ADB to support Recto’s tax collection strategy

THE Asian Development Bank (ADB) pledged to back Finance Secretary Ralph Recto’s central strategy for enhanced tax collection, focusing on leveraging digital technologies to achieve more efficient and proactive tax administration.

Recto, in a statement on Wednesday, highlighted the importance of improved coordination among national and local agencies in a meeting with ADB senior officials.

He stressed the need for a unified approach to harmonize the records of registered taxpayers and enhance the efficiency of tax collection.

The ADB, in response, backs the Philippines’ ongoing endeavors to establish an equitable and effective tax system that promotes inclusive and resilient economic growth.

This is through the $400-million policy-based loan for Domestic Resource Mobilization, which works to improve policies, legal frameworks, modernize tax administration through digital transformation, and strengthen international tax cooperation and information exchange.

Recto said that a second subprogram is pipelined for 2025.

The ADB also commits to enhancing collaboration with the Philippine government in modernizing infrastructure, specifically in public-private partnerships (PPPs).

Through the Infrastructure Preparation and Innovation Facility (IPIF), the ADB will assist the government in executing more efficient and innovative infrastructure projects, supporting initiatives from the Department of Transportation and the Department of Public Works and Highways.

Both sides also agreed to collaborate on developing projects, particularly in green infrastructure and clean energy, within the ADB’s $10-billion climate financing commitment for 2024 to 2029.

Recto, for his part, shared the Philippines’ efforts to attract investments, emphasizing the role of job creation and economic growth.

He stated the Department of Finance’s (DoF) initiative to amend the Corporate Recovery and Tax Incentives for Enterprises (Create) Act to suit investors’ interests, and advocated for refined tax reform measures.

The Finance chief mentioned that the DoF is actively advocating for the approval of its improved tax reform measures aimed at enhancing revenue generation.

These measures encompass the introduction of excise tax on single-use plastics, streamlining the mining fiscal regime, implementing value-added tax on digital service providers, enacting the Passive Income and Financial Intermediary Taxation Act, and introducing the Motor Vehicle Road User’s Tax.

The ADB expressed support for these reforms and remains the Philippines’ second-largest official development assistance (ODA) partner with a total commitment of $9.67 billion, contributing to 28 percent of the total ODA share.

The ADB has also provided an annual average of $1.64 billion in loan financing to the Philippines from 2010 to 2023.