Manila: The Marcos administration is intensifying its efforts to attract foreign investments by negotiating double taxation agreements (DTAs) with 10 countries, Finance Secretary Frederick Go announced. The government aims to alleviate the burden of double taxation on foreign investors, thereby enhancing the appeal of the Philippines as an investment destination.
According to Philippines News Agency, Go highlighted during a recent briefing with selected reporters that the Department of Finance (DOF) is also advocating for the passage of the multinational minimum tax bill. The Philippines is currently renegotiating DTAs with Japan, Singapore, and Hong Kong, and is in discussions with Liechtenstein, Cambodia, Lao PDR, and Thailand. Some agreements are in the negotiation stage, while others are being processed or are ready for signing. Talks with Malaysia, Luxembourg, and South Korea are in the preliminary stages, seeking authorization to negotiate.
Of the agreements under discussion, Go noted that the DTA with Japan is likely to be implemented first. Last month, during President Ferdinand R. Marcos Jr.'s visit to Japan, the two countries signed a renegotiated Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. This agreement seeks to eliminate double taxation on income earned in both jurisdictions, reduce business costs, and enhance tax predictability for individuals and enterprises. Go emphasized that DTAs are crucial for attracting foreign direct investments by allowing investors to receive tax credits in their home countries for taxes paid in the Philippines.
In addition to the DTAs, Go stated that the DOF is actively supporting the multinational minimum tax bill, or the Qualified Domestic Minimum Top-up Tax (QDMTT). According to a Bureau of Internal Revenue (BIR) briefer, the QDMTT ensures large multinational enterprise (MNE) groups pay at least a 15-percent effective tax rate on profits earned in the Philippines, aligning with the Organisation for Economic Co-operation and Development's Pillar Two Global Minimum Tax rules. This tax applies to multinational groups with annual consolidated revenues of at least £750 million.
BIR data indicates that over 1,100 MNEs operate in the Philippines, with approximately 531 falling under the global minimum tax framework. The DOF has already endorsed the proposed measure to Congress. Go clarified that adhering to the 15-percent minimum tax would not adversely affect foreign direct investors, as they would not be subjected to double taxation in their home countries.
Go expressed optimism about the bill's enactment this year, aiming for the Philippines to join the program in 2027. However, the first collection of taxes is slated for 2028 due to the structuring of the rules. The Fiscal Incentives Review Board is currently evaluating the potential additional revenues that could arise from this measure.
