BIR gears up for possible MNE top-up tax rollout

MANILA, Philippines – The Bureau of Internal Revenue (BIR) is preparing for the rollout of the planned domestic top-up tax for large multinational enterprise groups (MNEs) earning income in the Philippines.

In a statement on Thursday, the BIR said it is preparing for the Department of Finance’s (DOF) Qualified Domestic Minimum Top-Up Tax (QDMTT) proposal through discussions on compliance, reporting, audits, and institutional capacity.

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In September 2025, the DOF first proposed the QDMTT as a tax rule aligned with the OECD’s Global Minimum Tax framework. It ensures MNEs pay a minimum global tax rate of 15 percent on income arising in each country where they operate.

The QDMTT will enable the Philippines to collect additional taxes on locally earned income, keeping taxing rights in the country rather than with MNEs’ home jurisdictions.

“As global tax rules evolve, we have to make sure that income earned in the Philippines remains taxable in the Philippines,” BIR Commissioner Charlie Mendoza said.

“At this stage, our immediate priority is to build the capability of our personnel and prepare the systems, processes, and organizational structures needed to administer the proposed regime effectively,” he added.

The BIR met with the DOF’s QDMTT team and the Fiscal Incentives Review Board on June 3 to discuss staff training, new tax forms, compliance systems, and organizational preparations for implementation.

Industry feedback

For its part, the DOF said the government is pursuing the measure following feedback from multinational enterprises operating in the Philippines.

“We have been informed that many of our multinationals would rather comply with the GMT domestically rather than comply with unfamiliar rules of other jurisdictions or pay top-up taxes abroad,” Finance Assistant Secretary Euvimil Nina Asuncion said.

“The primary considerations are simplifying domestic compliance and ensuring that implementation is strictly in accordance with international standards,” she added.

Moreover, a recent Congressional Policy and Budget Research Department (CPBRD) paper urged lawmakers to prioritize the QDMTT, warning that the government could lose up to P162.9 billion in revenue without it.

“In the short term, policymakers may prioritize the enactment of a Qualified Domestic Minimum Top-Up Tax or QDMTT to safeguard the country’s taxing rights and prevent revenue leakage to foreign jurisdictions,” the CPBRD said.

“At the same time, policymakers should recognize the need to strengthen the Bureau of Internal Revenue’s capacity to effectively administer more complex global tax rules,” it added. /pai INQ