PH, 10-country double taxation pacts will boost overseas investments, opportunities — DoF

Adrian Maravillas

The Philippines is currently pursuing double taxation agreements (DTA) with 10 nations, aiming to improve the country’s foreign direct investments (FDIs) and job opportunities, Department of Finance (DoF) Secretary Frederick Go shared.

Go announced during a media briefing last June 17 the renegotiation of DTAs with three partners and the pursuit of seven new contracts.

He listed Japan, Singapore, and Hong Kong, as part of the realignment. Meanwhile, Cambodia, Laos, Ireland, and Liechtenstein are currently being processed. Additionally, pacts with Malaysia, South Korea, and Luxembourg are still in their initial phases, or what he termed “the infancy path” of the agreement.

“[These] are under various stages—some are negotiation, some are processing, some are for signing,” Go clarified.

He also highlighted the agreement’s target in improving the country’s slow FDI and attracting massive foreign investors.

“That is why DTAs are an essential tool, as they help make the Philippines a more attractive destination for foreign investors and, ultimately, contribute to job creation.” Go stated.

According to him, DTAs establish clear tax rules between two countries, preventing international investors from being taxed twice on the same income.

“We sign DTAs with other countries to ensure that taxes paid by investors in the Philippines can be credited against their tax obligations in their home countries,” he added.

The department also expects an increase in job opportunities for Filipinos globally

“What we’re trying to do is to create jobs for Filipinos. [In order] to create jobs for Filipinos, we need investments,” Go said.

Despite already having 44 existing DTAs with other countries, completing the ten new ones would take years due to the extensive legal procedures required. 

PH-Japan tax treaty

As shared by DoF, Japan might be the first of ten countries to fully implement the updated contract.

President Ferdinand Marcos Jr. recently signed a renegotiated Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income in Japan.

The treaty aimed to remove taxation on both countries and decrease the tax burden for both individuals and enterprises.

“By providing clear and predictable rules on the taxation of cross-border income, the agreement is also expected to benefit more than 245,000 overseas Filipino workers (OFWs) in Japan,” Go said.

“I think more and more we see investments coming from within the region. So, greater trade and investment links should also be in place,” he added.

Multinational minimum tax bill

DoF is pushing to pass the qualified domestic minimum top-up tax (QDMTT) law, commonly known as multinational minimum tax bill, to prevent the loss of potential tax revenues.

Once the bill passes, the Bureau of Internal Revenue (BIR) is expected to implement the program. 

In the meantime, Go explained that the country faces up to ₱50 billion in annual losses to other jurisdictions unless it implements the law, which requires multinational enterprises to pay a minimum tax rate of 15%.

Go voiced his desire to pass the law this year, onboard the system next year, and officially commence the initiatives in 2028.

“I definitely want to pass the law this year so that we can join the program in 2027,” Go stated.

The bill, under the Organization for Economic Co-operation and Development’s (OECD) Pillar 2 framework, is currently undergoing a congressional evaluation.