trade – Page 2 – Author Carlo Carrasco

America sets 20% tariff on Philippine goods and will take effect on August 1, 2025

July 11, 2025July 10, 2025carlocarrasco

Starting August 1, 2025, the United States of America (USA) will impose a 20% tariff on all and any Philippine-made products coming into their shores as stated in US President Donald Trump’s official letter to President Ferdinand “Bongbong” Marcos, Jr., according to a Philippine News Agency (PNA) news article. In response, the Philippines wants to renegotiate with America while there is still time.

For the newcomers reading this, America previously set a 17% tariff on the Philippines when Trump unveiled last April the many tariff rates on many nations. The Philippines was confident about the negotiations they had with their American counterparts.

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

The Philippine government is looking to renegotiate the 20 percent tariff imposed by the Trump administration on Philippine goods, according to Philippine Ambassador to the US Jose Manuel Romualdez.

In a letter dated July 9 addressed to President Ferdinand R. Marcos Jr., US President Donald Trump announced that beginning Aug. 1, 2025, the US will raise tariffs on Philippine goods to 20 percent—up from the previously announced 17 percent rate.

In a text message to the Philippine News Agency on Thursday morning, Romualdez said Manila would formally request a review of the tariff hike from Washington D.C.

Trump, in his letter, recognized the Philippine-US trade relations and said the latter has “agreed to continue working with the Philippines, despite having a significant trade deficit.”

“Starting on August 1, 2025, we will charge the Philippines a Tariff of only 20 percent on any and all Philippine products sent into the United States, separate from all Sectoral Tariffs,” it read.

Trump said there would be “no tariff if the Philippines, or companies within” the country decide to build or manufacture products within the US.

The US, he added, is also open to “reconsider an adjustment” if the country opens its “closed trading markets to the United States,” and eliminates its “tariff, and non-tariff policies and trade barriers.”

“These tariffs may be modified, upward or downward, depending on our relationship with your country,” he said.

Trump, meanwhile, warned Manila against reciprocating the move with a tariff increase.

“If for any reason you decide to raise your Tariffs, then, whatever the number you choose to raise them by, will be added onto the 20 percent that we charge,” he said.

For transparency, posted below is the 2-page letter of Trump to Marcos regarding tariffs.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the Philippines fell short in its recent negotiations with the United States which resulted in a higher tariff at 20%? Do you think the economic managers of the Philippines can convince America to delay, if not lower, the declared tariff? Do you think a 20% tariff rate by America will hurt the economy of the Philippines this year?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Philippines manufacturing activity slowed down in May 2025

June 7, 2025June 3, 2025carlocarrasco

In what could be a possible sign of economic slowdown in the Philippines, manufacturing activity for the month of May this year slowed down as demand from foreign markets weakened, according to a BusinessWorld news report.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld. Some parts in boldface…

GROWTH in Philippine manufacturing activity slowed in May due to declining output and weaker demand from foreign markets amid global trade tensions.

The S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI), which measures the country’s monthly factory performance, settled at 50.1, slipping from 53 in April. This was the lowest index since the 49.4 contraction in March.

A PMI reading above 50 denotes better operating conditions month on month, while a reading below 50 shows the opposite.

“The promising growth observed at the beginning of the second quarter signaled a notable cooling in May,” Maryam Baluch, an economist at S&P Global Market Intelligence, said in a report on Monday. “While new orders continued to increase, they did so at a slower pace, overshadowed by contractions in other areas.”

S&P Global data on the Association of Southeast Asian Nations (ASEAN) showed that only the Philippines expanded in May, while Vietnam (49.8), Myanmar (47.6) and Indonesia (47.4) all declined.

In its report, S&P Global said output declined in May, the second contraction in the past three months.

“Overall, the downturn was marginal, but companies noted softer demand conditions weighed on production,” it said.

Despite continuing to signal a rise in new sales, the rate of expansion in new orders was slight and weaker than in April, it added. This was reflected in the softer rate of increase in input buying activity.

“The situation was further exacerbated by a deteriorating demand from foreign markets, with May witnessing a sharper drop in new export orders,” Ms. Baluch said. “As global trade tensions escalate, the outlook for overseas demand appears increasingly precarious,” US President Donald J. Trump paused his reciprocal tariffs in April for 90 days but continues to apply a 10% baseline tariff rate for most trading partners.

