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Chino Leyco

DOF proposes higher VAT exemption threshold for MSMEs

The Department of Finance (DOF) is proposing to widen the value-added tax (VAT) exemption threshold for micro-, small- and medium enterprises (MSMEs) to lessen the impact of higher fuel levies on low cost businesses. During the Senate inquiry on the DOF’s tax reform plan, Finance Undersecretary Karl Kendrick T. Chua told lawmakers that they are proposing to exempt entrepreneurs with annual gross revenues of P3 million or less from paying the 12 percent VAT. Under the proposal, Chua said the VAT threshold on business’ goods and services would be increased from the current P1.9 million. “The protection really comes from the increase in their VAT threshold to P3 million so that the micro and small enterprises with gross sales of at most P3 million will not be affected by the broadening of the …

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Economic team guarantees protection for poor families

The Duterte administration’s economic team assured the poor and low-income households that they are protected from the impact of the proposed increase in fuel taxes under the comprehensive tax reform program. According to the Department of Finance, they along with the Department of Budget and Management (DBM) as well as the National Economic and Development Authority (NEDA) are assuring the public that the proposed tax reform will not burden the poor individuals. In a joint statement, the economic team said the government will introduce highly targeted, direct and indirect subsidies plus other social protection initiatives that should benefit poor and low-income families. Finance Secretaries Carlos G. Dominguez III, Budget Secretary Benjamin Diokno and NEDA Director-General Ernesto Pernia said they will help cushion the impact of the proposed indexing to inflation of the excise …

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Subsidies to GOCCs drop in August

Subsidies to state-owned companies declined in August this year after it surged in the previous month, data from the Bureau of the Treasury showed. Based on the Treasury report, the national government spent P7.4 billion in subsidies last August, down by 16 percent from R8.8 billion in the same month last year. Of that amount, about 45 percent of the total government subsidies went to the Power Sector Assets & Liabilities Management Corporation (PSALM). During the Duterte administration’s first month in office, the government spent P35.26 billion, and bulk of which, or P33.8 billion, was used to pay off the health insurance coverage of indigent families, through the Philippine Health Insurance Corp. (PhilHealth). The government needs to provide some financial support to PhilHealth to pay off the health insurance premiums of beneficiaries identified by …

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DOF sees PH becoming Asia’s economic powerhouse

The Duterte administration vowed to undertake “long-postponed” institutional reforms to transform the Philippines from being Asia’s laggard into an economic powerhouse, the Department of Finance (DOF) said. As President Rodrigo R. Duterte recalibrates the country’s foreign policy, Finance Secretary Carlos G. Dominguez III said the government’s focus is to undertake economic investments to finally lick poverty in the country. Under the government’s medium-term goal, the Philippines will become an upper middle-income nation and become an investment-driven economy in six years.  To achieve this goal, the finance chief wants to implement the tough reforms ranging from the upgrade of its law enforcement capabilities to the long-overdue overhaul of its tax system.  “We have the elbowroom to undertake the institutional reforms necessary to bring our country to the high-middle income level over the next six years,” …

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Beijing to fund local infra, rural projects

The Philippines and China have sealed two agreements allowing the Duterte administration to tap Beijing’s financing facilities and technical expertise to help fund its infrastructure and rural development projects, the Department of Finance (DOF) said. The two agreements were among the 13 agreements signed by the Philippines and China during President Rodrigo R. Duterte’s state visit. The first MOA was a financing cooperation signed by Finance Secretary Carlos G. Dominguez III and Export-Import Bank of China (China EXIM) Vice President Sun Ping. According to the DOF, the first agreement signifies the intent of the China EXIM, a state-owned bank, to provide funding for infrastructure, agriculture and energy, among other priority sectors in the Philippines, through concessional loans and other preferential financing facilities. The MOU stated that projects in infrastructure, energy, transportation, engineering and manufacturing …

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Gov’t records P33-B budget surplus in August

The national government posted a record budget surplus for the month of August owing to the Duterte administration’s prudent spending and strong tax collections, the Department of Finance (DOF) said yesterday. Based on the Bureau of the Treasury report submitted to Finance Secretary Carlos G. Dominguez III, the national government doubled its budget surplus in August this year to P32.6 billion compared with P15 billion in the same month last year. The surplus in August, the first record under the Duterte administration, dragged down the eight-month fiscal gap to P138.4 billion, leaving the government with ample fiscal room to support growth for the remainder of the year. The end-August budget deficit is also well within the P388.87-billion ceiling for the year, but significantly higher than the P3.4-billion gap incurred in the same period …

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Nomura raises PH GDP forecast

Global investment bank Nomura has raised its growth forecast for the Philippine economy saying the country’s long-term prospects remain strong despite the recent political noise generated from President Rodrigo R. Duterte’s tough rhetoric. In its Asia Special Report entitled “Philippines: Beyond Words,” Nomura said the Philippines’ reform progress will likely continue as the nation’s foundations for economic resilience “have been established.” For this year, Nomura expects the country’s gross domestic product (GDP) will grow 6.7 percent, and 6.3 percent for 2017. The investment bank also raised its Philippine growth forecast in 2018 to 6.5 percent. “Despite the recent political noise from President Duterte’s rhetoric, reform progress will likely continue, which bodes well for the longer-term growth outlook,” Nomura said. “In our base case, we think it [growth] could rise further to 6.7 percent …

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Economic team rejects nationwide pay hike

The Duterte administration’s economic managers stood against the proposed across-the-board wage increase for workers in the private sector, saying it could worsen income inequality among workers in all regions in the country. Along with the National Economic Development Authority (NEDA), the Department of Finance (DOF), the Department of Budget and Management (DBM), and the Department of Trade and Industry (DTI) rejected the P125 daily wage increase. “While the economic managers want to raise the living standards of workers and their families, we do not support the P125 daily wage increase,” Socioeconomic Planning Secretary Ernesto M. Pernia said in his letter to the President Rodrigo R. Duterte. According to Pernia, who is also NEDA director-general, the proposed across-the-board pay hike would adversely impact the country’s economic growth, employment, and inflation. “Similarly, we do not support …

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DOF: Low-income earners getting bigger take-home pay

Entry-level employees earning above the minimum wage to enjoy significant increases in their take-home pay once the Department of Finance’s (DOF) proposed tax reform package is passed into law. In a statement, Finance Undersecretary Karl Kendrick T. Chua said that entry-level employees, such as office clerks, with no dependents, earning a monthly salary of P13,378 would see an increase in their take-home pay by around P12,673 per year. On the other hand, a call center agent earning P21,000 a month with four dependents, who may be currently paying P9,209 in income tax will only have to pay around P1,567 per annum. “This represents an 83 percent decrease in their tax due, which translates into annual savings of P7,642,” said Chua, who is the finance department’s chief economist. He likewise said that the proposed income …

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Tax reform, infra to boost PH rating—Moody’s

Debt-watcher Moody’s Investors Service has favorably cited the Duterte administration’s tax reform and infrastructure development plans as a big boost to the Philippines’ credit rating if successfully implemented over the medium term and noted that political noise is far from distracting the government’s sound policies. Despite headline noise, Moody’s explained, political risk in the Philippines is still low given that sound policies both in the economic and political fronts remain intact. In its latest commentary on the Philippines released on Tuesday (October 18, 2016), Moody’s described the concrete plans of government to reform the tax system and accelerate infrastructure investments as being anchored on a “well defined development agenda.” “In particular, an acceleration of infrastructure development and the passage of comprehensive tax reform would be credit positive,” Moody’s said. Other factors that, if achieved, can drive the country’s …

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