Stamp tax on letters of credit (L/Cs) in the Philippines has doubled as it brings in a radical new taxation system.

The Tax Reform for Acceleration and Inclusion Act (TRAIN) has seen employees with salaries pay less income tax while very low paid workers will, in percentage terms, benefit most under the new regime.

L/C costs

The impact of TRAIN is that it will provide workers with more spending power while increases in other taxes will help the government recoup some of the cost of forgone income tax revenue.

Increases include a doubling of documentary stamp tax on L/Cs, mortgages and certificates of deposits.

Other increases

Tax has also doubled on interest income in foreign currency deposits.

Charges for cheques have increased and documentary stamp tax has been raised by as much as fifty per cent for all debt instruments.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.