Country’s tax ranking rises

THE PHILIPPINES has risen several places in the World Bank and International Finance Corp.’s global tax rankings, benefiting from continued reforms said to have made compliance more efficient and less costly.

The country ranked 131st out of 189 economies in the annual "Paying Taxes" report after placing 143rd out of 185 last year.

The United Arab Emirates was ranked first, followed by Qatar, Saudi Arabia, Hong Kong and Singapore. At the bottom, meanwhile, were Bolivia, Guinea, Venezuela, Central African Republic, and Chad.

The World Bank and IFC list measures the overall ease of paying taxes -- based on mandatory levies and contributions imposed on medium-sized firms in a given year -- with regard to three main indicators: number of payments, time given to comply and the total tax rate imposed.

This year’s report -- the result of surveys from June 2012 to June 2013 -- showed that globally, businesses spent an average of 268 hours in complying with 26.7 tax payments and paid 43.1% of their commercial profit for these. Last year, they took 267 hours, made 27.2 payments and dealt with a 44.7% tax rate.

"Economies around the world are adopting a range of policies as they strive to strike a balance between raising tax revenues and encouraging growth," it noted.

For the Philippines, the Bureau of Internal Revenue’s (BIR) implementation of electronic facilities for tax payments was said to have helped this year.

The country was noted as requiring 36 tax payments from businesses per year, still higher than the world average of 26.7. One corporate income tax payment, 25 labor tax payments and social contributions, and 10 other forms of taxes are mandated. These numbers, however, improved from the 47 payments reported last year as labor taxes then totaled 36.

"In the Philippines, an electronic filing and payment system for social security contributions, health insurance and housing development fund contributions was launched in 2012. Over the past two years the system has been rolled out and in 2012 the majority of companies adopted this new system which reduced the number of payments by 11," the report noted.

The country’s total tax rate likewise went down to 44.5% of firms’ commercial profit from last year’s 46.6% -- albeit still higher than the global benchmark of 43.1%. Of this, 19.6% goes to corporate income tax, 10.8% to labor taxes and social contributions, and 14.1% to other taxes. In last year’s report, the numbers were 21.1%, 11.3% and 14.2%, respectively.

As for the time required for compliance, meanwhile, businesses here spend 193 hours to settle their tax liabilities, lower than the global average of 267. Of this, 42 hours are needed to pay corporate income tax, 38 hours for labor taxes and social contributions, and 113 hours for consumption taxes -- unchanged from last year’s report.

The report noted that governments worldwide continued to reform their respective tax regimes to reduce the administrative burden. The most common initiative noted remained the introduction or improvement of online filing and payment systems.

source:  Businessworld