Recto urges passage of refined DOF tax measures

ALONGSIDE the enhancement of tax administration efficiency, Finance Secretary Ralph G. Recto is pushing for the passage of the refined priority tax measures of the Department of Finance (DOF), which are critical to meet President Ferdinand R. Marcos, Jr.’s 8-point socioeconomic agenda, particularly, on ensuring sound fiscal management.

Secretary Recto stated that the DOF has no new tax proposals but is recalibrating its existing priority tax measures to guarantee that these are fairer, easier to collect, and more practical while ensuring that these reforms will not translate to unnecessary burdens to Filipino consumers and taxpayers.

“In my first week as Secretary of Finance, we have worked to review all proposals and have reconsidered some key provisions. This is in consideration of the economic situation, where some proposals might have unintended consequences in terms of inflation or in terms of possibly hindering growth in some sectors,” Secretary Recto said.

Among the DOF priority measures are the Value-added Tax (VAT) on Digital Service Providers (DSP); the Imposition of Excise Tax on Single-use Plastics (SUPs); Package 4 of the Comprehensive Tax Reform Program (CTRP); the Rationalization of the Mining Fiscal Regime; and the Reform on the Motor Vehicle Users’ Charge (MVUC).

The VAT on DSP seeks to level the playing field between local and foreign DSPs by clarifying that services provided by the latter in the country are subject to VAT.

The reform will lead to equitable tax treatment and fair competition between foreign and local DSPs and is expected to bring in a total of P 83.8 billion in revenues from 2024 to 2028.

Meanwhile, Package 4 seeks to encourage growth in key financial markets by simplifying the tax structure on passive income, and on certain instruments and other financial products.

Secretary Recto highlighted that under the refined Package 4 proposal, the DOF seeks to maintain the structure of some products and instruments while deferring the implementation of certain provisions by 2028 or when the government will have been in a better fiscal position. The said measure would bring in an estimated additional P12.2 billion in revenues from 2024 to 2028.

The DOF also seeks to curb the high volume of mismanaged plastics by imposing an excise tax on certain SUPs. The measure is expected to generate a total of P33.9 billion in revenues from 2024 to 2028. /