- The OECD recommends the Philippines phase out VAT exemptions for private healthcare, private education, and senior citizens, replacing them with targeted social transfers for better equity and revenue efficiency.
- The report advises gradually ending corporate income tax holidays and shifting to expenditure-based incentives to reduce untargeted benefits and support productivity-enhancing investments.
- The Philippines has one of the lowest VAT revenue collection ratios in Southeast Asia, collecting only about 45% of potential revenue.
- Broadening the VAT base by limiting exemptions and improving compliance could yield significant additional revenue (about 6.5% of GDP).
- Targeted social transfers are suggested as a more efficient and equitable alternative to current poorly targeted and regressive VAT exemptions.
Source: oecd.org
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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