The Bureau of Internal Revenue (BIR) is set to make tax payments easier for foreigners betting on stocks and other assets which would attract more investors.

A draft memorandum circular posted on the BIR’s Web site last week outlines a “simplified” procedure for non-residents to claim “preferential” tax rates for dividend, interest and royalty incomes incurred in the Philippines under tax treaties forged by the Philippines with other countries.

TMAP President Benedict R. Tugonon said the planned reform would “certainly improve the ease of doing business” in the country, and in turn would attract more investors to make their bets here.

“When businesses invest here like in shares of stock in Philippine companies, they would always want to know how much dividends they get after tax. With these simplified rules, it’s relatively easier to avail this tax rate. It will definitely encourage them (foreign investors),” Mr. Tugonon said in a phone interview last week.

Under the proposal put forward by BIR Commissioner Caesar R. Dulay, foreigners only need to submit a Certificate of Residency (CoR) to be eligible for lower tax rates as covered by an existing tax treaty between the Philippines and his/her home country.

The CoR will also be the basis for company officials and other withholding agents in applying the reduced income tax rate to non-residents. In turn, these agents must submit the form to the bureau within 30 days from income payments.

Mr. Tugonon sees Mr. Dulay’s proposed reform as the BIR’s way to “correct” an old rule started by former BIR Chief Kim S. Jacinto-Henares that required non-residents to first secure tax treaty relief applications (TTRA) before a lower tax rate can be availed of.

“Foreign investors don’t like changing rules mid-game. This is going back to original practice that you don’t really have to file TTRA,” Mr. Tugonon added.

The TMAP head also lauded the new BIR’s efforts to consult stakeholders before releasing the new guidelines, describing it as a “very huge departure” from the previous administration. The agency is accepting comments on the proposed memorandum order until today.

The Finance department has created an anti-red tape unit to review current procedures among its attached agencies, following a directive from President Rodrigo R. Duterte to trim the bureaucracy and fast-track the delivery of government services.

 

Source: www.bworldonline.com

The current Philippine Administration is bent on eradicating red tape in government offices. Pres. Rodrigo “Rody” Duterte’s first marching order upon taking office as the 16th President of the Philippines was to ease doing business in the Philippines. In his inaugural speech, Pres. Duterte says “There are policies and specifics that cannot wait for tomorrow”. He went on to say “I direct all department secretaries and the heads of agencies to reduce requirements and processing time of all applications from submission to release. I order all department secretaries and heads of agencies to remove redundant requirements and compliance with one agency shall be accepted as sufficient for all.”

On 1 August 2016, the Philippine government launched the President’s dial hotline 8888 for complaints against fixers, erring government officials and poor government services. 911 was also launched for emergency situations. These actions were lauded by the business sector, as the country hopes to improve its Doing Business ranking, notwithstanding the improvement from 148th to 103rd this year. The goal is to make it to the top third of the rankings which is around 63rd in the EODB rank. With these current undertakings by the Philippine government, the business sector hopes to attract more investors as the government processes in doing business will be streamlined. Case in point, to start a business an investor will have to go through 16 processes in approximately 34 days.

MOA Signing poster (Edit7)
 

The ultimate goal is to cut down these processes to 6 steps and 8 days laid out in a framework entered into by the different government agencies such as the Department of Finance, Department of Trade and Industry, Department of Interior and Local Government, Securities and Exchange Commission, Bureau of Internal Revenue, Social Security System, Philippine Health Insurance Corporation (PhilHealth), Home Development Mutual Fund (Pag-IBIG), Land Bank of the Philippines, Development Bank of the Philippines, National Competitiveness Council and the Quezon city Government.

Sources:
news.abs-cbn.com
businessmirror.com.ph
philippinechamber.com
gov.ph

The latest Gross Domestic Product (GDP) figure has shown a 7% growth in Q2 2016. As announced by Socioeconomic Planning Secretary Ernesto Pernia during a Press Conference for the 2016 Q2 Performance of the Philippine Economy, “The 7-percent growth in the second quarter of 2016 is an upbeat start for the current administration.”

This strong growth increases the probability of our attaining the revised full-year 2016 DBCC-approved real growth projection of 6 to 7 percent.” Pernia said.

The Philippines seems to remain to be the fastest growing economy in the second quarter of 2016, followed by China which grew by 6.7%. Following are Vietnam by 5.6%, Indonesia by 5.2 %, Malaysia by 4.0%, and Thailand by 3.5%.

GDP-Q2-2016 800px

The economy in the 2nd quarter of 2016 shows that demand has a stronger performance with investments having the highest contribution of 5.7 percentage points to GDP growth. Public spending remains a strong point while private consumption has grown stronger compared to the previous quarter and year.

The performance of the agriculture sector remains at -2.1 percent likely due to the effects of El Nino. There is also a developing risk of La Nina that will possibly intensify between August and October this year.

“Moving forward, despite the good numbers for the first six months of 2016, there is still a risk of seeing a lower growth rate in the second half of the year. This is a normal occurrence during election years. Consumer sentiment will also likely normalize given the post-election season.’ said Pernia. Source: NEDA http://www.neda.gov.ph