Tax BlogTax Treaty Relief : Application and Guidelines

June 2, 2014

Taxes are definitely one the worst enemies of any organization or individual and are among the major concerns when it comes to foreign investment and trade. Corporate Tax, Custom Duties and Value Added Tax will affect a big % of your revenue when trading in the Philippines.

What about double taxation? If my company is in USA or Singapore and will trade in the Philippines will I have to pay taxes in both countries? Tax treaties have been created in order to avoid fiscal evasion and mitigate the effects of double taxation.

The Philippines has 37 effective tax treaties. Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate, or are exempt from Philippine taxes on certain items of income they receive from sources within the Philippines.

To benefit from a particular tax treaty is aimed by all foreign companies but the process it is not as easy as you might think. The BIR made compulsory to file a tax treaty relief application before anyone can avail of the lower tax rate. The process is not the easiest and several documents must be gathered throughout the application. Certain documents must be executed abroad and require to be authenticated by the appropriate Philippine consulate. All this still not assures that your application will be accepted.

To decrease your tax exposure you must follow a complex process which could refrain you from applying for it. If you wish us to support you with your Tax Treaty Relief Application, contact us. Our experience with the Bureau of Internal Revenue can be vital for your business in the Philippines.

Loic Toullec, Account Executive

Unit 616 Tower One Stock Exchange
Makati City, Philippines 1226
T: +63 917 831 65 64

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