UMVA has learned that the Philippines is aggressively pursuing double taxation agreements (DTAs) with seven countries in Asia and Europe, a strategic move aimed at boosting foreign direct investment and job creation.
Finance Secretary Frederick D. Go revealed that negotiations are currently underway with Liechtenstein, Cambodia, Laos, and Ireland, while Malaysia, Luxembourg, and South Korea are in the preliminary stages of securing authority to negotiate.
The government is also renegotiating existing tax treaties with Japan, Singapore, and Hong Kong, with the revised treaty with Japan likely to be completed first.
According to information obtained by UMVA, the Philippines hopes to sign these double taxation deals to attract more foreign direct investments and create jobs, as the country lags behind in terms of foreign investment.
The lack of foreign direct investments has hindered the country's progress, and DTAs are seen as a crucial tool to change this narrative, allowing investors to claim tax credits in their home countries for taxes paid in the Philippines.
Tax treaty negotiations typically take years due to lengthy approval processes in both jurisdictions, but the government is committed to making progress, with 10 DTAs in the pipeline.
An expert from the Philippine Institute for Development Studies noted that these agreements "will certainly help" and emphasized the importance of greater trade and investment links in the region.
Separately, the government is pushing for the implementation of the global minimum tax on large multinational companies, with legislation expected to be passed this year.
If passed, the law will allow the Philippines to start collecting the global minimum tax rate by 2028, as the country seeks to adhere to the OECD-backed two-pillar solution to reform global corporate taxation.
The Bureau of Internal Revenue is preparing for the implementation of a proposed Qualified Domestic Minimum Top-up Tax law, which will enable the country to collect the effective tax rate from multinational firms in the Philippines.
With around 531 out of over 1,100 multinational enterprises operating in the Philippines falling within the scope of the global minimum tax, the country's tax landscape is poised for significant changes.