Ms. Baluch said the drop in production requirements was accompanied by a fresh decline in employment and the inventories of both purchases and finished goods.

S&P said employment numbers declined for the first time in four months.

The pace of job shedding was marginal, but the strongest in 11 months, which factories attributed to voluntary resignations and the nonreplacement of those roles.

S&P also cited the limited manpower for a renewed buildup of backlogs across Filipino producers.

“On a brighter note, inflationary pressures remain modest and historically subdued, which could play an important role in supporting demand moving forward,” she said.

However, cost burdens and output charges rose to the highest since January.

“The stability of price pressures may also provide a necessary buffer against the challenges posed by a cooldown in new orders and external market uncertainties,” she added.

S&P Global said manufacturers expect new orders to continue to rise, supported by confidence in the year-ahead outlook for production, but the degree of optimism was the third weakest in the series’ history.

Analysts also said trade tensions and softer demand weighing down the country’s manufacturing activity in May.

The anticipation for higher tariffs likely caused subdued exports, said Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc.

“The persistent trade tensions continue to weigh on global trade, causing exports to drop as higher tariffs may be imposed,” he said in a Viber message.

Philippine exports in the first four months rose 9.5% to $26.87 billion, according to the local statistics agency.

Mr. Erece said domestic demand slowed as the election-spending season ended. Stronger manufacturing activity is expected later this year, as local authorities continue trade talks with the US Trade Representative, he added.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the Philippines’ manufacturing sector will rebound this month?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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New rules streamlining VAT refund processes will make Philippines more attractive to foreign investors

June 6, 2025June 3, 2025carlocarrasco

In the view of the Bureau of Internal Revenue (BIR), the Philippines will become a more attractive destination for foreign investors due to the new rules streamlining the value-added tax (VAT) refund process, according to a Philippine News Agency (PNA) news article.

To put things in perspective, posted below is an excerpt from the news article of the PNA. Some parts in boldface…

The Bureau of Internal Revenue (BIR) expects the new rules streamlining the value-added tax (VAT) refund process — a key reform under the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act – will make the Philippines a more attractive destination for foreign investors.

In a televised interview, BIR Commissioner Romeo Lumagui Jr. said the new regulations are consistent with President Ferdinand Marcos Jr.’s broader goal of making the country more business-friendly.

“Ang expectation natin, makikita ng mga dayuhang investors na seryoso ang pamahalaan na pagbutihin ang pagnenegosyo at papadaliin ang pagnenegosyo dito sa ating bayan (Our expectation is that foreign investors will see that the government is serious on business and in easing the doing of business in our country),” Lumagui was quoted as saying in a news release on Saturday.

“So, we’re hoping that it will encourage foreign investors to do business here in the Philippines,” he added.

According to the BIR chief, the main objective of CREATE MORE, as well as other BIR efforts, is to ease the doing of business and payment of taxes.

Republic Act No. 12066 or the CREATE MORE Act amended the National Internal Revenue Code to provide greater tax relief and incentives for businesses, particularly exporters.

To implement this, the BIR issued Revenue Memorandum Circular No. 37-2025 on April 10, which reduces the documentary requirements for VAT refund claims.

Under the new guidelines, certified true copies of invoices or receipts may now be submitted in place of original documents.

There was also a reduction of three documentary requirements, particularly the proofs of registration with the Securities and Exchange Commission or Department of Trade and Industry (DTI), whichever is applicable, and the copies of Import Entry and Internal Revenue Declarations/Informal Import Declaration and Entry or Single Administrative Document.

For claims involving amortized input VAT on capital goods, prior certifications from the Bureau of Customs may be reused if already submitted in past filings.

Furthermore, for VAT refund claims starting April 1, exporters are no longer required to submit actual proof of shipment, such as bills of lading.

Instead, the BIR will rely on a certification from the Export Marketing Bureau of the DTI, following a newly signed agreement between the two agencies.

“Ngayon pinadali natin ang proseso sa pakikipag-coordinate sa DTI. So, may kanya-kanyang role ang bawat isa para hindi na rin magdoble-doble ang mga requirements at pag-iimbestiga kung talagang merong mga inexport ang isang entity (We made the process easier through our coordination with the DTI. Each agency now has specific roles to prevent duplication in the submission of requirements and in investigating the goods exported by a business entity,” Lumagui explained.

