"To
lessen the impact of VAT on socially-sensitive petroleum products like diesel,
kerosene and LPG, the government has reduced the corresponding excise taxes and
import tariffs."
The
reformed VAT law's direct effect on small business is neutral, because whatever
VAT they pay on raw materials (Input VAT), they can deduct from their Output VAT.
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invite you to post questions, interact, and share solutions.
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WHY
IS VAT REFORM NECESSARY?
The
current Philippine fiscal condition requires that immediate attention be given
to fiscal reform:
In 2004, debt service
(principal and interest payments) was equivalent to 86.1% of government revenues
Interest
payment alone was equivalent to 37.4% of government revenues
On
the other hand, infrastructure and other capital expenditures were only 10.87%
of government expenditures for the same year
In order to address this fiscal condition, the Government is proposing a fiscal
reform program that intends to generate additional revenue equivalent to 2.5%
of the projected gross domestic product (GDP) for 2005, with the end in view of
accelerating the balancing of the National Government budget possibly by 2008.
Reforming the value-added tax system is a vital component of this fiscal reform
program.
