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: ADMINISTRATIVE ORDERS
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ADMINISTRATIVE ORDER NO. 112
ADMINISTRATIVE ORDER NO. 112 -
CREATING A TASK FORCE ON TAX AND TARIFF REFORMS
WHEREAS, global competitiveness should be
boosted to attain rapid, sustainable growth envisioned in the
medium-term development plan, reach newly-industrialized country status
by 2000 as envisioned under the Philippines 2000 and reduce
dramatically the incidence of poverty in the country;
WHEREAS, as agreed upon in the Economic Summit held last September 8
and Economic Caucus held on July 22 and October 29, a level playing
filed is necessary to enable industries to compete more effectively in
both the domestic and international market place;
WHEREAS, a stable macroeconomy is necessary to allow for optimization
of savings and investment;
WHEREAS, multiplicity and high rates of taxes and tariffs with
proliferation of exemptions distort revenue allocation, hamper
competitiveness of domestic industries, compound difficulties in
collection and cost of tax administration;
WHEREAS, a complicated tax system induces avoidance and evasion
resulting in equitable distribution of tax burden and an uneven playing
field for economic and social sectors; and
WHEREAS, the absence of integrating and harmonizing mechanism among
entities conducting studies and making recommendations on tax and
tariff policies in medium-term could delay the formulation of a firm
and consistent plan for viable reforms that should be implemented
immediately;
NOW, THEREFORE, I, FIDEL V. RAMOS, President of the Republic of the
Philippines, do hereby approve the following:
1. A Task Force on Tax and Tariff Reforms shall be
created with the following functions:
a. The Task Force will be guided by the following
basic objectives:
i. Setting up a tax system which has equitable and
reasonable rates, minimal level of exemptions, and features which
facilitate administration thus reducing leakages, minimizing compliance
costs and tax administration expenses, distributing tax burden
equitably across economic sectors and income groups, enhances
productivity and efficient resource allocation and contributes to
revenue yields adequate for the government's development programs;
ii. Rationalizing quantitative restrictions, reducing
the overall level of tariffs, and reducing the dispersion of tariff
rates within and across economic sectors;
iii. Establishing a collection system that is simple
to administer and easy to comply with; and
iv. Leveling the playing field, allowing competitive
forces to optimize resource mobilization and investment allocation, and
saving on unnecessary expenditures arising from implementation of high,
disparate and complicated taxes and tariffs which enabling the
Government to keep the fiscal deficit within reasonable levels.
b. To the above ends, the Task Force will study the
mechanics and impact of, and draft legislation and executive orders to
give effect to:
i. Introduction of a minimum business income tax
based on gross assets and simplified net income tax system for
corporations;
ii. Introduction of presumptive income tax for
individuals;
iii. Broadening of VAT to include utilities,
transportation, trade and other services;
iv. Abolition of tax exemptions under special laws;
v. The restructuring of tariffs to include the
lowering of higher tariff rates towards a simplified structure based on
transaction values; and
vi. Further globalization of income tax system; and
vii. Administrative and other structural reforms.
2. The Task Force shall be composed of the Secretary
of Finance, or one of his Undersecretaries, as Chairman;
Director-General of Congressional Planning and Budget Office (CPBO),
Director-General of Senate Tax and Research Office, (STRO), Deputy
Director General of National Economic and Development Authority (NEDA),
Undersecretaries from the Department of Trade and Industry (DTI) and
the Department of Agriculture (DA), Executive Director of National Tax
Research Center (NIRC), Commissioners from the Bureau of Internal
Revenue (BIR) and Bureau of Customs (BOC), senior experts from the
Philippine Institute for Development Studies (PIDS), University of the
Philippines School of Economics (UPSE), and Center for Research and
Communications (CRC); as Members.
3. To hasten the conduct of the study, the Task Force
may create sub-groups under its organization and obtain technical
assistance from local and foreign experts and research groups.
4. The Task Force shall invite other government
departments, offices and instrumentalities and the private sector to
assist and participate actively in the conduct of the study.
5. The Task Force shall submit its recommendations to
the Executive and Legislative Revenue Mobilization Group the following:
on the gross income taxation, on minimum income taxation and VAT —
within ninety days; on administrative and structural reforms which are
immediately implementable — within six months; and on other reforms —
within one year from the effectivity of this order.
DONE in the City of Manila,
Philippines, this 10th day of February, in the Year of Our Lord,
Nineteen Hundred and Ninety Four.
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Since 19.07.98.