“Patuloy din ang pag-e-examine natin kung ano ang pwede nating i-streamline na mga proseso para mas mapadali pa ang pagnenegosyo sa ating bayan (We also continue to examine what other processes we can streamline to make doing of business in our country easier),” he added.

Let me end this post by asking you readers: What is your reaction to this recent development? Are you convinced that the changes made will help the Philippines attract more foreign investors?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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World Bank says Philippines economic growth will be below 6% per year until 2031

June 3, 2025June 3, 2025carlocarrasco

By pointing to several economic factors, the World Bank stated that it expects the economy of the Philippines to grow less than 6% per year until the year 2031, according to a Manila Bulletin news report.

To put things in perspective, posted below is an excerpt from the news article of the Manila Bulletin. Some parts in boldface…

The Philippines’ annual economic growth is expected by the World Bank Group (WBG) to remain below six percent this year until 2031.

Its newest country partnership framework (CPF) for the Philippines, covering fiscal years (FYs) 2026 to 2031, showed that the WBG forecasts Philippine gross domestic product (GDP) growth of 5.3 percent for this year, 5.4 percent for next year, and 5.5 percent for 2027—all below the more ambitious six- to eight-percent target of the Marcos Jr. administration for the second half of its term.

“The average GDP growth forecast for 2025 to 2027 is expected at 5.4 percent. Risks are mostly tilted downside and include potential retaliation by main global players that may affect global growth further, probably hitting domestic growth,” the WBG said, referring to the lingering world trade uncertainty caused by United States (US) President Donald Trump’s tariff spree.

“Increased uncertainty could trigger instability in financial markets and capital flight,” it added.

On the flipside, “the Philippines may benefit from improved margins of preference for key export products, and from lower global commodity prices (tied to lower global growth), and absent any external pressures, the prospect of continued monetary policy rate normalization” in the next three years, the WBG said.

This year, its projected 5.3-percent GDP growth rate—poised to be the slowest pace of expansion since the Philippine economy gradually reopened from the most stringent Covid-19 restrictions—was attributed by the WBG to “the direct impacts of the higher tariffs and trade policy uncertainty on demand for exports, the effects of increased global policy uncertainty on investment demand, and the indirect effects on export and investment demand through lower global growth.”

But on the upside, “these negative effects are dampened as the Philippines is mostly integrated in services rather than merchandise value chains (that have been most affected by trade policy barriers), and as public investment and private investment in non-tradables is expected to remain robust,” the WBG added.

Philippine GDP growth is seen picking up gradually to 5.7 percent in 2028, 5.8 percent both in 2029 and 2030, and 5.9 percent in 2031.

The WBG forecasts headline inflation to be in the range of three to 3.2 percent from 2025 to 2031—within the targeted two- to four-percent annual consumer price increases deemed conducive to economic growth.

As the Marcos Jr. administration embarks on fiscal consolidation to narrow the yawning budget deficit and lower the share of public debt to the economy following massive borrowings at the height of the pandemic, the WBG projected the fiscal deficit narrowing gradually from 5.7 percent of GDP in 2024 to 5.4 percent in 2025, 4.9 percent in 2026, 4.4 percent in 2027, 4.1 percent in 2028, 3.9 percent in 2029, 3.7 percent in 2030, and 3.6 percent in 2031.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the economy of the Philippines currently does not have enough strength to exceed the crucial 6% mark for annual growth?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Department of Agriculture (DA) recommends retaining 15% tariff on imported rice

June 3, 2025May 29, 2025carlocarrasco

In an attempt to mitigate the effects of inflation on domestic prices, the Department of Agriculture (DA) recommended keeping the 15% tariff on imported rice, according to a GMA Network news report.

To put things in perspective, posted below is an excerpt from the news report of GMA. Some parts in boldface…

The Department of Agriculture (DA) has recommended retaining the 15% tariff on imported rice to help mitigate the effects of inflation in local prices.

In a public briefing on Wednesday, DA spokesperson Assistant Secretary Arnel de Mesa said that they aim on lowering the effects of inflation throughout the agricultural industry.

