Agreement in Principle on the Protocol Amending the Income Tax Treaty between Japan and the Republic of the Philippines

July 18, 2006

Governments of Japan and the Philippines have reached an agreement on the revision of the Convention between the Government of Japan and the Government of the Republic of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Income Tax Treaty) signed in 1980, after the formal negotiation held in May 2006 and some subsequent adjustments. On July 18th, this agreement was formally announced. Two governments have held informal negotiations to revise Income Tax Treaty since 2005 when the meeting was held between the Finance Minister of the Government of Japan and the Finance Secretary of the Government of the Republic of the Philippines in January 2005.
The both governments have agreed in principle on the Protocol which will partially amend the current Income Tax Treaty and reduce the withholding taxes imposed on dividends, interest and royalties paid between the two countries. The Protocol would also expand the scope of the tax sparing credit while introducing a time limitation on its availability.
The amendment reflects the importance of the economic relationship between Japan and the Philippines. It is expected to further strengthen the economic ties between the two countries.
After both governments complete the necessary procedures, the Protocol will be signed; it will be put into effect after it is approved by the Diet.

(END)