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Manila Bulletin devider Philippines devider National devider Senate bill seeks to reduce VAT rate to 10%

Senate bill seeks to reduce VAT rate to 10%

Published Dec 5, 2025 12:49 pm  |  Updated Dec 5, 2025 01:22 pm

At A Glance

  • A move is underway in the Senate to lower the value-added tax (VAT) imposed on purchased goods and services.
A move is underway in the Senate to lower the value-added tax (VAT) imposed on purchased goods and services.
(Manila Bulletin file photo)
(Manila Bulletin file photo)
Under Senate Bill No. 1552 filed by Senator Erwin Tulfo, Section 106 of the National Internal Revenue Code would be amended to bring down the current 12 percent VAT to 10 percent.
The measure also includes a provision that empowers the President, upon the recommendation of the Secretary of Finance, to temporarily revert the VAT rate to 12 percent in any fiscal year if the Development Budget Coordination Committee (DBCC) projects that the national deficit as a percentage of GDP will exceed programmed targets.
Tulfo said that inflation remains the primary concern of Filipino households, and VAT reduction is a direct and efficient mechanism to ease the cost of living.
"Unlike redistributive programs funded through other forms of taxation, which may suffer from leakages and administrative inefficiencies, lowering VAT immediately increases household purchasing power and stimulates consumption," Tulfo said.
"This, in turn, can boost economic growth, increase overall tax compliance, and partially offset potential revenue reductions through higher GDP growth," he added.
In filing his proposal, he noted that the Philippines has the highest VAT rate in Southeast Asia.
By comparison, Tulfo said that neighboring countries impose lower rates: 11% in Indonesia, 10 percent in Cambodia, 10 percent in Vietnam, 9 percent in Singapore (GST), 7 percent in Thailand, 7 percent in Laos, 6 percent in Malaysia, 5 percent in Myanmar (Service Tax), and 2.5 percent in Timor Leste (Import Tax).
"Reducing the VAT to 10% would align the Philippines more closely with regional standards, improving competitiveness and encouraging economic activity," Tulfo said.

Related Tags

value-added tax (VAT) Erwin Tulfo Department of Finance (DOF) Development Budget Coordination Committee (DBCC)
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