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April 12, 2024

Philippines refines tax bill to streamline passive income and financial instruments

The Finance Department is collaborating with various parties to refine a legislative package that aims to simplify and modernize taxes on passive income and financial products.

This proposal forms part of a broader tax reform program designed to enhance the Philippines’ international competitiveness.

Key suggestions include standardizing the tax rates on interests, royalties, and dividends, phasing out the taxes on stock transactions, and keeping the existing financial transaction taxes stable until 2027, with plans to abolish them in 2028.

Moreover, the proposal includes shifting from a 12% VAT to a 2% premium tax on HMOs, pre-need, and pension plans, along with lowering the taxes on insurance policies and mortgages by 2028.

Following its passage in the House of Representatives in November 2022, a Senate Committee Technical Working Group is currently examining the bill.