|RG Manabat & Co|
|SyCip Gorres Velayo & Co|
|Du-Baladad and Associates|
Since the issuance of its transfer pricing regulations in 2013, there have not been many changes to the field of transfer pricing in the Philippines. The tax office made no regulation changes except for the draft of advance pricing agreement (APA) rules, but even these APA rules have not been issued to date.
In the second half of 2015 however, according to Fredieric Landicho of Deloitte, the tax office employed a foreign consultant to train their staff, enabling the tax office to form a TP audit team. This TP audit team is incorporated into the large taxpayers service in the national office, demonstrating large taxpayers are the focus of the Philippines audit activity.
"The tax office made huge progress also when it subscribed to a commercial database (Bureau van Dijk) during the latter part of 2015. With access to commercial database, the TP audit team was able to select potential cases for TP audit from different industries, focusing mainly on cross-border related-party transactions and transactions of enterprises who are enjoying the Philippines economic zone authority or board of investments tax incentives," said Landicho. "Given these significant developments in the capacity and capability of the TP audit team, we can expect to see TP audits over the next 12 to 18 months," he added.
BEPS has also been an area of concern in the Philippines as taxpayers become more aware of it. The former commissioner of the Bureau of Internal Revenue, Kim Jacinto-Henares was an active participant at the OECD.
According to a KPMG report, the BIR is particularly focusing on the following areas: limiting base erosion involving interest deductions and other financial payments; preventing the artificial avoidance of permanent establishment status; aligning transfer pricing outcomes with value creation; and measuring and monitoring BEPS. Notably, the Philippines is projected to implement the standard of automatic exchange of information sometime in 2018.
Bureau of Internal Revenue
BIR National Office Bldg, BIR Road, Diliman, Quezon City
Tel: +63 981 8888; +63 981 7000
(As of January 1 2016)
|Corporate income tax rate||30%|
|Capital gains tax rate|
|Branch tax rate||30% (b)|
|Interest on peso deposits||20% (d)(e)|
|Royalties from patents, know-how, etc.||20% (e)|
|Branch remittance tax||15%|
Net operating losses (years)
Source: EY 2016 Worldwide Corporate Tax Guide