PPP Center calls for more smart city projects

The Public-Private Partnership (PPP) Center said more smart city projects are needed, citing the need to incorporate advanced technology in key infrastructure projects.

“There is a need for us to develop more digital infrastructure, smart city projects,” PPP Center Director for project development service Raphael M. Badillo said in an online briefing.

Smart City projects refer to the efficient management of infrastructure and public services like mobility, water, and energy.

The PPP Center website lists 18 information and communications technology projects valued at a combined P35.87 billion. The projects are currently in the pipeline or being implemented, the PPP Center said.

“Private sector expertise and efficiencies play a vital role in enabling smart city development since these smart cities heavily depend on technology and innovation,” Mr. Badillo said.

Projects include the P2.10-billion Bacolod Super City Project which was awarded to Highdata Infra Corp.

This project involves a centralized command center for traffic monitoring, natural disasters, criminal activity, emergency response and public alerts. The Bacolod Super City project also includes the installation of video surveillance equipment, deployment of analytics, and the development of comprehensive geographic information system software for the creation of maps, spatial analysis and data integration.

The smart city PPP projects also include the P3.29-billion smart urban mobility proposal of the Metro Pacific Tollways Corp. (MPTC) which is currently being negotiated.

MPTC’s unsolicited proposal for Baguio City involves the financing, design, procurement, construction, and installation of urban mobility solutions, including a congestion fee scheme; traffic enforcement system; parking management system and smart command center.

“The private sector can finance these critical infrastructure development projects to enable this smart city development. We encourage companies expressing interest in pursuing more digital infrastructure because a lot of local government units definitely need these innovations and technological advancements,” Mr. Badillo said.

Source: Business World

Digitalizing tax: The next frontier

In the modern world, data is king. Every step taken creates a data footprint, and the ability to capitalize on this is crucial —with tax authorities and businesses being no exception.

As businesses generate voluminous data, there is growing recognition that tax and finance departments require robust digital infrastructure to run effectively. Globally, regulatory authorities globally recognize that the ability to collect and analyze taxpayer data is key to bridging the tax gap.

Taxpayers, meanwhile, are expected to provide tax and financial data through more rigorous regulatory and compliance requirements. There is also a pivot to ensuring that they implement effective financial and tax governance frameworks, guaranteeing data accuracy and the rigorous enforcement of company tax policies.

The Organization for Economic Cooperation and Development's vision on tax digitalization, i.e., Tax Administration 3.0, supports the view that digital transformation has the potential to expand the tax system in an increasing number of areas.

Throughout Southeast Asia, meanwhile, governments are enhancing their tax systems with digital frameworks. As noted by the Asian Development Bank, post-pandemic tax reforms across the region have prioritized digitalization to strengthen economic recovery and improve efficiency in tax administration.

Singapore, Malaysia, and Indonesia have implemented advanced compliance systems. Beyond e-filing and payment systems, tax authorities are now exploring new technologies like big data, blockchain, biometrics, and artificial intelligence.

In 2020, Thailand launched a value-added tax (VAT) refund mobile app that allows tourists to make VAT claims. The system uses blockchain technology to record and track claims and purchases, enhancing data integrity and efficiency.

This year, Indonesia announced the Core Tax System, which enables the automation and digitalization of tax administration and provides an integrated network for more informed, data-driven decisions.

The Philippines joined the Inclusive Framework on Base Erosion and Profit Shifting (BEPS) implementation in November 2023. The framework implements measures to tackle tax avoidance and equip governments with instruments to minimize profit shifting to low-tax jurisdictions that erode a country's tax base.

To maintain membership, the Philippines will need to implement "minimum standards" to combat harmful tax practices. Modernizing its existing tax framework from both technical and technological standpoints will be crucial. This should incentivize the Bureau of Internal Revenue to accelerate its digital transformation with more urgency.

Digital transformation is included in the Philippine Development Plan 2023-2028. The country has taken steps toward digitalization through initiatives like e-invoicing, aligning with the region's digital trends. Observing these regional advancements can help Philippine companies anticipate the future direction of tax systems.

As for Philippine companies, they need to adapt their digitalization strategies in key areas such as transfer pricing (TP) and Pillar Two rules to align with other countries in Southeast Asia.

