Philippines to Follow Indonesia With Tax Amnesty to Spur Revenue

  • We’ll show ‘this government means business’: Finance Secretary
  • Indonesia amnesty boosted revenues by more than $10 billion

Philippines Aims to Double Value-Added Tax Revenue

The Philippines will follow Indonesia’s lead in implementing a tax amnesty as it seeks to boost revenue to pay for its ambitious spending plans, Finance Secretary Carlos Dominguez said.

The government will target tax evaders and beef up compliance before adopting an amnesty program, which will probably be very similar to Indonesia’s, Dominguez said in an interview with Bloomberg Television’s Haslinda Amin in Cebu, Philippines, on Friday.

Dominguez discusses tax plans

(Source: Bloomberg)

Referring to tax evaders, Dominguez said “the tax amnesty will not work if they don’t believe you can actually go after them.”

“First we go after them, show that this government means business and has the political will to stop tax evasion,” he said.

Indonesia’s nine-month tax amnesty boosted government revenue by more than $10 billion. It allowed citizens to put their tax affairs in order and pay a penalty rate of as low as 2 percent when they declare previously hidden assets. The plan was seen as largely successful with more than 970,000 people participating.

Dominguez is boosting tax compliance and pushing through a tax reform plan to help ward off a credit-rating downgrade as the budget deficit widens. The government filed a criminal complaint against cigarette-maker Mighty Corp. last month for not paying almost 10 billion pesos of taxes.

Dominguez said authorities will probably file more cases against the company and will also pursue “big-ticket items” in the power sector.

The government needs funds to pay for $160 billion of infrastructure projects. The Philippines had a tax revenue ratio of 13.6 percent of gross domestic product in 2014, which is lower than other regional peers, such as Malaysia and Thailand, according to data from the World Bank.

— With assistance by Cecilia Yap, and Ditas B Lopez

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