The Impact of the Proposed Comprehensive Tax Reform Package

By Grace Sorongon

The American Chamber of Commerce of the Philippines (AmCham) held its general membership meeting last July 21 at the ballroom of the Diamond Makati Residences which was jam-packed with foreigners and local executives wanting to hear from the Secretary of Department and Trade, Mr. Carlos Dominguez, the tax reforms the department has been lobbying in Congress. It would seem that business leaders will be challenged because these tax reforms will have a certain impact on costs or even business processes. Some of the industries which were highlighted were:

BPO industry — This stems from the incentive which the government is giving to locators in the Philippines. As we all know, a majority of these are tax exempted, provided of course, they comply with the requirements of the law. It was to my understanding that nothing has changed, as explained by Secretary Dominguez and his team members.

Automotive industry — Given that ad valorem taxes shall be levied, assessed and collected from manufacturers and importers of cars, in 2018 and 2019, the cost of various cars will go up by about 5% to 20%.

Manufactured oils and other fuels — New excise tax rates shall be levied, assessed and collected in the next three years. Again, this tax will impact the cost of fuel.

Sugar sweetened beverages — excise tax shall be levied, assessed and collected per liter of volume capacity. The main driver why reform is being instituted on this product is for health reasons. The government apparently wants to instill healthy drinking habits and is discouraging the consumption of sugar-based products.

The said forum dispelled some doubts, but obviously, the executives in the room needed to understand the tax reforms more. Once these reforms are approved and implemented, Implementing Rules and Guidelines will be released to address the confusion.

We will keep you posted on this matter.


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About the author:

Grace was the 2013 president of the People Management Association of the Philippines. She has been working with John Clements Consultants for more than three decades now. She is a senior vice president and is in charge of various corporate projects and steering these projects towards completion. She also manages the operations of Professional Staffers, a business unit within the John Clements group.

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