Tax reforms generated PHP 202.8B in revenues in 2022

THE IMPLEMENTATION of key tax reform laws generated PHP 202.8 billion in additional revenues in 2022, the Department of Finance (DoF) said.

“The total collection last year was 26.3% or PHP 42.3 billion higher than the 2021 full-year incremental revenue of PHP 160.5 billion on the back of full economic recovery due to lifting of stringent quarantine measures,” Finance Secretary Benjamin E. Diokno said in a statement.

Higher revenues were attributed to the comprehensive tax reform program (CTRP), which included the Tax Reform for Acceleration and Inclusion (TRAIN) law; the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) law; the Tax Amnesty Law, and “sin” taxes on alcohol and tobacco.

Data provided by the DoF showed these tax reforms generated PHP 709.9 billion in total revenues since 2018.

Total collections from the TRAIN law reached PHP 216.5 billion, up by 27% from PHP 171 billion in 2021.

Excise tax collections on imported petroleum rose by 10.7% to PHP 132.6 billion, “due to higher volume of oil imports,” the DoF said.

Meanwhile, collections from sweetened beverages rose by 12.7% to PHP 44.3 billion, while those from tobacco jumped by 2.5% to PHP 15.7 billion. Excise taxes from alcohol increased by 23% to PHP 31.8 billion.

Also, documentary stamp tax collection jumped by 58.8% to PHP 58.8 billion.

Data from the DoF showed that the government lost PHP 51.1 billion from the reduced income tax rates in 2022, slightly lower than the PHP 77.1 billion losses in 2021.

Meanwhile, collections from package 1B or the Tax Amnesty Law fell by 69.6% to PHP 1.4 billion in 2022 from PHP 4.6 billion in the previous year. The law granted an amnesty to unsettled estate taxes and delinquent accounts.

Data from the DoF showed revenue losses from the CREATE law reached PHP 80.4 billion, higher than PHP 68 billion in losses in 2021. This included PHP 59.2 billion in losses arising from the reduction in corporate income tax rates.

The CREATE law was implemented as a pandemic relief measure for businesses through income tax reductions. Corporate income tax rate for micro, small and medium enterprises was lowered to 20% from 35%. Large corporations with taxable income above PHP 5 million also saw rates reduced to 25% from 30%.

Actual collections from corporate income tax grew by 5.2% to PHP 495.5 billion from PHP 471 billion a year ago, reflecting “the full reopening of the economy,” the DoF said.

Proposed Measures
Meanwhile, Mr. Diokno said the government is expected to generate around PHP 29.1 billion from several proposed tax measures that would be implemented in 2024.

The Passive Income and Financial Intermediary Taxation Act is seen to generate P8.5 billion next year. It is currently pending at the Senate committee level.

Data from the DoF also showed that the value-added tax on digital service providers is expected to raise PHP 13.7 billion in revenues next year. It is also pending at the Senate committee level. If passed into law, it is seen to generate up to PHP 18.2 billion in revenues by 2028.

The proposed excise taxes on single-use plastics and pre-mixed alcohol are also expected to generate PHP 6.5 billion and PHP 400 million, respectively, in fresh revenues.

The House approved on final reading the bill seeking to impose an excise tax on single-use plastics. The bill has been transmitted to the Senate.

Meanwhile, the bill imposing an excise tax for pre-mixed alcohol is pending at the House Committee on Ways and Means. — By Luisa Maria Jacinta C. Jocson