On 7 February 2024, the Philippines Department of Finance (DOF) published a release declaring that the Asian Development Bank (ADB) will support the country’s tax collection strategy using digital technologies for a more efficient and aggressive tax administration.

The ADB supports the Philippines’ continued efforts in creating a fair and efficient tax system that fosters inclusive and resilient economic growth through the USD 400-million Domestic Resource Mobilization policy-based loan.

The policy-based loan focuses on enhancing domestic resource mobilization policies and legal frameworks, modernizing tax administration through digital transformation, and strengthening international tax cooperation and exchange of information. A second subprogram is pipelined for 2025. Moreover, the Bank is supporting the Bureau of Internal Revenue (BIR) in its digitalization efforts through technical assistance that prepares an investment project in 2025.

The ADB affirmed its commitment to likewise strengthen cooperation with the Philippine government on infrastructure modernization, particularly on public-private partnerships (PPPs).

The ADB said it will continue to work on supporting the government in delivering more effective and innovative infrastructure projects through the Infrastructure Preparation and Innovation Facility (IPIF).

Meanwhile, the DOF informed the ADB of the Philippine government’s aggressive efforts to attract foreign and domestic investments, acknowledging their crucial role in creating quality jobs for Filipinos and stimulating economic growth. The release also notes that the DOF is pushing for the passage of refined tax reform measures to boost revenue generation and that ADB is also keen to support these measures as well.

These reforms include:

• the imposition of excise tax on single-use plastics (SUPs);
• the rationalization of the mining fiscal regime;
• the imposition of value-added tax on digital service providers (DSPs);
• the Passive Income and Financial Intermediary Taxation Act (PIFITA); and
• the Motor Vehicle Road User’s Tax (MVRUT)

The ADB expressed its willingness to extend support for the said reform proposals, noting that it has previously extended technical assistance to the Department on developing sound tax and fiscal policies.

As of September 30, 2023, the ADB is the Philippines’ second-largest official development assistance (ODA) partner, with a total commitment of USD 9.67 billion, accounting for 28 percent of the total ODA share.

For the period 2010 to 2023, the ADB has made available to the Philippines an average of USD 1.64 billion in loan financing annually.