The updated DTC will be subject to approval under each country’s legal processes and will take effect 30 days after the exchange of diplomatic notes.
In a statement, Finance Secretary Frederick D. Go said the conclusion of the talks underscores the importance of Japan as one of the Philippines’ most enduring economic partners.
“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,” Go said.
What it covers
The updated DTC, completed after a single round of formal negotiations, covers income taxation for citizens and residents of both countries.
It sets out how taxes will be imposed and how credits will be granted for taxes already paid, ensuring compliance with the tax laws of both the Philippines and Japan.
According to the DOF, the updated treaty is expected to provide a balanced framework that supports cross-border trade and investment while protecting the integrity of both countries’ tax systems.
Supporting cross-border activity
Revenue Operations Group (ROG) Undersecretary Rolando Ligon said in the same statement said the renegotiation comes at a critical time, as tax systems worldwide adjust to rapid digitalization and increased capital mobility.
“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.
Timely bilateral milestone
The renegotiation coincides with the 70th anniversary of diplomatic relations between the Philippines and Japan, adding significance to the talks.
Embassy of Japan in the Philippines Minister for Economic Affairs Yokota Naobumi expressed optimism that the amended treaty would encourage greater Japanese investment in the country.
“I sincerely hope that the amendment to the tax treaty will be concluded at an early stage and that this year will truly become one of significant progress in our bilateral relationship,” he said.
Next steps ahead
Both sides reiterated their commitment to aligning the DTC with current international standards while ensuring fairness and preventing tax evasion.
The Philippine negotiating team included DOF ROG Assistant Secretaries Dakila Elteen M. Napao and Euvimil Nina R. Asuncion, along with Bureau of Internal Revenue (BIR) Deputy Commissioner for Legal Larry M. Barcelo and International Tax Affairs Division chief Robbie M. Bañaga.
The Japanese delegation was led by Economic Minister Naobumi and included officials from the Ministry of Japan’s Tax Bureau. —Ed: Corrie S. Narisma