“Napakaimportante yan sa buong ekonomiya ng ating bansa, at masigurado din natin na maging tuloy-tuloy ang mga programa natin na mas mababang presyo ng bilihin di lamang ng bigas kundi iba pang agricultural commodities,” said de Mesa.

(It is very important to the economy of the entire country, and we should ensure that our programs to lower the prices of commodities will continue, not just rice but other agricultural commodities.)

He further said that the majority of every P100 that poor Filipino families spend were used to purchase rice.

“Mga 25% kasi ng bigas na kino-consume natin ay imported. So, kung mapapanatili natin na mababa ang taripa at 15%, mas masisigurado natin na yung pangkalahatang presyo ng bigas ay mas magiging matatag at hindi makakaapekto sa price spikes kung magkakaroon man. Yung inflation overall natin, mapapanatili nating mababa kung mananatiling mababa presyo ng bigas,” he added.

(About 25% of the rice we consume is imported. So, if we keep the tariff low at 15%, we can better ensure that the overall price of rice will remain stable and won’t affect any price spikes. We can keep or overall inflation lower if we keep the price of rice low.)

DA said that they consider the price of rice in international markets, exchange rates, logistics costs from the port of origin, and productivity in the country when considering rice tariffs.

“Napakaimportante lalo na sa panahon ng lean months, ay masigurado natin na yung imported na bigas ay maganda ang presyuhan para di maapektuhan din yung presyo ng local na supply natin. Yung timing is really important to make sure natin na mapapanatili natin na matatag ang presyuhan ng bigas,” he said.

(It is very important, especially in the lean months, that we ensure that the price of important rice will not affect the price of our local supply. The timing is really important to make sure that we keep rice pricing stable.)

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think 15% tariff on imported rice is just right?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Philippines trade officials meet with Pan Pacific International Holdings Corporation (PPIH)

May 25, 2025May 21, 2025carlocarrasco

Recently officials of the Department of Trade and Industry (DTI) met with the executives of Pan Pacific International Holdings Corporation (PPIH) – the company behind the popular Don Quijote stores – and they discussed opportunities of trade expansion, according to a news article by the Philippine News Agency (PNA).

To put things in perspective, posted below is an excerpt from the news article of PNA. Some parts in boldface…

Trade Secretary Cristina Roque has met with executives of Pan Pacific International Holdings Corporation (PPIH) to expand trade opportunities for Philippine products.

PPIH is the Japanese retail powerhouse behind Don Quijote and Don Don Donki store chains.

In a statement on Tuesday, DTI said the meeting, held on May 19 in Tokyo, centered on expanding the sourcing of Philippine products for inclusion in PPIH’s global store network, particularly in Japan, the United States, and other Asian markets.

The recent engagement with PPIH officials is in line with President Ferdinand R. Marcos Jr.’s directive to deepen trade and investment ties with key global partners, with the representatives from both parties eyeing collaborative solutions to address regulatory and packaging requirements, facilitating smoother entry of Philippine products into foreign retail markets.

During the meeting, PPIH expressed strong interest in increasing the visibility of Filipino-made goods in their retail ecosystem, both as standalone Philippine-branded products and as ingredients or components for Japanese-packaged offerings tailored to local markets.

PPIH identified food and wellness items, natural and sustainable home goods, and unique lifestyle products as key areas of sourcing interest.

They also expressed interest to connect directly with more Philippine exporters and manufacturers, beyond current intermediaries, to gain better access to new and trending products.

“We welcome every opportunity to introduce Filipino products to the world — especially through partners who share our commitment to innovation, inclusion, and excellence. As we work toward a more dynamic and future-ready Bagong Pilipinas (New Philippines), engagements like this underscore our dedication to creating new market avenues for Filipino enterprises,” Roque said.

DTI said that while PPIH noted that opening a Donki store in the Philippines remains a long-term consideration, executives acknowledged that a successful sourcing partnership with the Philippine government and exporters could play a significant role in including the Philippines in future regional expansion plans.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think that PPIH will proceed with trade expansion opportunities with the Philippines this year? Do you think that a strategic partnership will be realized soon?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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ANZ Research says Philippine economic growth for 2025 could slow down to 5%

May 2, 2025April 28, 2025carlocarrasco

By pointing to the trade policies of the United States and weak private spending, ANZ Research says that the economic growth of the Philippines for 2025 could slow down to 5%, according to a BusinessWorld news report. ANZ also downgraded its growth forecasts for many other Asian economies.

