Philippines tax reforms could see Senate snags

Subject

Tax reform update in the Philippines.

Significance

The next congressional session opens on July 24, in which the Senate will address its version of the first reform bill in the Duterte administration’s Comprehensive Tax Reform Package (CTRP). This follows the House of Representatives passing its version -- the Tax Reform for Acceleration and Inclusion Act (TRAIN) -- on May 31.

Impacts

• As it would prove the government’s reform commitment, the CTRP’s passage would likely see Philippine credit rating upgrades.
• Lowering taxes could bring some business and investment competitiveness benefits, but this is not guaranteed.
• The tax reforms’ success will be moderated by inefficient tax collection and disbursement, and corruption and evasion.