A comparative study on the effect of imposing either value-added tax or gross receipts tax on pawnshops

• Main Author: Dionisio, Lorenze Angelo G.
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Value-added tax—Philippines; Sales tax—Philippines; Pawnbroking—Philippines; Taxation; Tax Law
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/6088; https://animorepository.dlsu.edu.ph/context/etd_masteral/article/13062/viewcontent/CDTG004690_P.pdf
• Institution: De La Salle University

For centuries, pawnshops around the world have been a good alternative source of financing for persons who have short term liquidity problems. Because of this, during the past twenty years, the pawnshop industry has been steadily growing in the Philippines. With the substantial growth in capital and asset base, the industry has been subjected to regulations issued both by the Legislature and from the Bangko Sentral ng Pilipinas, the government agency which under Presidential Decree No. 114, is tasked with the supervision of pawnshops. There have been many regulations imposed on pawnshops and non-bank financial institutions, but this paper’s focus is on the aspect of taxation. There have been many changes to laws governing taxing schemes of pawnshops, but the most notable of these changes is the imposition of either the Value Added Tax or the Gross Receipts Tax, which has both been imposed on the pawnshop business. As it stands today, by virtue of Republic Act No. 9238, it is the latter taxing regime applicable to pawnshops. This study focuses on this particular change. Its objective is to compare the various effects of Value Added Tax or Gross Receipts Tax on the pawnshop business; their effect to government tax collections and revenue; and their possible impact to people who frequently transact with pawnshops. This study aims to give a holistic and objective view on these two taxes which may be applied to pawnshops and to offer recommendations with a view to improve the state of the pawnshop industry as well as to give insights on the important factors which must be considered in tax reforms pertaining to pawnshops.