The Market Monitor Minding the Nation's Business
Finance Secretary Ralph Recto on Thursday emphasized that the newly signed double taxation agreement (DTA) between the Philippines and Cambodia will enhance the country’s tax system while attracting foreign investments.
“By eliminating tax barriers and ensuring a fair and transparent framework, we are not only attracting greater foreign investments into the Philippines but also reinforcing our trade ties within the region. This will position us as a strong and reliable economic partner,” Recto said.
The agreement was signed on February 11, 2025, by Recto and Cambodia’s Deputy Prime Minister and Minister of Foreign Affairs and International Cooperation Prak Sokhonn.
President Ferdinand R. Marcos Jr. and Cambodian Prime Minister Samdech Moha Borvor Thipadei Hun Manet witnessed the signing.
Designed to prevent double taxation on income earned in both countries, the DTA also aims to curb tax evasion and deepen economic cooperation in alignment with the ASEAN Forum on Taxation’s commitments.
The deal is expected to remove fiscal barriers, spur bilateral trade, and encourage investment.
The agreement covers various tax categories, including business profits, dividends, interest, royalties, capital gains, and other income sources. It also establishes tax information exchange and dispute resolution mechanisms, aligning with global efforts on Anti-Base Erosion and Profit Shifting (BEPS) and tax transparency.
Finalized after three rounds of negotiations, the last of which concluded in Manila in April 2024, the agreement will take effect upon ratification by the legislative bodies of both nations.
The DTA signing was part of Prime Minister Hun Manet’s official visit to the Philippines from February 10 to 11, 2025, aimed at strengthening diplomatic ties and expanding cooperation in key sectors, including trade, investment, and regional initiatives.
Recto accompanied Marcos as the Cabinet Secretary-in-Attendance during the visit. The President underscored the significance of the agreement in fostering closer economic collaboration between the two countries.
“[W]e welcome our formal cooperation on the avoidance of double taxation and the exchange of best practices in competition law that the Philippines and Cambodia both consider as critical to entice and facilitate greater bilateral investments and economic activities between our business sectors,” Marcos stated during the signing.