Tax
Insight and innovation to guide you through an ever-evolving tax landscape
Double Taxation happens when the same taxes are imposed twice on the same object or income by the same taxing authority on the same taxable period and may occur in the following scenarios:
Specific examples of double taxation that are allowed and are actually happening in the Philippines are:
Double Taxation Agreements (DTA) in the Philippines, also known as “Tax Treaties,” are made between two countries so they can deal with situations where said income becomes taxed by two or more jurisdictions. This becomes relevant when the subject matter of taxation involves incomes or properties that may be taxable under different jurisdictions depending on the interpretation as to the situs of taxation and presence of permanent establishment, among others.
Currently, there are forty-three (43) double taxation agreements in the Philippines. These include:
Australia | Brazil | Hungary | Malaysia | Qatar | Thailand |
Austria | Canada | India | Mexico | Romania | Turkey |
Bahrain | China | Indonesia | Netherlands | Russia | United Arab Emirates |
Bangladesh | Czech | Israel | New Zealand | Singapore | United Kingdom of Great Britain and Northern Ireland |
Belgium | Denmark | Italy | Nigeria | Sri Lanka | United States of America |
Australia | Finland | Japan | Norway | Spain | Vietnam |
Austria | France | Korea | Pakistan | Sweden | |
Bahrain | Germany | Kuwait | Poland | Switzerland |
Double Taxation can have a great negative impact on taxpayers and businesses, especially when substantial amounts of income get taxed twice. So how does one deal with this situation in the Philippines? The Mutual Agreement Procedure (MAP) allows authorities of the contracting states to be able to resolve the disputes that may arise from the decisions of the affected contracting state/s that can result in the taxation becoming non-compliant with the provisions in the DTAs.
Philippine law states that if either contracting state’s tax authority cannot resolve an issue alone, both countries should try to settle it together through agreement. Additionally, following the provisions provided in the Revenue Regulation (RR) 10-2022, it is clarified that the Philippine authority for resolving tax disputes with other countries is the Commissioner of Internal Revenue. The Commissioner can then delegate this role to other Bureau of Internal Revenue (BIR) officials through a Revenue Delegated Authority Order (RDAO); however, no RDAO has been issued yet as of date.
The RR also highlighted certain scenarios that may require the assistance of a MAP:
While MAPs can be used to resolve a Double Taxation agreement in the Philippines – the taxpayers must first make a formal request to acquire a MAP assistance.
To confirm if a MAP is necessary, the taxpayer may opt for a pre-filling consultation by following the guidelines below:
The ITAD Chief would inform the taxpayer if the issue presented can be resolved with MAP, afterwards the Chief will advise the taxpayer to submit an official formal request for MAP.
The taxpayer needs to submit a formal request for a MAP in writing (manually or thru email) that must be signed by the taxpayer or their authorized representative. However, the formal request must include the following information and documentation and must be submitted through the following address:
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For a formal MAP request to be valid under a DTA, the following information are needed:
Tax Services at Forvis Mazars
Keeping up to date with the constant changes and amendments to tax laws can become quite tedious to manage. At Forvis Mazars, we work closely with clients – offering solutions that simplify their compliance and help them navigate complex tax situations with confidence.
Our professionals have deep experience in multiple areas of tax, providing businesses at all stages of their life cycle with specialist advice. Our expertise ranges from corporate and employment tax, to transfer pricing and corporate structuring, to national and international transactions, to assessing tax implications when setting up new operations overseas, among others.
Our solutions include outsourced tax compliance, tax advisory and expert opinions, application for incentives, handling BIR tax assessments and audits, among others.
For more information on Forvis Mazars’ tax services in the Philippines, reach out to us for an initial call or follow the link below.
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