Yesterday, I co-facilitated a small group discussion at the UP School of Economics, organized by my former student org, Economics Towards Consciousness (UP ETC).
Before asking my co-facilitator, Prof. Amado "Bong" Mendoza of the UP Political Science Department to speak, I gave this brief intro about ASEAN taxation and tax competition. Data from KPMG, WB and Price Waterhouse (PWC). Below, the PH has the highest corporate income tax, highest withholding tax, and highest VAT or GST, also among the highest personal income tax, in the 10-countries ASEAN.
The PH also has the second most bureaucratic tax system in the ASEAN, next to Vietnam.
What do these numbers tell us?
1. Tax wise, the PH is NOT an attractive place to do business in the ASEAN. High and multiple taxes, complicated and bureaucratic procedures. Neighboring countries except Vietnam offer less complicated, lower taxes.
2. Tax
competition among ASEAN member countries is happening, they are cutting their
tax burden, except in Malaysia. PH tax
burden and cost is declining too, but not low enough compared to many of its
neighbors in the region.
And
those were among the reasons why various fiscal
incentives were introduced in the PH, to help attract more investors
given the non-attractive overall tax
regime.
PH
Fiscal Incentives Rationalization bills in Congress, mainly pushed by the Department of Finance (DOF). They argue that it is necessary to reduce or remove some of those incentives, raise more tax
revenues to finance the annual deficit, build more infrastructures to prepare for AEC
and regional integration, amortize new and old public debt, and so on.
