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The Philippines and Japan signed an updated treaty that eliminates the risk of double taxation on income earned across the two jurisdictions, covering both enterprises and individuals
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It replaces the existing tax treaty originally concluded in 1980 and partially amended in 2008
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Agreement also introduces updated provisions on withholding taxes on dividends, interest, and royalties, designed to encourage greater flows of investment and technology into the Philippine economy
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More than 245,000 Filipino workers in Japan are also expected to benefit from the clear and predictable rules on the taxation of cross-border income
The Philippines and Japan have signed an updated treaty that eliminates the risk of double taxation on income earned across the two jurisdictions, covering both enterprises and individuals.
The agreement – called the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income – was signed during President Ferdinand Marcos Jr.’s four-day state visit to Japan that concluded May 29.
“This agreement reflects the Philippines’ commitment to fostering a more competitive, predictable, and investment-friendly environment that will create high-quality employment opportunities and sustained economic growth,” Finance secretary Frederick Go, who was part of the Philippine delegation, said in a statement.
The agreement replaces the existing tax treaty originally concluded in 1980 and partially amended in 2008. It also introduces updated provisions on withholding taxes on dividends, interest, and royalties, designed to encourage greater flows of investment and technology into the Philippine economy.
These changes are expected to further support Japanese investments in key sectors such as advanced manufacturing, infrastructure, and digital innovation.
READ: Japanese firms pledge $3.4B fresh investments during Marcos visit
Japan remains one of the Philippines’ top sources of foreign direct investment, with annual inflows exceeding US$800 million in 2022 and 2023.
By providing clear and predictable rules on the taxation of cross-border income, the agreement is also expected to benefit more than 245,000 overseas Filipino workers in Japan.
Marcos, in a joint press conference with Japanese Prime Minister Takaichi at the Akasaka State Guest House in Tokyo, said the agreement “will enhance the business environment and promote greater cross-border investment.”
