PH, Japan finalize amendments to double taxation treaty
The Philippines and Japan have finalized negotiations to amend their decades-old double taxation agreement, aiming to align with the evolving global business climate.
In a statement on Tuesday, the Department of Finance (DOF) said it had finalized the Philippines-Japan Double Taxation Convention (DTC) after one round of formal negotiations.
“As one of the Philippines’ most vital and enduring economic partners, the negotiation with Japan underscores our countries’ mutual commitment to strengthening partnership by providing a clear, modern and equitable tax treaty framework,” Finance Secretary Frederick Go said.
First signed on Feb. 13, 1980, the agreement aims to avoid double taxation by defining how each country will levy taxes and apply credits to income taxes already paid by citizens and residents of both countries.
The first amending protocol was signed on Dec. 9, 2006, and entered into force on Dec. 5, 2008.
The latest renegotiation is expected to support cross-border economic activity and strengthen the tax systems of both countries.
According to the DOF, the update ensures that economic relations remain modernized and responsive to the current business landscape, while still ensuring fairness and preventing tax evasion.
For his part, DOF Revenue Operations Group Undersecretary Rolando Ligon said the digitalization of the economy prompted the review of the agreement.
“Through these renegotiations, we seek to align our convention with contemporary international standards, promote certainty and fairness for taxpayers and reinforce our shared commitment to combating tax evasion and avoidance,” Ligon said.
Meanwhile, the Embassy of Japan in the Philippines Minister for Economic Affairs Yokota Naobumi said the amendment would “become one of significant progress in our bilateral relationship” and stimulate investments between the two countries.
The renegotiation comes as the Philippines marks 70 years of diplomatic relations with Japan.
The DTC will go through each country’s legal process and take effect 30 days after the exchange of diplomatic notes.
