Philippines: DoF sees possible S&P upgrade within a year

  • THE Department of Finance (DoF) said a credit rating upgrade from S&P Global Ratings is “possible” within a year’s time, to account for reforms in the tax regime and greater ease of doing business.
  • Undersecretary Gil S. Beltran said the Philippines a credit rating upgrade from S&P could be in the works “within one year” as the government continues to rationalize the tax system.
  • In Apr 18, the credit rater bumped up its outlook on the Philippine economy to “positive” from “stable,” raising the chances of a credit rating upgrade in the short term. It took stock of tax reform and improved fiscal policies which support solid economic growth.
  • The Philippines currently holds a “BBB” rating from S&P, which is a notch above minimum investment grade. The rating had a “stable” outlook since Apr 15 prior to the 2018 revision.
  • The government is pushing for comprehensive tax reform to simplify the regime and generate more revenue to support its infrastructure program and expand social services.
  • Signed into law in Dec 17, the Tax Reform for Acceleration and Inclusion Act or the first package imposed excise taxes on certain commodities and updated income tax brackets which raised take-home pay for many taxpayers.
  • Meanwhile, the package 1B or the Tax Amnesty Act was enacted on 14 Feb 19, providing relief for delinquent accounts up to 2017. However, provisions on the relaxation of the deposit secrecy law and the automatic exchange of information with foreign tax authorities were not included in the signed law.
  • Enacted in 2018, the Ease of Doing Business Act aims to eliminate corrupt practices and cut bureaucratic red tape. However, its implementation hangs in the balance as its implementing rules and regulations are still pending.

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