Senate concurs with ratification of PH-Brunei pact vs. double taxation

The Senate on Wednesday concurred with the ratification of the agreement between the Philippines and Brunei to avoid double taxation and the prevention of fiscal evasion on income taxes.

The chamber unanimously voted for the adoption of Senate Resolution 119 which was sponsored by Senate Committee on Foreign Relations chairperson Sen. Imee Marcos on Tuesday.

Under the agreement, Marcos said business profits would be taxed only in the state where the company did business unless that company had a permanent establishment in the other state.

Independent personal services such as professional services by lawyers, engineers, architects, dentists, and accountants, shall be taxed only in the worker’s state of residence provided that he does not stay for an aggregate period of over 183 days in any twelve months, she added.

Professors, teachers, and researchers who render services upon the invitation of any educational institution in the other contracting state are exempted from that state’s income tax.

Cross-border remittances for a student’s or a trainee’s maintenance, education, study, or training are likewise exempted from tax including grants, allowances, and awards given to them abroad.

According to Marcos, the agreement allocates taxing jurisdiction between the two states.

The Philippines shall allow as a tax credit any tax payable in Brunei Darussalam on income or profits and in turn, Brunei shall credit taxes paid in the Philippines on income or profits derived from our country,” she said.

The pact also provides a Non-Discrimination provision to ensure that taxpayers are not subjected to unfair treatment or denied benefits solely based on their nationality or residence.

It also mandates the exchange of information between the contracting parties to help prevent tax evasion.

“The concurrence by the Senate will thus alleviate the tax burden on both our Filipino workers and Filipino corporations and partnerships,” she said.

“It will encourage cross-border trade and investments between the two countries and provide clarity and certainty in the manner by which each state will treat and levy income taxes, enabling businesses and investors from both nations to finance and develop their businesses,” she added.

Marcos said the agreement will also foster people-to-people exchanges between professionals, academics, students, businessmen, and workers which will encourage close personal ties between two good neighbors.

Lastly, the senator said the concurrence in the ratification of the agreement will strengthen the Philippines’ commitment to the ASEAN Forum on Taxation to complete a network of Double Taxation Avoidance Agreements among ASEAN member-states.

The Philippines-Brunei DTAA was signed in 2021 decades after it started the negotiations in 2001. —NB, GMA Integrated News