The Marcos administration is stepping up efforts to attract foreign investments, with the government currently negotiating double taxation agreements (DTAs) with 10 countries, Finance Secretary Frederick Go said.
In a recent briefing with selected reporters, Go also said the Department of Finance (DOF) is pushing for the passage of the multinational minimum tax bill.
The Philippines is currently renegotiating DTAs with Japan, Singapore, and Hong Kong. The government is also in talks with Liechtenstein, Cambodia, Lao PDR, and Thailand.
“These are under various stages, some are negotiation, some are processing, some are for signing,” Go said.
“For those that are in the, what you call this, more infancy path, meaning we are just going through the process of what you call authority to negotiate, [include] countries like Malaysia, Luxembourg, and South Korea,” he added.
Of the 10 countries, Go said the agreement with Japan is likely to be implemented first.
During President Ferdinand R. Marcos Jr.’s visit to Japan last month, 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.
The agreement aims to eliminate double taxation on income earned in both jurisdictions, reduce the cost of doing business, and improve tax predictability for individuals and enterprises.
“DTAs are very essential tool to attract foreign direct investments. And that is because investors who pay their taxes here in the Philippines can get credit for the taxes they pay here in their home country so that they are not subjected to double taxation,” Go said.
Multinational minimum tax
Go said the DOF is also strongly supporting the passage of the multinational minimum tax bill, also known as the Qualified Domestic Minimum Top-up Tax (QDMTT).
According to a Bureau of Internal Revenue (BIR) briefer, the QDMTT is a domestic tax designed to ensure that large multinational enterprise (MNE) groups pay at least a 15-percent effective tax rate on profits earned in the Philippines, consistent with the Organisation for Economic Co-operation and Development’s Pillar Two Global Minimum Tax rules.
The tax applies only to multinational groups with annual consolidated revenues of at least €750 million during the relevant testing period.
BIR data show that more than 1,100 MNEs operate in the Philippines, with about 531 falling within the scope of the global minimum tax framework.
Go said the proposed measure has already been endorsed by the DOF to Congress.
“If you follow that [15 percent] minimum and you don’t touch it, it does not affect any of the foreign direct investors. Because again, just like a global taxation agreement, whatever they pay us here, the 15 percent that they pay us here, they don’t have to pay it again in their home jurisdiction,” he said.
Go expressed optimism that the bill would be enacted this year.
“I definitely want to pass the law this year so that we can join the program in 2027. But the first collection of taxes is actually 2028 because of the way the rules are crafted,” he said.
He added that the Fiscal Incentives Review Board is still assessing the potential additional revenues that could be generated from the measure. (PNA)
