In the Philippines there is some concern in the Department of Finance (DOF) that tax relief is being granted to applicants without sufficient consideration of their entitlement. The Department is therefore keen for legislation to be passed to increase the level of supervision and control of tax relief in the form of reduced tax rates, tax holidays or exemptions from duty for certain investments.
As pointed out in the DOF’s Tax Expenditure Report, the government is losing revenue through tax relief because the system for granting relief is uncoordinated and inefficient. The additional tax revenue that could be gained by tightening tax relief could contribute to improving public finances. A measure called the Tax Incentives Management Transparency Act would if passed enable the amount of tax relief for specific sectors to be quantified and the government could then undertake a review of the effectiveness of the relief in helping to pursue its social and business targets. Another measure known as the Fiscal Rationalization Bill aims to introduce more supervision of the process of granting tax relief in the various sectors of the economy.
