Finance Secretary Ralph Recto highlighted the Philippines’ business-friendly reforms to attract investors during a meeting with the Joint Foreign Chambers of the Philippines (JFC).
The JFC is a coalition of six major international business chambers in the Philippines, including the American, Australian-New Zealand, Canadian, European, Japanese, and Korean, alongside the Philippine Association of Multinational Companies Regional Headquarters Inc. (PAMURI).
These chambers represent 2,000 companies, facilitating around $100 billion in bilateral trade and contributing $30 billion in investments to the Philippine economy.
Among the reforms highlighted by Recto during the courtesy call meeting with JFC on Oct. 1, 2024 was the recently-enacted Value-Added Tax on Digital Services Act.
The new law levels the playing field between local and foreign digital service providers (DSPs) by mandating a 12-percent value-added tax on all digital services consumed in the Philippines. At present, only local DSPs are subject to paying the 12-percent VAT.
Arangkada Project Philippines director Katie Stuntz welcomed the new law and expressed eagerness to be involved in the consultation process for its implementing rules and regulations (IRR).
The American Chamber of Commerce (AmCham) said it would collaborate with the Asia Internet Coalition to host a workshop on the law’s implementation, with participation from the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR).
Meanwhile, PAMURI director Mimi Lopez Malvar committed to participating in crafting the IRR so that companies have a clear understanding of what constitutes digital services.
Recto also said the government is pushing forward the rationalization of the mining fiscal Regime to introduce a straightforward and streamlined fiscal policy.
The JFC expressed support for the reform, while Recto committed to ensuring that the final version of the bill would provide mutual benefits for both the government and the private sector.
Meanwhile, the JFC recognized that Package 4 of the Comprehensive Tax Reform Program (CTRP) would be critical to strengthening economic competitiveness and improving the business climate in the Philippines.
Package 4 will harmonize and simplify the tax structure on passive income, financial products, and its transactions to spur greater capital inflow and economic activity.
Recto said the government is proposing to reduce the tax on stock transactions from 0.6 percent to just 0.1 percent to lower friction costs and align the country with its regional peers.
He said the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) measure would be signed into law anytime soon.
It will enhance both fiscal and non-fiscal incentives, resolve key investor concerns and respond to emerging global developments, he said.
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