The Bureau of the Treasury (BTr) has launched a streamlined tax treaty process for non-resident investors of government securities (GS) as part of efforts to attract foreign participation in the GS market while strengthening the domestic capital market.
In a statement, the BTr said under the streamlined procedure, non-resident investors would no longer have to submit multiple tax documents to the issuer to claim tax treaty benefits on specific GS income items, nor will they have to do this application process over and over again for each new GS income event.
“This removes the risk of claim denial and eliminates the need to file for tax treaty relief and go through a lengthy tax refund process,” the BTr said.
The agency said this is made possible by integrating the streamlined process into the tax tracking system of the National Registry of Scripless Securities (NRoSS).
Thus, non-resident investors only need to complete a one-time process to create their securities account, after which treaty rates are automatically applied to all GS held within this securities account.
Additionally, non-resident investors don’t need to be holding GS to benefit from this initiative as they can set up their securities account in advance of any GS purchases.
“This is just one of the many reforms underway to boost the Philippine capital market and reinforce its competitiveness. With this streamlined process, we are confident that more foreign investors will seize the opportunity to invest in our government securities, which would enhance market liquidity,” Finance Secretary Ralph Recto said.
“This is another key step in deepening our capital market, driving sustainable economic growth, creating more job opportunities for our people, boosting their incomes, and uplifting more Filipino lives,” he added.
The Philippines has 43 double taxation agreements or tax treaties that provide preferential tax rates from 10 percent to 15 percent depending on the country.
The NRoSS system’s tax tracking feature will automatically reflect the relevant rates from the said tax treaties.
The application of these rates shall remain effective as long as the non-resident investor maintains an updated tax residency certificate through their custodian, the BTr said.
