Senate approves tax treaties with Turkey, Italy & Germany
Credit: Manila Bulletin
The Senate concurred, after hearing, the ratification of tax treaties between the Philippines and the governments of Italy, Germany and Turkey that will prevent double taxation.
Sen. Juan Edgardo “Sonny” Angara said the approval on third and final reading of Senate resolutions 1540, 1541, 1542 on the double taxation avoidance agreements, seek to promote international trade as well as improve political relations of the Philippines with the countries involved.
Angara, sponsor and chairman of the subcommittee handling the PH-Italy, PH-Germany and PH-Turkey Double Taxation Avoidance Agreements, explained that by entering into tax treaties, instances of double taxation, a situation in which both countries levy taxes on the same income, will be mitigated.
The three countries are among the Philippines’ largest trading partners worldwide; with Germany being the country’s top trading partner in Europe and 8th worldwide; Italy, 7th in Europe and 24th worldwide; and, Turkey, 14th in Europe and 41st worldwide.
“With these tax treaties, we help build an enabling environment and investment climate that is more attractive to new businesses and ventures, particularly with Germany, Italy and Turkey,” the senator said.
With tax treaties in place, cross-border tax avoidance and evasion will be reduced by better exchange of tax information and mutual assistance in collection of taxes between the two countries, he added.
In the case of Italy, Angara pointed out that the renegotiations of the tax treaty were prompted so as to remove the Philippines from the “blacklist” of tax havens, which had posed a considerable barrier to Italian investments into the country.
“These agreements were undertaken to better enforce domestic laws, reduce tax evasion, promote technology transfer, and guarantee that Philippine tax laws are compliant with internationally agreed standards,” the lawmaker said.
16 senators voted in favor of the resolutions, with no negative vote and no abstention. The Philippines has entered into tax treaties with 42 countries as of this year.
According to Angara, government agencies who pushed for the tax treaties included the Department of Finance (DoF), the Bureau of Internal Revenue (BIR), the Bangko Sentral ng Pilipinas (BSP), the Department of Foreign Affairs (DFA) and the Department of Justice (DOJ).