Looming PH-Cambodia tax treaty seen fostering more investments, jobs

MANILA, Philippines — Two-way investments and employment between the Philippines and Cambodia are seen getting a boost from the double taxation agreement (DTA) that the two countries will likely sign soon.

In a statement Monday, the Department of Finance (DOF) said that during negotiations held in Siem Reap last month, Cambodia already “agreed to the majority of the proposals of the Philippines” concerning the proposed DTA provisions.

Finance Undersecretary Antonette Tionko led the Philippine delegation, while Deputy Director-General Bun Neary of the General Department of Taxation represented Cambodia.

Last month’s negotiations were a follow-through to initial talks in June 2018.

A DTA will allow residents of both countries who were working in the other country to only pay taxes in their home-country.

“If a nonresident has income source in the Philippines and is a resident in another country, he may be liable to pay tax in both countries under their tax laws. To avoid ‘double taxation’ in this situation, the Philippines has negotiated double taxation treaties with (other) countries. A nonresident in another country with which the Philippines has a double taxation treaty may be able to claim exemption or partial relief from the Philippines’ tax on certain types of income from Philippine sources,” the Bureau of Internal Revenue (BIR) explained on its website.

The BIR had said that a DTA with Cambodia was “expected to boost cross-border investments between the Philippines and Cambodia, and entry of more Filipino professionals to Cambodia.”

“[In 2018], there are around 50 Filipinos who are registered stockholders in Cambodian companies. These companies are engaged in the following: transport of goods and similar services; computer and other related services; call center; market research and public opinion polling; import and export of goods and merchandise; accounting, bookkeeping and tax consultancy; real estate development; software development; garment manufacturing; and educational services,” the BIR had noted.

“There are also more than 2,500 Filipinos working in Cambodia as factory workers, teachers, technical and skilled workers, managers, entertainers, engineers and clerks and other service staff” two years ago, according to the BIR.

The Philippines was also eyeing a DTA with Ireland, and had expressed interest to sign similar agreements with Brunei, Laos and Myanmar.

The country has existing DTAs with the five other Asean member-countries—Malaysia, Singapore, Thailand, Indonesia and Vietnam.

To date, the Philippines has more than 40 tax treaties with other countries—mostly DTAs and tax exchange information agreements—in force.