A tax treaty formally known as convention or

agreement for the avoidance of double taxation

and the prevention of fiscal evasion with respect
to taxes on income (and on capital) could be
defined in terms of its purpose. First, a tax treaty
is intended to promote international trade and
investment in several ways, the most important of
which is by allocating taxing jurisdiction between
the Contracting States so as to eliminate or
mitigate double taxation of income. Second, a tax
treaty is intended to permit the Contracting States
to better enforce their domestic laws so as to
reduce tax evasion. These purposes are in fact
incorporated in the title and the preamble.

The Philippines has thirty-seven (37)

effective tax treaties.

The International Tax Affairs Division (ITAD).

Income taxes imposed by the domestic

laws of the Contracting States, including
substantially similar taxes that may be
imposed later, in addition to, or in
place, are covered by the tax treaties.

The business profits of a resident of a

Contracting State shall not be taxable in
the Philippines unless that enterprise of
a resident of a Contracting State carries
on business in the Philippines through a
permanent establishment.

PE is defined as a fixed place of business

through which the business of the enterprise is
wholly or partly carried on. The concept of
permanent establishment is used to determine
the rights of a Contracting State to tax the
business profits of enterprises of the other
Contracting State.
Under this concept, profits of an enterprise of a
Contracting State are not taxable by the other
Contracting State, unless the enterprise carries
on
business
through
a
permanent
establishment situated in the other Contracting
State.

The appearance of the MFN clause in the tax

treaty means that a Contracting State will
grant to a resident of the other Contracting
State the same lower rate of tax or
exemption the former has granted to a
resident of a third State.

Income from an immovable property is

taxable in the Contracting State where
the property is situated. This term is
generally defined under the domestic
laws of the Contracting States. However,
this is further defined in the tax treaties.

Gains from the alienation of immovable

property or movable property forming
part of the business property of a
permanent establishment or pertaining
to a fixed base are taxed in the
Philippines if the immovable property or
permanent establishment or fixed base
is located here.

Country
1. Australia
2. Austria

Date of Effectivity
January 1, 1980
January 1, 1983

3. Bahrain

January 1, 2004

4. Bangladesh

January 1, 2004

5. Belgium

January 1, 1981

6. Brazil

January 1, 1992

7. Canada

January 1, 1977

8. China

January 1, 2002

9. Czech

January 1, 2004

10. Denmark
(Renegotiated)

January 1, 1998

11. Finland

January 1, 1982

12. France

January 1, 1978

Date and Venue of Signature

May 11, 1979, Manila, Philippines
April 4, 1981, Vienna, Austria
November 7, 2001, Manila,
Philippines
September 8, 1997, Manila,
Philippines
October 2, 1976, Manila,
Philippines
Sept. 29, 1983, Brasilia, Brazil
March 11, 1976, Manila,
Philippines
November 18, 1999, Beijing,
China
November 13, 2000, Manila,
Philippines
June 30, 1995, Copenhagen,
Denmark
October 13, 1978, Manila,
Philippines
January 9, 1976, Kingston,
Jamaica

Country
20. Korea

Date of Effectivity
January 1, 1987

21. Malaysia

January 1, 1985

22. Netherlands

January 1, 1992

23. New Zealand

January 1, 1981

24. Norway

January 1, 1998

25. Pakistan

January 1, 1979

26. Poland

January 1, 1998

27. Romania

January 1, 1998

28. Russia

January 1, 1998

29. Singapore

January 1, 1977

30. Spain

January 1, 1994

31. Sweden

Date and Venue of Signature

February 21, 1984, Seoul, Korea
April 27, 1982, Manila,
Philippines
March 9, 1989, Manila,
Philippines
April 29, 1980, Manila,
Philippines
July 9, 1987, Manila, Philippines
February 22, 1980, Manila,
Philippines
September 9, 1992, Manila,
Philippines
May 18, 1994, Bucharest,
Romania
April 26, 1995, Manila,
Philippines
August 1, 1977, Manila,
Philippines
March 14, 1989, Manila,
Philippines
June 24, 1998, Manila,