MANILA — Roberto Claudio, president of the Philippine Retailers Association (PRA), expressed confidence that the retail industry’s contribution to the nation’s gross domestic product (GDP) could rise to 20 percent this year, reflecting robust growth from the current 18.6 percent recorded in 2022.
According to Philippines News Agency, speaking at the conclusion of the National Retail Conference and Expo 2024 on August 30, the retail sector has shown a consistent increase in its GDP share, climbing by approximately 1 to 2 percent annually. This growth is supported by the industry’s substantial tax contributions, which have averaged PHP 750 billion annually between 2017 and 2022. Claudio highlighted the potential for even greater contributions if online transactions were subject to the same taxes as traditional brick-and-mortar stores.
Currently, online marketplaces in the Philippines are not subject to value-added tax (VAT), giving them a pricing advantage of up to 17 percent over local retailers, who are taxed at a rate of 12 percent VAT with an additional 5 percent duties on some goods. This tax disparity favors foreign online retailers, particularly those importing goods from markets like China, and presents a significant challenge to local businesses. Claudio urged the government to expedite the implementation of the Internet Transactions Act, aimed at leveling the playing field between physical and online stores by harmonizing tax regulations.