To put things in perspective, posted below is an excerpt from the news report of BusinessWorld. Some parts in boldface…

PHILIPPINE economic growth is expected to slow to 5% this year due to the fallout from the Trump administration’s trade policy and weak private spending, ANZ Research said.

In its latest Asia Insight report, ANZ cut its gross domestic product (GDP) forecast for the Philippines to 5% this year from 5.7% previously. It also lowered its 2026 GDP projection to 5.5% from 6% previously.

Both forecasts would fall short of the 6-8% growth target set by the Development Budget Coordination Committee from this year to the next.

“Our new forecasts incorporate our expectations of direct and indirect impact of tariffs, bilateral trade agreements between the US and individual economies, revised growth estimates for mainland China and the US and potential policy response,” ANZ Chief Economist for Southeast Asia and India Sanjay Mathur said.

The downward revisions constitute a “durable shock to regional growth as US tariffs imply a long-term reduction in global trade,” he added.

President Donald J. Trump slapped reciprocal tariffs on most of its trading partners earlier this month but suspended these higher tariffs for 90 days. Only the baseline 10% tariff remains in effect.

The Philippines was hit with a 17% reciprocal tariff, though this was the second lowest in Southeast Asia, just after Singapore.

“It is likely that some Asian economies will negotiate down or even do away with the April 2 reciprocal tariffs owing to the potential damage to US growth,” Mr. Mathur said. “Even so, the uncertainty around US trade policies will constrain business activity, including hiring and investment.”

ANZ slashed its growth projection for Asia, excluding China and India, to 2.9% this year from 3.4% previously. It also trimmed its 2026 forecast to 3.3% from 3.5% previously.

ANZ also downgraded its GDP projections for all countries it covers, namely India, Indonesia, Malaysia, Singapore, Taiwan, Thailand, South Korea and Vietnam.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the Philippines will be able to negotiate with the United States on tariff and trade matters soon?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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DTI executive says Philippines is unlikely to be hit by Trump’s planned tariff hikes

December 13, 2024December 3, 2024carlocarrasco

Based on available details and key factors, an executive of the Department of Trade and Industry (DTI) stated that the Philippines is unlikely to be hit by the planned tariff hikes of the returning United States President Donald Trump whose administration will formally start on January 20, 2025, according to a Philippine News Agency (PNA) news article.

To put things in perspective, posted below is an excerpt from the PNA news article. Some parts in boldface…

Department of Trade and Industry (DTI) Undersecretary Ceferino Rodolfo said Monday that the Philippines is unlikely to be targeted by the planned tariff hikes under the incoming administration of United States President-elect Donald Trump, citing the balanced and healthy trade relationship between the two countries.

Rodolfo noted that the Philippines’ trade deficit with the US stood at USD4 billion in 2023, far smaller than the deficits the US faces with other Asian countries, including China (USD300 billion), Vietnam (USD109 billion), Japan (USD75 billion), South Korea (USD55 billion), India (USD47 billion), and Thailand (USD43 billion).

“We believe that countries with which the US has a huge trade deficit—particularly those which worsened during the past four years—will be likely targets of additional US tariffs,” he said.

He added that this puts the Philippines in a strong position as the US looks to address trade imbalances.

“With the Trump administration’s focus on reducing trade deficit, the Philippines can leverage the balanced and healthy Philippines-US trade, indicating a mutually beneficial trade relationship,” the DTI official added.

Strengthening ties – Rodolfo said DTI Secretary Cristina Roque and Special Assistant to the President for Investment and Economic Affairs Secretary Frederick Go are working closely with the US government to ensure “even closer economic relations” with the long-time ally in preparation for Trump’s assumption into office.

He also pointed out that Trump’s pick for Department of State Secretary, Senator Marco Rubio, has been a strong proponent of closer economic and strategic ties between the US and the Philippines.

Rubio filed Senate Bill 4703, or the Philippines-US Strategic Partnership Act, which aims to enhance economic relations between the two countries.

The bill, filed on July 11, 2024, proposes to negotiate a critical minerals agreement with the Philippines; to prioritize support from the US International Development Finance Corporation for projects involving critical minerals and fossil fuels in the Philippines; and to identify additional US agencies that could invest in the Philippines, including the Department of Defense’s Office of Strategic Capital.