TP involves setting prices for transactions between related parties within multinational enterprises to ensure these prices adhere to the arm's length principle (i.e., prices are set as if between unrelated parties). This aids in the fair allocation of taxable income across jurisdictions.

TP also impacts a company's profitability, operational structure, and fiscal efficiency. Technology plays a critical role in monitoring pricing and financial outcomes, structuring or restructuring business to achieve fiscal efficiencies, and meeting compliance obligations.

Meanwhile, Pillar Two rules — also known as the Global Anti-Base Erosion Model Rules (GloBE) — are transforming the tax landscape by applying a 15-percent global minimum tax across all countries where a company operates. This requires advanced data management and comprehensive analysis of tax positions.

Pillar Two forms part of BEPS 2.0, together with Pillar One, which introduces a new approach to taxing the digital economy.

Adopting a digital strategy does not require a complete redesign of a company's finance system architecture. It can focus on targeted, point-based solutions that could address immediate concerns but with a broader, overarching strategy in mind.

For Philippine companies, digital transformation in tax compliance and TP goes beyond mere automation. It involves building a strategic digital framework that enables an organization to pre-empt, pivot or keep pace with technological advancements and regulatory shifts.

Developments in TP and BEPS 2.0 necessitate rethinking the future of the finance function. Digital tools streamline complex data processes, automate calculations, and improve documentation accuracy — meeting the intensive data requirements of regulations such as the GloBE rules.

Companies need to move away from siloed, manual processes and embrace a more integrated approach across tax, finance, and operational functions. The top priority for tax transformation is ensuring the integrity of data across various use cases.

By leveraging automated data extraction and integration, companies can build a single, unified data source, reducing manual errors and enhancing the efficiency and timeliness of financial, tax and TP calculations. A tech-enabled tax and TP infrastructure facilitates data-driven strategic decision-making for businesses. It also enables data analytics to preempt potential tax issues before they reach the desks of regulatory authorities.

Embarking on a digital transformation journey requires assembling many moving parts. However, the benefits that can be realized along the way are substantial. For Philippine companies, proactive technology investment is essential to address the growing complexities of tomorrow's tax and transfer pricing frameworks.

Source: Manila Times

Digital payments: How the Philippine economy gains from it

Real-time digital payments are projected to provide banking access to nearly 21 million unbanked Filipinos and contribute to economic growth, according to a report by global payments software provider ACI Worldwide.

The report that ACI published in partnership with London-based economic consultancy firm The Centre for Economics and Business Research used data from 40 countries to try to establish an “empirical link” between real-time payments and financial inclusion.

Real-time digital payments are projected to provide banking access to nearly 21 million unbanked Filipinos and contribute to economic growth, according to a report by global payments software provider ACI Worldwide.

ACI said that boosting financial inclusion by promoting instant payments could contribute an additional $323 million to the Philippines’ gross domestic product (GDP) by 2028.

Meanwhile, the estimated increase in banked Filipinos presents a profit opportunity of $28.7 billion for Philippine financial institutions by 2028, which ACI calculated “based on the typical customer lifetime value estimated at $1,375.“

The report that ACI published in partnership with London-based economic consultancy firm The Centre for Economics and Business Research used data from 40 countries to try to establish an “empirical link” between real-time payments and financial inclusion.

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Digital payments: Its profit prospects for banks

Globally, ACI said instant payments are expected to contribute an additional $285.8 billion to global GDP and create more than 167 million new bank account holders by 2028.

“The rise of real-time payments has the potential to open up banking access to millions of new customers, presenting significant growth and profit potential for banks that capitalize on this to modernize and streamline payment technology and services,” said Leslie Choo, senior vice president at ACI.

Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the share of digital payments to total retail payment transactions in the country had grown to 52.8 percent in 2023, from 42.1 percent in 2022.

It was a feat that exceeded the expectations of the central bank, which hoped to digitalize 50 percent of retail payments in the country by 2023. This, in turn, bodes well for the BSP’s goal to capture 70 percent of adult Filipinos into the formal financial system by 2023.

The central bank had said its next goal is to digitalize 60 to 70 percent of retail payments in the country by 2028.

“Real-time payments have asserted their role as a powerful enabler for societal transformation, bridging critical gaps in financial access and empowering millions of Filipinos,” Choo said

Source: Inquirer