Investment Incentives and Effective Tax Rates in the Philippines: A Comparison With Neighboring Countries

Alexander Klemm, Dennis Botman and Reza Baqir

No 2008/207, IMF Working Papers from International Monetary Fund

Abstract: We compare the general tax provisions and investment incentives in the Philippines to six other east-Asian economies-Malaysia, Indonesia, Lao, Vietnam, Cambodia, and Thailand. We calculate effective tax rates and find that general effective tax rates are relatively high in the Philippines, while investment incentives are comparable to those in neighboring countries. Tax holidays are most attractive for very profitable firms, creating redundancy, and for investment in short-lived assets. We also consider recently-proposed tax reforms that would replace tax holidays by a reduced corporate income tax rate or a low tax on gross receipts. The results suggest that this would result in stronger incentives to invest, while government revenue increases. Alternatively, replacing holidays with a general reduction in the corporate tax rate and offering accelerated depreciation will either not provide the same incentives or be very costly.

Keywords: WP; income tax; accelerated depreciation; export enterprise; personal income; contract research and development company; depreciation rate; export processing zone company; indirect tax; tax year (search for similar items in EconPapers)
Pages: 34
Date: 2008-09-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=22239 (application/pdf)

Related works:
Journal Article: Investment incentives and effective tax rates in the Philippines: a comparison with neighboring countries (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2008/207

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().