The Philippines and Japan have signed an updated tax treaty aimed at boosting cross-border investments, strengthening economic cooperation, and aligning bilateral tax rules with modern international standards, according to the Department of Finance (DOF).

In a statement issued Friday morning, the DOF said the agreement is designed to support cross-border economic activity while safeguarding the integrity of both countries’ tax systems.

The agreement was signed in Tokyo by Philippine Ambassador to Japan Mylene J. Garcia-Albano and Japanese Ambassador to the Philippines Endo Kazuya in the presence of President Ferdinand R. Marcos Jr. and Japanese Prime Minister Sanae Takaichi during the President’s state visit to Japan.

Earlier this year, the DOF led the formal renegotiation of the Philippines-Japan Double Taxation Convention (DTC) from 27 to 30 January, which resulted in an agreement in principle between the two countries.

The new convention, formally signed on Friday, replaces the existing Philippines-Japan tax treaty that entered into force in 1980 and was partially amended in 2008. It marks the first substantive revision of the bilateral tax framework in nearly two decades.

The convention updates rules on the taxation of business profits and investment income, lowers certain withholding tax rates to encourage cross-border investments, and introduces stronger safeguards against tax evasion and treaty abuse. It also expands information-sharing between tax authorities and establishes an arbitration mechanism for tax disputes that remain unresolved after two years of consultations.

Japanese officials said the updated framework is expected to promote a more stable and predictable investment environment while supporting sustainable economic growth and facilitating trade and investment flows between the two countries.

“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 D. Go said.

The signing forms part of broader efforts by Manila and Tokyo to deepen economic cooperation. The two nations elevated their relationship to a Comprehensive Strategic Partnership to “advance security, maritime safety, infrastructure, energy, technology, and trade.”

On Thursday, Philippine officials secured around $3.4 billion (approximately P210 billion) in investment pledges from Japanese companies following a roundtable meeting with President Marcos in Tokyo. The commitments cover sectors such as shipbuilding, advanced electronics manufacturing, semiconductors, artificial intelligence-driven technologies, and green maritime industries, and are expected to generate around 10,300 direct and indirect jobs nationwide.

The DOF also recently secured new financing from the Japan International Cooperation Agency (JICA) worth about P713 billion for the Metro Manila Subway Project (Phase 1) and the Cagayan de Oro-Malaybalay road project.

As of December 2025, total loan and grant commitments from Japan stood at approximately $13.96 billion, accounting for 33.54 percent of the Philippines’ total official development assistance portfolio, making Japan the country’s largest development partner.