PRESS RELEASE

October 7, 2024

Finance Secretary Ralph G. Recto has spotlighted the Philippines’ business-friendly reforms to roll out a red carpet for investors before members of the  Joint Foreign Chambers of the Philippines (JFC) and committed to continuing dialogue with them to further improve policies.

The JFC is a coalition of six major international business chambers in the Philippines, including the American, Australian-New Zealand, Canadian, European, Japanese, and Korean, alongside the Philippine Association of Multinational Companies Regional Headquarters, Inc. (PAMURI).

Together, these chambers represent 2,000 companies, facilitating around USD 100 billion in bilateral trade and contributing USD 30 billion in investments to the Philippine economy.

Among the reforms highlighted by Secretary Recto during the courtesy call meeting with JFC on October 1, 2024 was the recently enacted Value-Added Tax on Digital Services Act.

The new law levels the playing field between local and foreign digital service providers (DSPs) by mandating a 12% value-added tax on all digital services consumed in the Philippines. At present, only local DSPs are subject to paying the 12% value-added tax.

Arangkada Project Philippines Director Katie Stuntz welcomed the new law and expressed eagerness to be involved in the consultation process for its implementing rules and regulations (IRR).

The American Chamber of Commerce (AmCham) shared that it will collaborate with the Asia Internet Coalition to host a workshop on the law’s implementation, with participation from the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR).

Meanwhile, PAMURI Director Atty. Mimi Lopez Malvar committed to participate in crafting the IRR so that companies have a clear understanding of what constitutes digital services.

To fully realize the huge potential of the mining industry in the Philippines, Secretary Recto also shared that the government is pushing forward the Rationalization of the Mining Fiscal Regime, which will introduce a straightforward and streamlined fiscal policy.

The JFC expressed support for the reform, while the Finance Chief committed to ensuring that the final version of the bill will provide mutual benefits for both the government and the private sector.

Meanwhile, the JFC recognized that Package 4 of the Comprehensive Tax Reform Program (CTRP) will be critical to strengthening economic competitiveness and improving the business climate in the Philippines.

Package 4 will harmonize and simplify the tax structure on passive income, financial products, and its transactions to spur greater capital inflow and economic activity.

Aside from this, Secretary Recto shared that the government is proposing to reduce the tax on stock transactions from 0.6% to just 0.1% to lower friction costs and align the country with its regional peers.

Furthermore, Secretary Recto announced that the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE)  enactment will be signed into law anytime soon.

It will enhance both fiscal and non-fiscal incentives, resolve key investor concerns, and respond to emerging global developments.

The Finance Chief also updated the JFC on the progress of the Pre-border Technical Verification and Cross-border Electronic Invoicing System, and vowed to address the chambers’ concerns to ensure its efficient implementation.

Also present during the meeting were Canadian Chamber of Commerce of the Philippines President Julian Payne; AmCham Executive Director Ebb Hinchliffe; Korean Chamber of Commerce of the Philippines President Hyunchong Joseph Um and Director Eun Sun Kim; European Chamber of Commerce of the Philippines President Paulo Duarte; and Japanese Chamber of Commerce of the Philippines President Harutaka Ishikawa and Vice President Nobuo Fujii.

Joining Secretary Recto were DOF Undersecretaries Maria Luwalhati Dorotan Tiuseco, Domini Velasquez, Renato Reside; Charlito Mendoza; and Assistant Secretary Karlo Adriano.

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