The Department of Finance (DOF) said Wednesday the Asian Development Bank (ADB) is supporting its latest set of tax reforms aimed at increasing public revenues.
Finance Secretary Ralph Recto, following a meeting with ADB officials, emphasized the department’s push for these reforms to increase government funding.
These reforms include the imposition of excise tax on single-use plastics (SUPs), the rationalization of the mining fiscal regime, the imposition of value-added tax on digital service providers (DSPs), the proposed Passive Income and Financial Intermediary Taxation Act (PIFITA) and the Motor Vehicle Road User’s Tax (MVRUT).
The ADB expressed its willingness to extend support for the reform proposals, noting that it has previously extended technical assistance to the department on developing sound tax and fiscal policies, according to the DOF.
Recto said the DOF is pushing for the amendments of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act to tailor-fit the interests of investors in strategic investments.
The ABD will also provide support for Recto’s core enhanced tax collection strategy of using digital technologies for a more efficient and aggressive tax administration.
The move is in line with President Ferdinand R. Marcos, Jr.’s directive under Executive Order (EO) No. 170 mandating government agencies to adopt digital payment systems for government disbursements and collections.
The ADB also supports the Philippines’ continued efforts in creating a fair and efficient tax system that fosters inclusive and resilient economic growth through the $400-million domestic resource mobilization policy-based loan.
The loan focuses on enhancing domestic resource mobilization policies and legal frameworks; modernizing tax administration through digital transformation; and strengthening international tax cooperation and exchange of information. A second subprogram is pipelined for 2025.
The ADB is also supporting the Bureau of Internal Revenue (BIR) in its digitalization efforts through technical assistance that prepares an inve stment project in 2025.
It also affirmed its commitment to strengthening cooperation with the government on infrastructure modernization, particularly on public-private partnerships (PPPs).
The ADB said it would continue to work on supporting the government in delivering more effective and innovative infrastructure projects through the Infrastructure Preparation and Innovation Facility (IPIF).
IPIF is a technical assistance loan provided by the ADB to support initiatives of the Department of Transportation (DOTr) and the Department of Public Works and Highways (DPWH) in preparing, implementing, and managing public infrastructure investments.
The ADB is the Philippines’ second-largest official development assistance (ODA) partner with a total commitment of $9.67 billion, accounting for 28 percent of the total ODA, as of Sept. 30, 2023.
The multilateral lender has made available to the Philippines an average of $1.64 billion in loan financing annually from 2010 to 2023.