Japan And The Philippines Agree To Amend Tax Treaty

by Mary Swire, Tax-News.com, Hong Kong

20 July 2006

Japan and the Philippines have formally agreed to update the double taxation avoidance and fiscal evasion treaty in force between the two countries.

The two governments have held informal negotiations to revise Income Tax Treaty since January 2005, when a meeting took place between the Japanese Finance Minister and the Finance Secretary of the Government of the Republic of the Philippines. Formal negotiations were then held in May 2006, and adjustments made to the protocol.

These changes will reduce the withholding taxes imposed on dividends, interest and royalties paid between the two countries. The protocol will also expand the scope of the tax sparing credit, while introducing a time limitation on its availability.

"The amendment reflects the importance of the economic relationship between Japan and the Philippines. It is expected to further strengthen the economic ties between the two countries," the Japanese Embassy in Manila announced in a statement.

The protocol will be signed once both governments have completed the necessary legal steps. According to the Japanese Embassy, the treaty will go into effect upon approval by the Diet.

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