening the value-added tax base by removing certain exemptions.

The plan was recently supported by the Mindanao Business Council, which said in a November 30 statement that the proposed personal income tax reduction "is immediately needed and rightfully deserved by the Filipino taxpayer," stating "this will provide due relief for the middle and lower-income classes and spur consumption..."

On measures to broaden the tax base, in particular by removing certain VAT breaks for the elderly, the Business Council added: "Many of our VAT exemptions aim to protect vulnerable sectors, but we are in agreement with the Department of Finance that these sectors must be protected through more targeted and effective means, and not through the tax system, which benefits the rich far more. Most importantly, rationalizing VAT exemptions will improve compliance and contribute to ease of doing business."

TAGS: compliance | Finance | tax | investment | business | value added tax (VAT) | tax compliance | law | Philippines | excise duty | ministry of finance | tax rates | tax reform | trade | individual income tax | Tax

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