Paying taxes in PH remains cumbersome

Despite the introduction of electronic payment schemes, paying taxes in the Philippines remained hampered by numerous procedures and the highest total rate in Asean, according to the World Bank.

The multilateral lender’s joint “Paying Taxes 2018” report with PricewaterhouseCoopers ranked the Philippines 105th among 190 countries in the ease of settling tax dues, with a distance to frontier of 69.27. The distance to frontier measures how far the economies covered by the report were to the best-performing economy. Qatar ranked No. 1.

Compared with its Asean neighbors, those that performed better than the Philippines were Singapore (7th), Thailand (67th), Malaysia (73rd), Vietnam (86th) and Brunei (104th).

Behind the Philippines were Indonesia (114th), Myanmar (125th), Cambodia (136th) and Laos (156th).

The report noted that the Philippines as well as Botswana, Brunei Darussalam, El Salvador, India, Indonesia, Kenya, Lithuania, Maldives, Morocco, New Zealand, Rwanda, Saudi Arabia, Uruguay, Uzbekistan, Vietnam and Zambia had recently introduced or enhanced their respective online tax filing and payment systems.

The Philippines’ ranking improved from 115th in the Paying Taxes 2017 report released last year.

In the case of the Philippines, it took a total of 182 hours to comply with tax payments—36 for labor taxes, 38 for corporate income tax and 108 for consumption taxes, even as it only took taxpayers in Brunei as well as Singapore 54 hours, and 173 hours in Cambodia. The average time to pay taxes across Asia-Pacific was 204 hours.

Taxpayers in the Philippines have to settle 20 tax payments: One profit tax, nine labor taxes and 10 other taxes. The total number of payments in Singapore is only five, eight in Malaysia, and 14 in Vietnam, while the average in the region was 22.1.

The total tax and contribution rate, meanwhile, reached 42.9 percent, above the regional average of 36.4 percent, as the tax slapped on firms’ profit averaged 20.3 percent, 8.7 percent on labor on top of 13.9 percent in other taxes. In Brunei, the total tax rate is 8 percent; 20.3 percent in Singapore; 21.7 percent in Cambodia; 26.2 percent in Laos; 28.7 percent in Thailand; 30 percent in Indonesia; 31.2 percent in Myanmar; 38.1 percent in Vietnam, and 39.2 percent in Malaysia.

The annual Paying Taxes report is a spinoff of the World Bank’s Doing Business reports. —BEN O. DE VERA