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the Philippines won’t be hit by Trump’s planned tariff hikes? Are you hoping that under a Trump presidency, the Philippines and America will be able to have a free trade agreement?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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Computer and Communications Industry Association (CCIA) expresses concern over Philippines’ digital tax and regulations

November 6, 2024October 28, 2024carlocarrasco

The Computer and Communications Industry Association (CCIA) – a Washington, DC-based group whose members include several prominent technology companies – expressed concern over the Philippines’ 12% value-added tax (VAT) on foreign digital services plus rules on online transactions, according to a Manila Bulletin news report.

To put things in perspective, posted below is an excerpt from the Manila Bulletin news report. Some parts in boldface…

US-based tech giants are worried that the 12-percent value-added tax (VAT) to be collected from digital services providers (DSPs), plus more stringent rules on internet transactions under two new Philippine laws, could make it harder for global firms to operate here.

While this law imposing VAT on DSPs does not discriminate between US non-resident DSPs (or other foreign DSPs) and local DSPs, industry is concerned that (its) implementing rules and regulations, which are currently being developed, could impose unworkable requirements on foreign DSPs similar to what has happened for [non-resident] income-tax payers,” the Washington, DC-based Computer and Communications Industry Association (CCIA) told the Office of the United States Trade Representative (USTR) in an Oct. 17 submission for its 2025 National Trade Estimate (NTE) Report on Foreign Trade Barriers, which also covers digital trade.

CCIA is referring to Republic Act (RA) No. 12023 enacted into law by President Ferdinand R. Marcos Jr. last October, whose implementing guidelines are due before this year ends in order to collect VAT next year.

CCIA’s member-companies include Amazon, Apple, Cloudflare, Coupang, eBay, Google, Intel, Meta, Opera, Pinterest, Rakuten, TSMC, Uber and X (formerly Twitter), among other global tech firms.

Arlington, Virginia-based Consumer Technology Association (CTA) also flagged RA 12023 as a barrier to US electronic commerce in its USTR submission, citing that this new Philippine law encompasses not only digital goods and marketplaces but also cloud services as well as online advertising, media and search engines.

Back in 2021, the Washington-based multilateral lender International Monetary Fund (IMF) warned that slapping digital services taxes (DSTs) may “open the door to retaliatory trade measures” from the US, as it did with India’s DST.

CCIA pointed out to the USTR that implementation of the Income Tax Convention of 1976, in which both the Philippines and the US are parties, has been “challenging” due to “complex and burdensome documentation procedures” or so-called request for confirmation (RFC) required by the Bureau of Internal Revenue (BIR) from income taxpayers.

“The BIR has not established standard processing timelines, and businesses are subsequently required to wait indefinitely without any commitment toward a resolution of the filing. These requests are required of all US non-resident service providers operating in the Philippines and, therefore, this policy is not limited to digital services and impacts members of all industries seeking to provide their services and goods to the Philippine market,” CCIA noted.

CCIA added that the BIR revenue memorandum circular (RMC) issued in January of this year “added further confusion to income-tax obligations of non-resident suppliers of cross-border services.”

Referring to RMC No. 5-2024, CCIA said it “appears to depart from established principles of income taxation of cross-border services (using the place where the services are performed to determine if the transaction is income-taxable) and treats the place of receipt of the services as being crucial in determining the taxability of the transaction.”

As such, CCIA called upon the Philippine government and the BIR, in particular, to hold comprehensive industry consultations, “including with US non-resident service providers, to clarify the income-tax position under Philippine law in line with well-recognized and established international practices.”

Like CCIA, the also Washington-based National Foreign Trade Council (NFTC) bewailed in its comment to the USTR that “there is significant ambiguity on how long the BIR will take to review the RFC and there is no guarantee of a positive outcome.”

“Such requests have to be made by each and every income payor (customers) of US non-resident service providers selling to the Philippines,” NFTC lamented.

Also, CCIA expressed concern about the Internet Transactions Act signed by President Marcos Jr. last year.

