EDITORIAL - 127th in the world

There’s no escaping death and taxes. Those with the right connections, those who can afford topnotch accountants to cook the books, and those who can bribe their way to a lower assessment can get away with lower taxes, but they still have to pay. So governments should at least make tax payments easy.

This, unfortunately, is not the case in the Philippines, except of course in the case of income taxes automatically withheld from monthly salaries. A study comparing tax payment procedures in 189 economies, conducted by auditing and tax advising firm PricewaterhouseCoopers, ranked the Philippines 127th in ease of paying taxes.

The study, called “Paying Taxes 2015,” is part of the “Doing Business” project of the World Bank Group. It showed that it takes an average of 193 hours to pay 36 kinds of taxes and fees annually in the Philippines, making the country rank behind even Iraq and Afghanistan.

Compare this with the countries where tax payment is easiest: only four payments are required in the United Arab Emirates, with the entire process taking only 12 hours, while it takes 41 hours in neighboring Qatar, which shared the top spot with the UAE. Third-ranked Saudi Arabia requires a total of only three payments, although the process takes 64 hours, according to the study.

Two Asian economies ranked in the top five: Hong Kong, placing fourth, has only three tax payments. Singapore followed with five. Malaysia placed 32nd and Thailand 62nd. It is surely no coincidence that the four Asian economies are ahead of the Philippines in luring foreign direct investment and in many development indicators. Hong Kong and Singapore also consistently compete for the No. 1 spot in international surveys on good governance.

Apart from the cumbersome tax payment process, the Philippines also has one of the highest tax rates – six percent higher than the average in the Asia-Pacific, according to the study. The high personal income and corporate taxes, on top of other minuses such as the highest power cost in Asia, make it difficult for the Philippines to compete with its neighbors in attracting job-generating investments. The study should make the Aquino administration take a second look at its resistance to tax reforms.

 

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