Philippines and Brunei Sign Double Tax Avoidance Treaty
On July 16, 2021, the Philippines and Brunei formally signed a double taxation avoidance (DTA) agreement that will eliminate double taxation and deter tax evasion on the income generated from cross-border transactions.
Negotiations for a DTA initially began in 2001 with the first draft being approved in 2017. The DTA will facilitate both governments in exchanging information and ensure tax matters are in line with global standards.Furthermore, the DTA is expected to increase the flow of trade and investments between the two countries due to the reduced corporate tax liability for businesses. Total trade reached some US$117 million in 2019, with Brunei enjoying a trade surplus of US$107 million. The vast majority of Brunei’s exports to the Philippines are for petroleum products and other liquified petroleum gasses.
Stronger partnership for the Halal industry
The DTA can further strengthen the Philippines’ and Brunei’s cooperation in the Halal sector. Both countries signed a memorandum of understanding (MoU) in 2017 to explore opportunities in the global market for Halal products by facilitating the Halal export development programs.
The Philippines is keen to tap into the US$ 3.2 trillion global Halal markets, particularly in sectors such as tourism, cosmetics, personal care items, and food and beverages. The country is particularly eager to develop the Mindanao region, where 25 percent of the population is Muslim. The Muslim travel market alone is expected to grow to US$300 billion by 2026, consisting of approximately 145 million Muslim tourists from ASEAN and the Middle East.
The country can take advantage of Brunei’s expertise in accommodating the global Halal market. For instance, Brunei has a credible Halal certification agency recognized worldwide, and according to the Global Islamic Economy Report 2020/21, the country was ranked sixth for Halal media and recreation and ninth in the Halal food sector. Moreover, Brunei can also be the base for Filipino Halal manufacturers looking to expand to the major Muslim markets of Malaysia and Indonesia.
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