PH ranks 2nd in digital patience in Asia-Pacific

Filipinos are the second most digitally patient consumers in the Asia-Pacific region, according to a new study by customer engagement platform Twilio, which measured how long consumers are willing to wait for online customer service issues to be resolved.

The Philippines trails only Indonesia, with 76 percent of Filipino consumers saying they remain patient when dealing with automated customer service, well above the regional average of 68 percent.

This translates to an expected resolution window of 27.3 minutes among Filipinos, longer than the regional average of 24.4 minutes. In practice, the Philippines waits longer than any other market surveyed, with actual waiting times averaging 31.9 minutes.

“Filipino consumers are patient because they start with a deep sense of trust, but this trust is a foundation that brands must either build upon or risk breaking,” said Nicholas Kontopoulos, vice president of marketing for Asia Pacific and Japan at Twilio.

Despite these delays, speed is not the dominant concern for many Filipino consumers, the study found.

Half of the respondents said clear and easily understandable instructions were their top priority when dealing with digital customer service channels.

Data security and fast issue resolution were also important factors, with 41 percent of Filipinos saying the protection of personal information and quick service were essential to their trust in a brand.

Another key expectation is warmth in digital interactions, with more than a third of respondents saying automated systems should reflect the friendliness and empathy of human agents.

The study “Decoding Digital Patience” was conducted between August and September 2025 and covered 7,331 respondents across seven Asia-Pacific markets. These include 1,007 respondents in the Philippines.

Varying patience

Twilio’s study showed patience varies significantly depending on the issue being addressed.

Filipino consumers were more understanding of delays involving complex or high-stakes concerns, particularly in healthcare, where longer resolution times were deemed necessary.

Patience declined sharply, however, in routine and everyday interactions that fell short of expectations.

High levels of frustration were reported during telecom service outages (69 percent), cases involving incorrect or damaged items (68 percent), billing disputes (68 percent) and delayed or missed retail deliveries (66 percent).

Filipinos belong to one of the markets most exposed to artificial intelligence (AI) in customer service, with 81 percent reporting they have interacted with an AI-powered tool before.

Despite this high exposure, satisfaction among Filipino consumers remains mixed, with 42 percent reporting frustrations stemming from scripted responses, generic answers and unresolved issues.

As a result, 43 percent of Filipinos said they prefer to begin customer support interactions with a human agent, even if it means waiting longer.

Source: Inquirer

May VAT be imposed upon condominium association dues?

Value Added Tax (VAT) is NOT imposed on condominium association dues in the Philippines. Association dues, membership fees, and other assessments collected by condominium corporations are explicitly exempt from VAT under Philippine law.

Legal Basis for Exemption

Supreme Court Ruling

The definitive legal authority is the Supreme Court decision in G.R. No. 215801 (First E-Bank Tower Condominium Corp. v. Bureau of Internal Revenue, January 15, 2020). The Court held that:​

• Association dues, membership fees, and assessments collected by condominium corporations are not subject to income tax, VAT, and withholding tax

• A condominium corporation is not engaged in trade or business

• Dues are collected purely for the benefit of condominium owners and constitute contributions for maintenance, not income

• The dues do not arise from the sale of goods or services

This Supreme Court ruling specifically invalidated Revenue Memorandum Circular No. 65-2012 (RMC 65-2012), which had attempted to impose 12% VAT on condominium dues in 2012.manilatimes+1​

Tax Code Provisions

The exemption is codified in the National Internal Revenue Code (NIRC) through two provisions:

Section 109(Y) - VAT Exemptions: Following the Tax Reform for Acceleration and Inclusion (TRAIN) Law (RA 10963, 2018), this section explicitly lists "association dues, membership fees, and other assessments and charges collected by homeowners' associations and condominium corporations" as VAT-exempt transactions

Section 30(C) - Mutual Benefit Associations: Condominium corporations qualify as "beneficiary societies" or associations operating exclusively for the benefit of their members. No part of net income or assets may inure to any member individually.​

Conditions for the Exemption

The VAT exemption applies only if the condominium corporation meets specific requirements:

Requirement	Details
Legal Structure	Non-stock, non-profit corporation
Primary Purpose	Organized exclusively to manage and maintain common areas for members' benefit
Use of Funds	Association dues must be budgeted and spent solely for common area maintenance, utilities, security, administrative expenses, and governance
Income Activities	No substantial income-generating activities directed at non-members (e.g., commercial leasing)
BIR Certification	Must obtain and maintain a valid Certificate of Tax Exemption (CTE)
CTE Validity	Valid for three years; must be renewed periodically (RMO 38-2019)

Obtaining Tax Exemption Status

To qualify for and maintain the exemption, associations must:

1. File BIR Form 1945 with the Bureau of Internal Revenue, including:

   • Certified copies of Articles of Incorporation and By-Laws

   • Latest General Information Sheet

   • Audited financial statements

   • Detailed list of actual activities

   • Board resolution authorizing the application

2. Pay the certification fee (₱100)

3. Undergo BIR evaluation, which may include field inspection and document verification

4. Receive and maintain the Certificate of Tax Exemption, valid for three years

5. File annual returns (BIR Form 1702-EX for exempt entities) demonstrating continued compliance​

What Is Taxable vs. Exempt

Understanding the distinction is critical for proper compliance:

