The Marcos administration is accelerating efforts to attract foreign investments by negotiating double taxation agreements (DTAs) with 10 countries and pushing for the passage of a multinational minimum tax law, Finance Secretary Frederick Go said.
Go said the Philippines is renegotiating DTAs with Japan, Singapore and Hong Kong, while talks are also underway with Liechtenstein, Cambodia, Lao PDR and Thailand. Discussions with Malaysia, Luxembourg and South Korea are at earlier stages.
“These are under various stages; some are negotiation, some are processing, some are for signing,” Go said.
Among the agreements, the revised tax treaty with Japan is expected to take effect first. During President Ferdinand R. Marcos Jr.’s visit to Japan last month, the two countries signed a renegotiated convention aimed at avoiding double taxation and preventing fiscal evasion.
The agreement seeks to eliminate double taxation on income earned in both countries, reduce business costs and improve tax certainty for investors and enterprises.
Go said DTAs are a key tool for attracting foreign direct investments (FDIs) because taxes paid by investors in the Philippines can be credited against tax obligations in their home countries, preventing them from being taxed twice on the same income.
The Department of Finance is also supporting the proposed Qualified Domestic Minimum Top-up Tax, which aligns the Philippines with the OECD’s Pillar Two Global Minimum Tax framework.
The measure would ensure that large multinational enterprise (MNE) groups pay a minimum effective tax rate of 15 percent on profits earned in the Philippines. It applies only to MNEs with annual consolidated revenues of at least €750 million.
According to Bureau of Internal Revenue data, more than 1,100 multinational firms operate in the country, with around 531 expected to fall under the global minimum tax regime.
Go said the bill has already been endorsed to Congress and would not increase the overall tax burden on affected investors since taxes paid in the Philippines can be credited in their home jurisdictions.
He expressed confidence that the measure could be enacted this year, allowing the Philippines to join the global framework by 2027. Actual tax collections under the scheme are expected to begin in 2028.
The Fiscal Incentives Review Board is still assessing the potential revenue gains from the measure. / PNA
