A Sneak Peek on Philippine Taxation
The Philippines, with its strategic location, is a gateway to the huge Asian market. Its considerable attractions as investment destination include a pool of English-speaking people who are highly trainable, a large potential market for consumer goods on account of its fast-growing population, a stable democratic government, and a vibrant free enterprise economy.
Despite the past political turmoil and economic instability, the Philippine government remains firm in focusing to attract foreign investors which will provide significant employment opportunities to Filipinos and even to foreigners relative to the amount of the capital being invested, improve productivity of resources to cater the demands of both domestic and international markets and provide a foundation for sustainable growth of the economy.
Recently, the Philippine President had approved a new law, Republic Act No. 9337 (also known as the Expanded Value-Added Tax Act of 2005) which will take effect on July 1, 2005. The said new law is intended to streamline and restructure the present VAT system and to provide additional revenue for the Philippine government through the increased tax rates, lifting of exemptions, and subjecting to tax transactions not previously covered by tax, having its main objective of balancing the country’s budget and curbing the existing fiscal deficit.
Most foreign companies find the Philippine tax system fair and equitable in consonance with the services and support provided by the government through transportation, infrastructure, and communications; and with liberalization of foreign investment-related rules, the granting of special fiscal and non-fiscal incentives to registered-enterprises.