World Bank recommends review of VAT exemptions

A review of value-added tax VAT) exemptions can help the Philippines improve tax collections without having to increase tax rates, according to the World Bank.

- LOUELLA DESIDERIO

Gonzalo Varela, lead economist for the Philippines at the World Bank, said in a briefing yesterday that the Philippines can increase its tax collection without raising tax rates through better tax administration.

He said one of the ways to improve the tax haul is by looking at the VAT exemptions in the country.

"There are many exemptions that apply to VAT zerorated sectors that introduce distortions in the system, that allocate resources in a way that is not necessarily optimal, but also reduce the capacity of the collector to collect taxes, given the tax rates," he said.