The election of President Benigno Aquino III in June 2010 prompted a change in the Philippines's tax policy. Rather than raising the corporate rate, Aquino is focusing government efforts on enforcement to drive up tax revenues."There has been a change ...
[more]
The election of President Benigno Aquino III in June 2010 prompted a change in the Philippines's tax policy. Rather than raising the corporate rate, Aquino is focusing government efforts on enforcement to drive up tax revenues.
"There has been a change in administration. The government is focused on revenue and keeping the deficit in check," said Emmanuel Bonoan of Manabat Sanagustin. "It is placing a lot of emphasis on tax evasion because evasion has been rampant in the Philippines. This has given rise to a heightened level of compliance."
"The president's major speeches and policies are focusing more on enforcement, not so much on raising taxes," said Richard Lapres, head of tax at Deloitte. "Without raising new taxes, the government will be hard-pressed to raise enough revenue from just enforcement and full compliance. It should look into excise taxes."
"There is a group that would want to impose excise taxes," said Dennis Dimagiba of Quisumbing Torres. "This could be a very lucrative source of revenue for the government, but we have not seen the legislation."
"The government does not intend to tax any new regulations in the future. But there is a new policy due affecting real estate investment trusts (Reits) in the Philippines," said Jose Cruz of Quisumbing Torres.
In July 2011 the government issued tax incentive regulations forReits. Since the introduction of the structure in 2009, companies have been making plans to float Reits on the stock exchange.
To continue to receive tax incentives, a Reit is now required to maintain a 40% minimum public float on the stock exchange for the first two years from its initial listing, rising to at least 67% by the end of the third year.
The regulations state that the Reits will be taxed at 30%, but for its first two tax years, each one will have to place the tax that would have been payable on the amounts declared and paid as dividends in escrow. However, this is applied only when the 67% listing threshold is not attained.
Income tax, capital gains tax, and VAT will be payable on the transfer of properties to a Reit. All property transferred to the Reit will be subject to a documentary stamp tax of 0.75%, while transfers of shares in property companies will pay a stamp tax of 0.375%.
[hide]