Govt Planning to Tax Luxury Items and the Self-Employed for 5 Year Devt Plan

According to the recent Philippine Development Plan (PDP) for 2023 – 2028, the current administration is looking to expand tax coverage in the medium term.

The government is targeting to expand and strengthen the tax program to self-employed Filipinos and on luxury items and digital transactions.

The PDP indicated that this can be achieved by tax mapping and aligning government information technology and data infrastructure to permit information sharing for taxation.

“All individuals registered with government corporations, such as [the] Philippine Health Insurance Corp. [PhilHealth] and Social Security System [SSS], can be part of the Bureau of Internal Revenue [BIR] database,”  mentioned the PDP.

The PDP mentioned how taxation of digital transactions would need a review of tax rules to “broaden the concept of ‘permanent establishment’” and also to review the formula for profit allocation.

The government has stated that this would need digital platforms for firms and non-resident firms conducting business in the Philippines to register with the BIR and collect value-added tax (VAT).

“Different forms of income, such as dividends, royalties, capital gains from stock transactions and interest income, are subject to different tax rates. Neutral taxation of all capital income can minimize avoidance and progressively strengthen revenue mobilization,”  said the PDP.

The government is likewise looking into assessing the preferential treatment and exemptions in the Tax Code. Aside from this, expanding the coverage of goods that would require excise tax would be on other items such as perfumes, jewelry, yachts, and other sports vehicles.

Source: Business Mirror