What's the big picture? Investors in the Philippines can enjoy income tax holidays of up to six years. After that, they are allowed to pay only a special 5% tax on gross income earned (GIE) indefinitely, instead of the full 30% income tax paid by everyone else.
Why it matters: Income tax breaks enjoyed by investors result in billions of foregone government revenues. These funds could have been collected and better spent on health, education and poverty reduction.
What are the facts? In 2018 alone, foregone revenues reached almost P70 billion due to the 5% special tax. This was more than the P53-billion budget of the Department of Agriculture for the same year.
The bottomline: A new bill intends to curtail the special 5% tax on gross income earned, a move resisted by officials of investment promotion agencies including the Philippine Economic Zone Authority, who fear that it will drive away foreign investors.
Dig deeper: Read the full story here.
Produced by Robert JA Basilio Jr. Credits: Music featured in this podcast include “In the Hall” of the Mountain King, composed by Edward Krieg and rendered by Kevin Macleod, “Staycation” by Corbyn Kites, and “Sunshine Samba” by Chris Haugen.
