MANILA -- The fourth round of tax reforms seeks a removal of taxes on initial public offerings or IPOs to encourage more companies to list in the stock market, a finance official said in a pitch to lawmakers Wednesday.
The tax on IPOs, which raised an average P273 million annually from 2000 to 2016, is seen as a "tax on capital" and "detrimental" to capital markets, said Finance Undersecretary Karl Kendrick Chua.
"Instead of taxing them, why don't we encourage them to participate?" Chua told the Senate tax-writing body.
"The idea here is we'll remove as many transaction costs that prevent companies from growing," he said.
The Philippines is the lone Asian economy that taxes IPOs, according to a study conducted by the National Tax Research Center in 2011.
The fourth tax reform package also proposes a 15-percent uniform tax on long-term savings, dividends and capital gains. It may be "easier" to pass than previous packages because it affects only passive income, said Sen. Pia Cayetano, chairperson of the Ways and Means Committee.
The first package, which took effect at the start of 2018, lowered individual income taxes, but raised duties on oil, sugar-sweetened drinks and tobacco, among others.
The second package which seeks to lower corporate income taxes to 20 percent in a span of a decade, and the third tranche that deals with real property valuations have yet to be passed by the Senate.