Europe-PH News

BUSINESS GROUPS expressed support for the Philippine government’s planned implementation of the Qualified Domestic Minimum Top-up Tax (QDMTT), saying the measure would strengthen the country’s taxing rights but require careful execution to avoid discouraging investment.

The American Chamber of Commerce of the Philippines (AmCham) said that many large corporations pay an effective tax rate below the 15% minimum prescribed under the Organisation for Economic Co-operation and Development’s (OECD) Pillar Two framework.

“If the Philippines fails to implement the QDMTT, these multinationals will still pay that minimum tax — but the funds will simply be collected by another country’s tax authority,” AmCham Executive Director Ebb Hinchliffe told BusinessWorld. 

“By stepping up, the BIR (Bureau of Internal Revenue) ensures that the Philippines retains the primary right to collect this top-up tax locally,” he added.

The QDMTT is part of the OECD’s Pillar Two initiative which ensures that large multinational enterprises pay at least a 15% effective tax rate in the country where they operate.

“This is a significant win for the country. Retaining these funds domestically means billions can be channeled directly into vital public services — funding the infrastructure, healthcare, and education systems that benefit the Filipino people,” said Mr. Hinchliffe.

“Acting now is an urgent necessity. Neighbors like Vietnam and Malaysia are already enacting their domestic legislation for 2024 and 2025. Prioritizing the QDMTT prevents the immediate leakage of our tax revenues to foreign jurisdictions,” he added.

The Philippines does not have a QDMTT law but is targeting to enroll in the program next year and start collections by 2028. The Finance department is currently preparing a draft bill for Congress.

The BIR earlier said that around 531 out of over 1,100 multinational enterprises operating in the Philippines fall within the scope of the global minimum tax.

The European Chamber of Commerce of the Philippines (ECCP) said that while the measure seeks to protect the country’s taxing rights, it could also affect competitiveness.

“The design and timing of the regime will be critical. While QDMTT may provide additional revenues, it could also affect foreign investment and competitiveness if it reduces the value of existing incentives without clear transition rules,” the ECCP said via e-mail.

The ECCP noted that many investors had already made long-term investment decisions based on approved incentive packages, making clarity on grandfathering provisions and the treatment of existing incentives crucial.

“ECCP believes it is appropriate for the government and the BIR to prepare now, but implementation should be carefully sequenced. ECCP supports alignment with international tax standards, provided this is done in a predictable, consultative, and competitiveness-sensitive manner,” it said.

“The biggest challenges will be ensuring clear legislation, OECD-consistent rules, BIR administrative readiness, inter-agency coordination, and practical guidance for taxpayers,” it added.

British Chamber of Commerce Philippines Vice Chairman Chris Nelson said that training of government officials will be important, not only as part of preparation but also in maintaining the country’s competitiveness.

“I think training and making government officials aware is a key factor,” he said in a phone interview. “I think competitiveness for the Philippines will be that the application is fair and correct and that obviously comes back to training.”

Mr. Nelson said businesses should be given clear guidance well ahead of implementation of the QDMTT in the country.

“This has to be well communicated for all sides, including the companies involved and to give everybody sufficient advice in advance so that they can prepare appropriately,” he added.

Makati Business Club Chairman Edgar O. Chua said attracting and retaining multinational investments is no longer solely dependent on fiscal incentives.

“As countries adopt the global minimum tax framework, the Philippines must ensure that its investment competitiveness is anchored not only on fiscal incentives but also on ‘non-fiscal’ incentives such as reliable infrastructure, cheap power, efficient logistics, a skilled workforce, and a predictable and sound regulatory environment,” he said.

“Structural reforms that improve the ease of doing business are now all the more critical in sustaining investor confidence and attracting job-creating investments,” he added.

In the 2026 IMD World Competitiveness Ranking, the Philippines climbed four spots to 47^th out of 70 economies, although weakness in government efficiency and infrastructure kept it among the lower-ranked economies in the Asia-Pacific region.