PHL, Germany to sign new treaty against double taxation

Philippines and Germany are set to sign next year a new tax agreement expected to boost German investments in the country.

Both countries have concluded the third and final round of negotiations on the revision of the accord, called Agreement for the Avoidance of Double Taxation with respect to Taxes on Income and Capital, on July 20 at the Federal Ministry of Finance in Berlin.

The Department of Foreign Affairs on Wednesday said all outstanding issues were resolved at the last round of the five-day negotiations.


Philippine and German officials have agreed to ensure early completion of their respective domestic requirements for the ratification of the new treaty.

“The signing of the new agreement is expected to take place in Germany early next year,” according to a DFA statement.

Both sides agreed on the adoption of new standards in the tax treaty, which is designed to protect against the risk of double taxation where the same income is taxable in the Philippines and Germany.

The agreement is also aimed at preventing fiscal evasion and fostering cooperation between Philippine and other tax authorities by enforcing their respective tax laws.

“This new tax treaty will provide German investors with certainty and guarantees in the area of taxation,” Philippine Ambassador to Germany Maria Cleofe Natividad said in her report to the DFA. “It will bolster our economic diplomacy efforts here in Germany.”

The DFA believes an effective tax measure is expected to facilitate more trade and investments in the country.

Despite an unsettled dispute between Manila and Berlin over the construction of an airport terminal in Pasay City, Germany remained a significant economic partner of the Philippines.

The problem started under former Philippine President Gloria Macapagal-Arroyo after the $650-million Ninoy Aquino International Airport III project undertaken by Germany’s Fraport AG and its Filipino partner Philippine International Airport Terminal Co. was expropriated by the government in 2002.

Manila and Berlin vowed to resolve the dispute in a timely manner and not to let the issue affect their bilateral ties.

From January to November 2011, bilateral trade was valued at $2.9 billion, with Germany the biggest export market for Philippine goods in Europe. German companies in the Philippines include Continental Temic, Siemens, Lufthansa Technik, Daimler Benz, BMW, Bayer, and Bosch.-GMA News (July 25, 2012 2:21PM)