Global tax reform to ‘moderately’ benefit PH, says Amro
The Philippines stands to “moderately” benefit from rich countries’ plan to pursue a global tax reform that will stop profits from being dumped into tax havens, the regional surveillance organization Asean+3 Macroeconomic Research Office (Amro) said.
In the report “Global Tax Reform: What It Means for Asean+3” published Tuesday, Amro said the Group of 20 (G20) and the Organization of Economic Cooperation and Development’s (OECD) inclusive framework to address base erosion and profit shifting (Beps), which now also covered developing countries, would “reallocate at least $100 billion of tax rights and generate at least $150 billion of additional global tax revenues annually.”
“The new taxation framework aims to ensure that MNEs (multinational enterprises) can no longer take advantage of existing taxation rules to avoid paying taxes in any jurisdiction,” Amro noted.
Under the proposed two-pillar Beps solution, a jurisdiction will have the right to tax an MNE if the revenue is generated there, unlike now when firms were being taxed where they were incorporated. The reform will also put in place a global minimum tax rate, which big MNEs must shell out, possibly at least 15 percent.
The Philippines, however, was not part of the 130 countries and jurisdictions taking part in this proposed new framework for international tax reform. The Inquirer already asked the Department of Finance (DOF) back in July why the Philippines had yet to participate, but the DOF did not respond.
While the Philippines took an active role in the OECD’s Beps project during the previous administration, it temporarily deferred implementation of stricter measures aimed at catching tax evaders across wider borders while the country improved compliance with international standards.
Amro nonetheless said that the Philippines was among the countries in Asean+3, which besides the 10 Southeast Asian nations also included China, Japan and South Korea, that would benefit from reallocating a portion of MNEs profits to the economies where revenues were generated.
W“Populous middle-income economies, such as Indonesia, the Philippines, Thailand and Vietnam, are expected to gain moderately,” it said.