Japan’s Ministry of Foreign Affairs has confirmed a new income tax treaty signed with the Philippines on 28 May 2026. The agreement sets dividend, interest and royalty withholding tax rates and will apply from 1 January following entry into force.
Japan’s Ministry of Foreign Affairs has confirmed that a new income tax treaty was signed with the Philippines on 28 May 2026.
The treaty applies to Japanese income tax, corporation tax, special income tax for reconstruction, special income tax for defence, local corporation tax, and special corporation tax for defence. It also applies to Philippine taxes on income imposed under the National Internal Revenue Code of the Philippines.
Dividends are taxed at 5% where the beneficial owner holds at least 90% of the paying company’s voting power or capital for at least six months, 10% where the holding is at least 10%, and 15% in all other cases, including where dividends are deductible in computing the taxable income of the paying company.
Interest is generally taxed at 10%, with exemptions for certain government-related or export credit–linked payments, while royalties are subject to a 10% withholding tax.
The treaty will enter into force 30 days after the instruments of ratification are exchanged and will apply from 1 January of the year following its entry into force.
Earlier, the Japanese Ministry of Foreign Affairs announced, on 26 January 2026, that the first round of negotiations to update the Japan–Philippines Income Tax Treaty will begin in Manila on 27 January 2026.
