DoF vows to address businesses’ tax concerns

Finance Secretary Ralph G. Recto has ordered the formation of a multi-sectoral working group to address tax woes raised by business leaders, the Department of Finance (DoF) said.

According to a DoF statement, Mr. Recto gave the order after a dialogue with the Makati Business Club on Oct. 14, where corporate executives flagged key policy concerns and proposed solutions to improve the investment climate.

The working group will be led by the DoF and include private sector representatives, giving the business community a chance to raise any tax concerns.

“We want to support the government in its quest to make this a very good business environment and investment destination. That’s our overall aim. We’re here to support you,” Makati Business Club (MBC) Executive Director Rafael ASG Ongpin was quoted as saying in the DoF statement. “We’re here because this government has been very open and very collaborative, and we really see the value of that.”

The meeting included representatives of multinational firms such as Mondelez Philippines, Inc.; Unilever; SGV & Co.; Pepsi-Cola Products Philippines, Inc.; the American Chamber of Commerce of the Philippines; Texas Instruments, Inc.; and e-commerce platform Shopee.

One of the concerns raised by business leaders was the implementation of Revenue Memorandum Circular (RMC) No. 5-2024, which outlines taxation of cross-border services involving foreign corporations.

In February last year, 10 business groups including the Philippine Chamber of Commerce and Industry and Management Association of the Philippines had urged the Bureau of Internal Revenue (BIR) to rescind the circular, which would raise the cost of doing business in the Philippines.

They had said the circular violates existing income tax treaties entered into by the Philippines with various countries.

“These treaties generally provide that business profits of a treaty resident shall not be taxed in the Philippines if the foreign treaty resident does not have a permanent establishment in the Philippines,” the business chambers had said.

In response, Mr. Recto pledged to review existing tax circulars and explore digital tools aimed at improving transparency and efficiency in tax assessments.

BIR Commissioner Romeo D. Lumagui, Jr., who also attended the meeting, acknowledged concerns raised over the mentioned tax memorandum and backed Mr. Recto’s proposal for amendments.

In addition, the Finance chief reaffirmed the government’s push to accelerate digitalization to curb corruption and increase efficiency in the delivery of public services to business leaders.

“The government is only 20% or 25% of the economy — you’re 75%. Today, you have more than 50.1 million people working, with more than 32 million in the private sector,” Mr. Recto said.

He also called for stronger private sector engagement in the DoF’s digitalization program, particularly in the BIR, Bureau of Customs and Bureau of the Treasury.

“Whatever support you think we can provide — inputs, technology, we’d be more than happy to do that,” MBC Chairman Edgar O. Chua was quoted as saying. — Aubrey Rose A. Inosante