July 15, 2021

Following a change in the rating outlook, additional changes are being prioritized

Following Fitch Ratings’ decision to lower the country’s investment-grade rating, further pressure is anticipated for the ultimate acceptance of the Duterte administration’s other tax reform proposals.

Cristina Ulang, research head and first vice president of First Metro Investment Corporation (FMIC), said during the company’s virtual briefing on Wednesday that reform measures, not just government spending, are among the factors that led Fitch Ratings to change its outlook on the country’s BBB rating from stable to negative.

She’s referring to the Passive Income and Financial Intermediary Taxation Act (PIFITA) and property taxes, which are now being debated in the Senate as part of Package 4 of the Comprehensive Tax Reform Program (CTRP), also known as the Tax Reform for Acceleration and Inclusion Act (TRAIN) legislation.

“So I believe there will be a rush, an eagerness for the government to approve all of these taxes because this is what would truly assist our budget deficit and then support expenditure if necessary,” she said.

Credit rating agencies are keeping an eye on these variables, according to Ulang, since they will enhance the efficiency of the taxing process and expand the revenue base.

She said that the suggested changes are targeted at growing the revenue base and enhancing tax administration efficiency rather than raising taxes.

According to her, these changes would make the country’s tax system “more fair and equitable to everyone” and attract more foreign direct investment.

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