“Industry is concerned that the [Internet Transactions Law] would introduce obstructive requirements on electronic commerce platforms to have regulatory oversight such as mandatory collection of valid business certificates of merchants and subsequent submission to the government authority,” CCIA explained

Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the national government should respond to the concerns of the CCIA? Do you think the digital tax and current laws will turn away technology giants?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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DTI lauds signing of Tatak Pinoy law (Republic Act Number 11982)

March 5, 2024February 28, 2024carlocarrasco

In relation to the recent signing of Republic Act Number 11982 (RA11982 or Tatak Pinoy law) into law by Philippine President Ferdinand “Bongbong” Marcos, Jr., the Department of Trade and Industry (DTI) lauded the signing stressing that it will empower the nation’s industrialization, according to a Philippine News Agency (PNA) news article.

To put things in perspective, posted below is an excerpt from the PNA article. Some parts in boldface…

Department of Trade and Industry (DTI) Secretary Alfredo Pascual reaffirmed the department’s commitment to boost its science, technology and innovation-driven industrialization agenda with the enactment of Republic Act (RA) 11982 or the Tatak Pinoy Act on Monday.

In line with President Ferdinand R. Marcos Jr.’s priorities in the Philippine Development Plan (PDP) 2023-2028, the newly passed legislation will empower Philippine industries to manufacture a broader range of higher quality and sophisticated products, elevate the country’s position in the global value chain, and enhance productivity and competitiveness in the global market.

The Tatak Pinoy Law lies at the core of the nation’s industrialization strategy, revitalizing and driving the economic agenda with precision. With its focus on promoting industrial excellence, embracing innovation and navigating contemporary challenges, Tatak Pinoy is a transformative legislation that empowers Philippine industries to thrive in an intensely competitive global landscape.

Under the law, a Tatak Pinoy Council will spearhead the development and implementation of a multi-year strategy focusing on five key pillars: human resources, infrastructure, technology and innovation, investments, and sound financial management.

“We are confident that this legislation will bolster our ongoing programs, propelling industries towards greater global recognition and success. It underscores our commitment to implement measures that enhance the competitiveness of our local industries, ensuring that the world gets to experience what the Philippines has to offer,” Pascual said in a news release.

The Atlas of Economic Complexity, which measures the level of sophistication of export products being produced by countries globally, ranks the Philippines as 33rd among 133 countries, with an overall economic complexity index of 0.76.

This is driven by the country’s exports of high to moderate complex products such as electronics and integrated circuits, electrical machinery and equipment, as well as information and communications technology (ICT) services.

The country ranks 4th in Southeast Asia, trailing behind Singapore (5th), Thailand (23rd), and Malaysia (28th), and above Vietnam (61st) and Indonesia (64th).

“The Tatak Pinoy Law is a significant milestone that will enable our industries to climb up the economic complexity ladder, making the Philippines a more formidable player in the global market. Tatak Pinoy will enable our industries to embrace new technologies and effectively overcome the challenges of the modern world,” DTI Undersecretary Rafaelita Aldaba said.

With the implementation of the Tatak Pinoy Law, the DTI aims to elevate the country’s ranking by supporting and promoting the production of more sophisticated and high-quality products.

Tatak Pinoy will build on the existing flagship initiatives of the DTI, such as the One Town, One Product (OTOP) and Malikhaing Pinoy Program, which cultivate and promote unique products and empower local entrepreneurs and innovators to elevate the quality and marketability of locally made products.

Tatak Pinoy is poised to revolutionize industries, particularly Philippine manufacturing, amidst the entry of Fourth Industrial Revolution technologies. It will amplify DTI’s efforts in building an Industry 4.0 Pilot Factory, establishing a Center for Artificial Intelligence Research (CAIR), and supporting the country’s Regional Inclusive Innovation Centers (RIICs).

The new law will also drive innovation and facilitate Industry 4.0 adoption, especially among micro, small and medium-sized enterprises (MSMEs).

Pascual said a critical provision of the law is the mandate for the Philippine government to prioritize Filipino products and services in government procurement, strengthening collaboration between the public and private sectors.

“This initiative serves as a catalyst for creating a robust market environment, particularly beneficial for SMEs and startups,” he said.

Let me end this piece by asking you readers: What is your reaction about this recent development? Do you think the new Tatak Pinoy law will improve the nation’s industrialization in the years ahead? Do you think it will lead to even more new jobs in the future?

You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.

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