The Philippines' Bureau of Internal Revenue (BIR) announced that it has begun preparations for a proposed Qualified Domestic Minimum Top-Up Tax, following a 3 June 2026 meeting between the Commissioner and the Department of Finance on the draft Qualified Domestic Minimum Top-Up Tax of 2026 Bill.
The Philippines Bureau of Internal Revenue (BIR) announced on 11 June 2026, through a Facebook post, that it has begun preparations for the possible implementation of the proposed Qualified Domestic Minimum Top-Up Tax (QDMTT), a measure pushed by the Department of Finance (DOF) to ensure that large multinational enterprise groups pay a minimum level of tax on income earned in the Philippines.
On June 3, 2026, as part of these preparations, BIR Commissioner Charlito Martin R. Mendoza met with the DOF QDMTT team and the Fiscal Incentives Review Board, who presented the key features and framework of the draft “Qualified Domestic Minimum Top-Up Tax of 2026” Bill. Discussions focused on tax administration considerations for its implementation, including compliance, reporting, audit readiness, and institutional capacity.
Key action items discussed during the meeting included implementing specialised training for BIR personnel, developing new tax forms and compliance procedures, and establishing the necessary organisational framework to administer the proposed QDMTT regime.
Commissioner Mendoza emphasised the BIR’s commitment to coordinating with the Department of Finance (DOF) in preparing for the introduction of the QDMTT as part of its Revenue Collection and Revenue Base Protection initiatives under BIR DARES. He noted that the measure aims to safeguard the Philippines’ taxing rights amid evolving international tax developments.
Finance Assistant Secretary Euvimil Nina Asuncion stated that the DOF is advancing the proposal following feedback from multinational enterprises operating in the Philippines. She explained that many multinational groups prefer complying with the global minimum tax domestically rather than navigating unfamiliar foreign rules or paying top-up taxes to other jurisdictions. The proposed framework seeks to simplify compliance while ensuring alignment with international standards.
Meanwhile, the Philippines House of Representatives has issued a discussion paper titled “The Future of Philippine Fiscal Incentives under OECD Pillar Two”, which examines the impact of Pillar Two global minimum tax rules on existing tax incentives in the Philippines, including possible policy considerations.
This paper examines the evolution of the Philippine fiscal incentive regime from the CREATE Act (Republic Act No. 11534) in 2021 to CREATE MORE (Republic Act No. 12066) in 2024, both of which sought to streamline investment processes and harmonise local taxation through mechanisms such as the Registered Business Enterprise Local Tax (RBELT).
In the context of the OECD Pillar Two Global Minimum Tax (GMT), the paper discusses the emerging “incentive paradox,” wherein traditional income-based incentives such as the Income Tax Holiday (ITH) and the Special Corporate Income Tax (SCIT) may reduce effective tax rates below the 15% global threshold, thereby triggering top-up taxes in foreign jurisdictions and diminishing the intended benefits of such incentives.
The paper further explores how the OECD Pillar Two framework may reshape the future relevance and design of Philippine fiscal incentives, arguing that while GMT is likely to constrain the effectiveness of traditional income-based incentives, fiscal incentives themselves remain relevant as instruments for investment promotion and economic development.
However, the changing global tax environment may drive a structural shift in incentive design and policy orientation — from income-based tax reductions toward cost-based, performance-driven, and strategically targeted instruments. The paper underscores the need for a recalibrated Philippine incentive framework that sustains competitiveness, enhances fiscal efficiency, and preserves domestic taxing rights within an increasingly coordinated global tax regime.
