(File photo)
MANILA – Finance Secretary Ralph Recto said the passage of the refined Department of Finance (DOF) priority tax measures will increase the share of revenues to almost 17 percent of the country's gross domestic product (GDP) by 2028.
“In my first week as Secretary of Finance, we have worked to review all proposals and have reconsidered some key provisions. This is in consideration of the economic situation, where some proposals might have unintended consequences in terms of inflation or in terms of possibly hindering growth in some sectors,” Recto said in a statement on Friday.
Among the DOF priority measures are the Value-added Tax (VAT) on Digital Service Providers (DSP); the Imposition of Excise Tax on Single-use Plastics (SUPs); Package 4 of the Comprehensive Tax Reform Program (CTRP); the Rationalization of the Mining Fiscal Regime; and the Reform on the Motor Vehicle Users’ Charge (MVUC).
The VAT on DSP seeks to level the playing field between local and foreign DSPs by clarifying that services provided by the latter in the country are subject to VAT.
The reform is expected to bring in a total of PHP83.8 billion in revenues from 2024 to 2028.
The Package 4 seeks to encourage growth in key financial markets by simplifying the tax structure on passive income, and on certain instruments and other financial products.
Recto said that under the refined Package 4 proposal, the DOF seeks to maintain the structure of some products and instruments while deferring the implementation of certain provisions by 2028 or when the government will have been in a better fiscal position.
The said measure would bring in an estimated additional PHP12.2 billion in revenues from 2024 to 2028.
The proposal on SUPs, meanwhile, is expected to generate a total of PHP33.9 billion in revenues from 2024 to 2028.
The rationalization of the Mining Fiscal Regime which aims to introduce a new fiscal regime that encourages growth in the sector while ensuring that the government still gets its fair share of the profits from mining activities is expected to generate PHP47 billion during the same period.
Recto said the DOF also enhanced its MVUC proposal to consider the impact of the new rates on inflation, particularly in the transportation and logistics sectors.
Given the revised MVUC, the reform will generate PHP36 billion from 2024 to 2028.
“Considering these reforms altogether, we expect total revenues to grow from 15.5 percent of GDP in 2024 to 16.8 percent of GDP in 2028,” Recto said.
Recto said the DOF aims to pass all priority reforms within the year. (PNA)
