DOF priority tax measures advance in Congress

Finance Secretary Benjamin E. Diokno has outlined the Department of Finance’s (DOF) priority tax measures for 2024, the majority of which are in advanced stages in Congress.

According to Secretary Diokno, the DOF is actively pushing for the passage of Package 3 or the Real Property Valuation and Assessment Reform (RPVAR), value-added tax (VAT) on non-resident digital service providers (DSPs), and the VAT refund for non-resident tourists.

RPVAR will boost investor confidence in the country through the adoption of internationally accepted valuation standards and the professionalization of real property valuation. The measure aims to improve real property tax collections by updating property valuations without increasing taxes or imposing new taxes.

RPVAR was approved on third reading at the House of Representatives (House Bill 6558) on December 12, 2022. Its counterpart measure in the Senate (Senate Bill 2386) is nearing the end of the period of interpellations and will be ready for amendments.

Meanwhile, the VAT on DSPs seeks to level the playing field between foreign and local digital service providers.

The measure was approved on third reading at the House of Representatives (HB 4122) on November 14, 2022. Its counterpart bill in the Senate is currently being routed for committee members’ approval, and will be presented to the Senate plenary early 2024.

On the other hand, the VAT refund for non-resident tourists provides tourists incentives to stimulate tourism and trade in the country and boost competitiveness among businesses. The Philippines is the only country in Asia that does not have a tourist VAT refund system.

The measure was approved on third reading (HB 7292) at the House of Representatives on March 6, 2023, while its counterpart in the Senate (SB 2415) has already been sponsored by Committee of Ways and Means Chairman Senator Sherwin Gatchalian, and will be up for plenary debates in January 2024.

RPVAR, VAT on DSP, and the VAT refund for non-resident tourists are expected to be passed in the Senate by the first quarter of next year.

The DOF is also pushing for the passage of Package 4 or the Passive Income and Financial Intermediaries Taxation Act