THE global tax reform being proposed by the Group of 20 (G20) and the Organisation of Economic Co-operation and Development (OECD) may only benefit the Philippines “moderately,” according to the Asean+3 Macroeconomic Research Office (AMRO).
In an analytical note, AMRO said this is specific to Amount A which aims to reallocate a portion of profit above the threshold to economies where the revenue is generated.
Amount A will apply to multinational enterprises (MNEs) with a global turnover of above 20 billion euros and have a profitability of above 10 percent.
“Populous middle-income economies, such as Indonesia, the Philippines, Thailand and Vietnam, are expected to gain moderately,” AMRO said.
The note stated that economies with large populations and high GDP such as China and Japan, are likely to receive a “significant portion of the reallocated residual profit” from Amount A.
Countries with smaller populations but have higher per-capita incomes are also expected to see moderate gains from Amount A. These countries include Brunei, Hong Kong, China, Korea, Malaysia, and Singapore.
However, countries with smaller population sizes and lower-income levels in the region such as Cambodia, Lao PDR and Myanmar are not expected to receive significant additional tax revenues as a result of the global tax reform.
“A caveat here is that MNEs’ e-commerce revenue from these economies could be lifted if consumers use mobile data and social media widely for online purchases,” AMRO said.
Meanwhile, civil-society organizations Freedom from Debt Coalition and the Asian Peoples’ Movement on Debt and Development (APMDD) called the OECD proposal as nothing but a “tax deal of the rich.”
FDC and APMDD asked the Philippine government to take a stand against tax abuses and block the tax deal. They said this because, only rich countries, multinational corporations and the global elite will benefit.
“In 2020, illicit financial outflows from corporate tax evasion and avoidance by multinational corporations [MNCs] in the Philippines was estimated at P94.3 billion, nearly equivalent to the budget allocated by the Bayanihan to Heal as One Act for social amelioration and wage subsidies,” the organizations said.
“While MNCs continue to engage in these abusive tax practices, the burden of revenue generation is passed on to the poor through regressive taxes such as the Value-Added Tax [VAT] and excise taxes on necessary goods,” they added.
The letter was delivered at the DOF by a small delegation at the same time as a rally was being held at the Welcome Rotonda by APMDD, FDC, Oriang and Sanlakas.
The delegation coming from the DOF office and another delegation that delivered a similar open letter to the Embassy of Indonesia only arrived at Welcome Rotonda to see the tail-end of the mass action which police forcibly though peacefully dispersed.
The rally dubbed Day of Action for Tax Justice was held as representatives of 193 member-states met at the 76th session of the United Nations to deliberate on “Covid-19 recovery” and how to rebuild sustainably.
Image credits: Nonie Reyes