The Asian Development Bank, or ADB, approved a $400-million loan for the Philippines to speed up its tax modernization program.

ADB said the loan is the multinational lender's first policy-based loan under the Domestic Resource Mobilization Subprogram 1.

The program aims to boost tax compliance and payments, reduce policy-based inequalities, and raise funds for climate-change mitigation projects.

"The program recognizes that DRM reforms necessitate not only raising revenue, but also designing a revenue system that fosters inclusiveness, encourages good governance, promotes investments and job creation, reduces inequality, and tackles climate change," ADB senior economist for public finance Aekapol Chongvilaivan said.

ADB said DRM supports the government's several major initiatives and development plan to make the country's tax system fair, efficient, and supportive of national progress.

These include the government target of raising the Philippine tax-to-GDP (gross domestic product) ratio to 15.9 percent by 2026 from 15 percent in 2020 under the Philippine Development Plan 2023-2028.

This will put the country's level further above the average ratio of 17.6 percent in Asia and Pacific.

The Development Budget Coordination Committee, or DBCC, said the government's revenue effort for this year could reach 15.7 percent, higher than the 15.2 percent pegged at the committee's meeting in April.

DBCC said the government aims to boost its total revenue up to P6.62 trillion in 2028.

For this year, DBCC expects tax-based revenue to range from P3.50 trillion to P3.55 trillion.

The Bureau of Internal Revenue also carries out its Digital Transformation Initiative which allows taxpayers to fulfill tax registration, return filing and payment online.

Better tax efficiency

Through this initiative, ADB projects the country to obtain a better ratio of actual tax revenues to tax potential of 85 percent by 2026 from 75 percent in 2020.

ADB added DRM advances the shared goals for  a better tax system in the Philippines as a new member of the Organization for Economic Cooperation and Development/G20 Inclusive Framework on Base Erosion and Profit Shifting and the Global Forum on Transparency and Exchange of Information.

"The Philippines looks forward to the partnership that it will have with the OECD and the members of the Inclusive Framework on BEPS in ensuring tax fairness and transparency and pushing for international tax reforms that benefit all nations," Finance Secretary Benjamin Diokno said.

The Philippines recently joined that organization on 8 November to exchange insights and adopt tax policies from 143 member jurisdictions and countries.

ADB said it also continues to provided the government knowledge for the Real Property Valuation and Assessment Reform Bill.

This bill aims to establish a comprehensive and up-to-date electronic database system for real property transactions.