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PH finance chief supports taxation on digital services

Philippine Finance Secretary Benjamin Diokno said he will support measures to tax digital services and transactions “to ensure that the country’s tax system remains fair and equitable.” In a media advisory Monday (derived from last week’s press briefing at Malacanang), the finance chief said he will also push for the passage of tax reform packages initiated by the previous government.

“The tax on digital services, I think it’s only fair that we tax these, isn’t it?” Diokno said. “If you’re going to buy from regular stores, the government taxes them. Then why is it that when it comes to digital [transactions], you won’t impose taxes?”

This is on top of his efforts to push for “revenue-neutral” measures in the previous administration’s comprehensive tax reform program (CTRP).

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“We won’t collect additional revenues from that, but it will simplify the tax system a lot,” Secretary Diokno said. “So, we will push for that and then we expect that could be approved before the end of the year and that would be implemented next year,” he added.

To expand the government’s tax base, Diokno is looking at pushing for reforms in real property valuation with the goal of putting it on par with international standards. The reforms also include the proposed Passive Income and Financial Intermediary Taxation Act (PIFITA), which seeks to simplify the taxation of passive income, financial services, and transactions.

“Reforming the real property valuation system will improve the tax collections of the local government units (LGUs) without increasing the existing tax rates or imposing new taxes,” the Department of Finance (DoF) said. “The reforms will make property valuation transparent, reliable, and attuned to market developments.”

According to DoF, PIFITA will enable the funding of “large-scale infrastructure projects, create more and better jobs, and boost economic growth” by attracting capital and investments.