PH to cut stock sales tax
MANILA, Philippines —The government is working to slash stock transaction tax in the country as part of structural reforms to improve ease of doing business, economic and investment czar Frederick Go said.
Go, secretary of the newly created Office of the Special Assistant to the President for Investment and Economic Affairs, said on Wednesday this was one of the measures under consideration to boost the local capital markets.
“We are working on reducing friction costs, like reducing sales tax, harmonizing withholding tax and reducing brokers’ commissions,” Go said during the ease of doing business briefing organized by the Anti-Red Tape Authority at Manila Hotel.
Go said the government aims to lower the 0.6 stock transaction tax to 0.1 percent.
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“When we benchmarked it with the rest of our peers in Asia, we noted that the sales tax for a transaction is much, much, much lower or nonexistent in other markets,” Go told reporters.
Improving market volume
Go added they are working to implement same-day volume-weighted average price (VWAP) trading and the further simplification of stock market listing procedures.
Allowing VWAP is seen crucial to improve stock market trading volume. At present, when prices don’t close at VWAP, foreign investors are unable to cross their shares.
Go also said the government is taking major steps to amend some provisions of the Corporate Recovery and Tax Incentives for Enterprises and Tax Reform for Acceleration and Inclusion laws.
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“Both laws have generated serious concerns for foreign direct investors, particularly exporters, and I have put these on top of our to-do list,” Go said.
“So, we are working with Congress and the Senate to bring back certainty in our laws, providing confidence to investors of predictability and firm implementation of policies that protect their investments,” he added.
Investment promotion agencies
In particular, Go said that they want to restore the powers of the different investment promotion agencies—such as the Philippine Economic Zone Authority and the Board of investments—when it comes to granting incentives.
He also said that they are working with Congress to address the ambiguity regarding the coverage of value-added tax (VAT) zero rating, which has been an issue raised by businesses operating at special economic zones.
“For this, we are also working with Congress to explicitly state that the nonincome tax-based incentives, particularly VAT-zero rating, VAT exemption and duty exemption, are not subject to the sunset period,” Go said, noting that registered businesses that are in good standing may continue to avail of such time-bound perks.
