PH, Germany ink amended double taxation treaty
MANILA, Philippines - The Philippines and Germany signed a renegotiated version of the Double Taxation Agreement between the two countries in Berlin on Monday.
Finance Secretary Cesar Purisima and Ambassador Martin Ney, the Legal Adviser to the German Foreign Ministry, signed the agreement.
"We are honored and pleased to sign this latest set of amendments to our Double Taxation agreement with Germany. By signing this, we also renewed the commitment between both of our countries to promote tax transparency as an international priority, and to help each other fight tax evasion in our respective jurisdictions,” Purisima said in a statement.
Double Taxation agreements are meant to promote international trade and investment by ensuring that entities are not subject to double application of certain types of tax between two contracting states, as this would be detrimental to foreign business activity.
Among the amendments to the Philippines-Germany DTA are the lowering of certain preferential rates, as summarized below:
Lowered preferential tax rate on dividends to 5% if beneficial owner is a company which owns at least 70 percent of stockholdings of paying company, from previous 10% under the old DTA
Lowered tax on interest to rate of 10 per cent unless otherwise exempt instead of 15 per cent rate in all other cases under the old DTA
Interest in connection with sale on credit of a commercial/scientific equipment and of an enterprise to enterprise sale on credit, if the recipient is also the beneficial owner thereof, is now taxable only in the residence State, and not anymore taxed in the source state at 10 per cent
Lowered tax rate to 10 per cent regardless of the type of royalty.