DoF leads talks to update PH-Japan tax treaty

The Department of Finance (DoF) led the formal renegotiation of the Philippines-Japan Double Taxation Convention (DTC) from 27 to 30 January, as both countries seek to update their tax treaty to reflect current global business and tax practices.

Finance Secretary Frederick D. Go said the talks reaffirm the long-standing economic partnership between the Philippines and Japan and aim to provide a clearer and fairer tax framework for cross-border activities.

Mutual commitment

“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.

The renegotiated DTC, concluded after one round of formal talks, covers the taxation of income earned by citizens and residents of both countries. It sets out how income will be taxed and how credits will be applied for taxes already paid, helping avoid double taxation while ensuring compliance with each country’s tax laws.

The updated treaty is expected to support trade and investment by giving businesses and taxpayers greater certainty, while also protecting the tax bases of both governments.

Revenue Operations Group Undersecretary Rolando Ligon said the review was necessary given changes in the global tax environment, including digitalization and increased cross-border capital flows.

“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.

Seventy years of Phl-Japanese diplomatic relations

The talks come as the Philippines and Japan mark 70 years of diplomatic relations. The Philippine delegation was composed of officials from the DoF and the Bureau of Internal Revenue, while the Japanese side was represented by officials from the Embassy of Japan and the Ministry of Finance.