VAT-Exempt Receipts

• Member association dues and CUSA (common-usage-service-area) charges

• Special assessments for common area improvements

• Penalties and interest on late payment of dues (part of enforcing collection)

• Rental of function rooms to members (mutual benefit activity)

Taxable Receipts (Subject to Income Tax and VAT)

• Lease income from commercial tenants (telco antennas, retail kiosks)

• Interest income on bank deposits (subject to 20% final withholding tax)

• Unrelated commercial operations

• Services rendered to non-members for consideration​

Important Compliance Consideration

Failure to maintain the Certificate of Tax Exemption is critical. If a condominium corporation's CTE lapses due to non-renewal, the exemption is automatically lost. This means all association dues collected become taxable income retroactively, creating significant tax liabilities and penalties.​

Evolution of the Law

The current exemption status represents a reversal of the BIR's 2012 position:

Year	Action	Outcome
2012	BIR issued RMC 65-2012 imposing 12% VAT and 32% income tax	Created significant burden on condo owners
2018	TRAIN Law amended the Tax Code to expressly exempt condominium dues	Provided statutory protection
2020	Supreme Court invalidated RMC 65-2012	Confirmed exemption is constitutionally and legislatively sound
2025-2026	Current BIR position and jurisprudence confirm exemption	Stable legal framework in place

Conclusion

Condominium association dues cannot lawfully be subject to VAT in the Philippines. This protection is established through:

1. Supreme Court precedent (G.R. No. 215801)

2. Tax Code statutory exemption (Section 109(Y) and Section 30(C))

3. Legislative intent embodied in the TRAIN Law and prior homeowners association statutes

4. Underlying principle that condominium corporations are not engaged in trade or business

Unit owners and condominium boards should ensure their associations maintain valid Certificates of Tax Exemption from the Bureau of Internal Revenue to protect this exemption and demonstrate compliance to local government units and regulatory authorities.

Source: Ziggurat Real Estate

Philippines targets 4.3% of GDP for infrastructure spending in 2026

The Department of Budget and Management (DBM) cut its infrastructure spending target to 4.3% of gross domestic product (GDP) this year from 5.1% previously, as a corruption scandal weighed on government spending and economic growth last year.

The lower target translates to about P1.3 trillion in infrastructure outlays, Acting Budget Secretary Rolando U. Toledo said on Tuesday, signaling a more cautious spending stance as the government works to restore confidence and streamline disbursements.

“Based on our approved General Appropriations Act, we’re looking at achieving our infrastructure target as [a percentage of our] GDP at 4.3%, and even at a nominal level, that is equivalent to P1.3 trillion,” he told a Palace briefing in mixed English and Filipino.

Infrastructure spending has been a key pillar of President Ferdinand R. Marcos, Jr.’s growth strategy, though execution slowed last year due to budget adjustments and project bottlenecks amid a massive graft scandal involving flood control projects.

The government had earlier set a target of 5.1% of GDP for infrastructure spending in 2026, equivalent to P1.56 trillion, lower than the 2025 target of 5.3% of GDP or P1.51 trillion.

In 2024, infrastructure spending accounted for 5.8% of GDP or P1.545 trillion.

Mr. Toledo said the government is still determined to boost investments in infrastructure in the medium term.

He said there is little risk of delays in infrastructure projects this year, after a “clean” budget process.

“There is no reason for us to delay,” Mr. Toledo said, adding that the 2026 national budget contains no “ghost projects” and that allocations across programs are fully specified, supporting the government’s ability to meet its infrastructure goals.

Mr. Marcos on Jan. 5 signed a record P6.793-trillion national budget amid a graft scandal, which has prompted tighter scrutiny of public spending and a more cautious approach to the release of funds for infrastructure and other major projects.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said slower public works spending may temper economic momentum because infrastructure has one of the highest multiplier effects in the economy.

“It may cap growth momentum, as public works have one of the highest multiplier effects in the economy,” he said via Viber.

“The more cautious stance may help restore governance credibility, but it also means less crowding-in of private investment, weaker job creation in construction and allied sectors, and slower productivity gains,” he added.

Economy Secretary Arsenio M. Balisacan last week said economic growth in the Philippines likely eased to between 4.8% and 5% in 2025, reflecting the impact of the graft scandal on the economy.

The Philippine Statistics Authority is set to publish official fourth-quarter and full-year 2025 GDP figures on Jan. 29.

Without faster execution, improved project selection, or stronger private investment to offset the slowdown, the Philippines’ economic growth could fall short of its potential even as confidence gradually improves, Mr. Rivera said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said higher government spending — particularly on infrastructure — is likely to be the primary driver of economic growth in 2026.

He expects authorities to accelerate public works as early as the first quarter to make up for underspending last year, which he said was partly due to tighter anti-corruption measures and governance reforms.

A catch-up spending program could help bolster investor confidence and sentiment, Mr. Ricafort said, reinforcing the growth outlook.

He said prospective interest rate cuts by the US Federal Reserve and the Bangko Sentral ng Pilipinas would lower borrowing costs, supporting credit demand, investment and overall economic expansion.

Source: Business World