A measure that would reduce the value-added tax on goods, services, and imports has been filed in the Senate, with its author arguing that the current 12% rate places a disproportionate burden on ordinary Filipino households already struggling with rising costs.
Senate Bill No. 2047, introduced by Senator Bam Aquino during the First Regular Session of the 20th Congress, proposes amending Sections 106(A), 107(A), and 108(A) of the National Internal Revenue Code of 1997. The bill would replace the existing 12% VAT rate with 10% across all three provisions — covering the sale of goods or properties, the importation of goods, and the sale of services including digital services and property leases.
The legislation, which Aquino has titled the “VAT Reduction Act,” argues that while VAT has long served as a major government revenue source, its broad application effectively takes a larger slice of income from lower-earning households than from wealthier ones. The bill’s explanatory note describes this as a regressive impact that worsens during periods of economic difficulty.
Aquino’s proposal frames the rate cut as both a consumer relief measure and an economic stimulus tool. The bill contends that reducing the tax burden on consumption would leave households with more disposable income, supporting continued spending that in turn benefits businesses and employment.
Under the bill’s implementation provisions, the Department of Finance — in coordination with the Bureau of Internal Revenue — would have 60 days from the law’s effectivity to issue the necessary implementing rules and regulations. The measure also includes standard separability and repealing clauses, and would take effect 15 days after publication in the Official Gazette or a newspaper of general circulation.
The bill was received by the Senate Secretary’s office on April 16.
