PH, Japan finalize new tax treaty to boost investment

MANILA — The Philippines and Japan have successfully concluded negotiations on a revised Double Taxation Convention (DTC), aimed at creating a modern and equitable tax framework that supports cross-border investments and economic cooperation.

The new DTC, finalized after a single round of formal talks held from January 27 to 30, 2026, outlines how both countries will levy income taxes and grant tax credits to prevent double taxation for individuals and businesses operating between the two nations.

“As one of the Philippines’ most vital and enduring economic partners, the negotiation with Japan underscores our countries’ mutual commitment to strengthening partnership by providing a clear, modern, and equitable tax treaty framework,” Finance Secretary Frederick D. Go said.

The Department of Finance (DOF) led the Philippine delegation, with participation from the Bureau of Internal Revenue (BIR), as the two countries moved to update their tax agreement in line with international standards and global economic shifts.

Revenue Operations Group Undersecretary Rolando Ligon emphasized the importance of the update amid rising digitalization and increased capital mobility.

“Through these renegotiations, we seek to align our Convention with contemporary international standards, promote certainty and fairness for taxpayers, and reinforce our shared commitment to combating tax evasion and avoidance,” Ligon said.

The updated treaty comes at a symbolic moment as the Philippines and Japan commemorate 70 years of diplomatic relations.

Officials on both sides expressed optimism that the revised DTC will further invigorate bilateral trade and investment.

“I sincerely hope that the amendment to the tax treaty will be concluded at an early stage and that this year will truly become one of significant progress in our bilateral relationship,” said Yokota Naobumi, Minister for Economic Affairs at the Embassy of Japan in the Philippines.

The Japanese delegation included Naobumi, Embassy of Japan Second Secretary Narita Akihiro, and officials from the Japanese Ministry of Finance’s Tax Bureau—Director for Tax Treaties and International Affairs Hisanaga Takuma, Deputy Directors Nishijima Hiromitsu and Tanaka Kyohei, and Section Chief Kawashima Ayaka.

Representing the Philippine side alongside Ligon were Assistant Secretaries Dakila Elteen M. Napao and Euvimil Nina R. Asuncion of the DOF, BIR Deputy Commissioner for Legal Larry M. Barcelo, and International Tax Affairs Division Chief Robbie M. Bañaga.

The negotiated agreement will undergo approval in accordance with the respective legal processes of each country.

Once ratified, it will take effect 30 days after diplomatic notes are exchanged confirming both nations’ consent.

The existing DTC between the Philippines and Japan was first signed in 1980.

The updated version reflects global shifts in tax policy, digital commerce, and international cooperation to curb tax avoidance.