Tax Agreement to Strengthen Economic Ties between Brunei and Philippines
Brunei Darussalam and the Philippines signed an agreement last month for the avoidance of double taxation and the prevention of income tax evasion. This is expected to increase trade and investment flows between the two countries. It will also enhance domestic resource mobilization and tax cooperation based on internationally agreed tax information exchange standards.
The agreement was signed in Brunei’s capital Bandar Seri Begawan on 16 July by Brunei Minister of Finance and Economy II Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah and the Philippines’ Secretary of Finance Carlos G. Dominguez III.
Double taxation occurs in cross-border trade or investment when the same income is taxed in two or more countries. Eliminating double taxation benefits the business and finance sectors by reducing corporate tax liability.
In the meantime, preventing tax evasion helps improve fiscal revenue, which is vital to ensuring the effective and timely delivery of public services and to attaining debt sustainability and the Sustainable Development Goals. Domestic resource mobilization is also one of the key strategies for a resilient economic recovery from the COVID-19 pandemic.
As members of the Association of Southeast Asian Nations (ASEAN), both Brunei and the Philippines are committed to resolving taxation issues that impede regional trade and investment. Initiatives under the ASEAN Forum on Taxation include creating a network of bilateral agreements on avoidance of double taxation and addressing withholding tax and double tax issues. The forum is also working toward automatic exchange of information to reduce tax evasion.
“This agreement will serve us well as we bounce back from the ravages of the global health crisis. It will further ease trade in goods and services between our two countries. It will strengthen our economic cooperation and enhance investment flows and economic activity across our borders,” said Dominguez in a statement released by the Department of Finance.
“Rest assured, we will work to continue and deepen the coordination between our respective tax authorities in ensuring the proper implementation of the agreement and the enforcement of relevant tax laws. I look forward to heightened cooperation between our two countries as we both exert all our efforts to recover from the pandemic and rebuild the best possible future for our two peoples.”
Brunei and the Philippines have also agreed to jointly promote the development of the halal industry and exports. The countries signed a Memorandum of Understanding on Halal Industry and Halal Export Development and Promotion in April 2017.