If reform isn’t enough, is it time for overhaul?

By Mon Abrea

For more than a decade, reform advocates have pushed for modernization of the country’s revenue system — digitalization, risk-based audit, faster VAT refunds, inter-agency coordination, and reduced bureaucratic discretion.

Progress has been made.

But the question remains: Is incremental reform enough?

The Philippines continues to impose more than 30 national and local taxes, and numerous regulatory fees. Yet compliance remains costly, unpredictable, and stressful. Our 2025 Corruption Perceptions Index score of 32 out of 100 — 120^th out of 182 economies and trailing several ASEAN peers, according to Transparency International — signals persistent governance risk.

Corruption functions as a hidden tax.

Not legislated — but paid through delays, inefficiency, and fragmented systems.

Recently, BIR Commissioner Charlie Mendoza commented on proposals to replace the BIR and Customs with a unified National Revenue Authority (NRA). He correctly noted that such proposals “reflect long-standing concerns over fragmentation and coordination in revenue administration,” and emphasized that the problem lies in “governance quality, not merely institutional form.” He added that restructuring should be “a governance reform of last resort, not a first response.”

I agree.

But after more than a decade of advocating administrative reform, digital modernization, risk-based enforcement, and simplification — are we already facing that last resort?

When inequity, inefficiency, and bureaucratic discretion persist despite reforms, the issue may not be governance alone. It may be institutional design.

Fragmented mandates, overlapping systems, and siloed data create structural vulnerabilities. When system design enables discretion, discretion enables leakage. And leakage erodes trust.

This is not a call for reckless institutional demolition. It is a call for strategic overhaul — a serious roadmap that considers structural integration, unified data architecture, and system redesign, not merely cosmetic upgrades.

Face-lifts cannot fix structural fractures.

Investors do not merely examine tax rates. They examine institutional coherence. They ask whether enforcement is predictable, whether rules are applied consistently, and whether systems are transparent.

Modernization must be comprehensive: end-to-end digital processes, AI-driven risk profiling, simplified excise structures, adoption of the OECD Global Minimum Tax, and alignment with ASEAN standards — including revisiting the region’s highest VAT rate.

Tax reform is governance reform.

If incremental change cannot resolve fragmentation and systemic inefficiencies, then institutional reform must at least be placed on the strategic table — not as political rhetoric, but as policy design.

On Feb. 26, the 2026 International Tax and Investment Roadshow across more than 30 global cities and the CREATE MORE edition of Why Invest in the Philippines? will officially be launched at the ACG Gala Night at Incanta in Quezon City. The message to global investors is simple: the Philippines is reforming.

But reform must be deep enough to restore trust.

Because in today’s economy, confidence is currency.

And confidence demands systems that work.

Mon Abrea is a tax policy expert and the founder and chief tax advisor of Asian Consulting Group, advising governments, multinational firms, and investors on tax reform and investment strategy. He holds degrees and executive training from Harvard University, Duke University, and the University of Oxford.

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