Europe-PH News

BUSINESSES need enhanced clarity and consistency regarding Philippine tax rules governing cross-border services, according to participants at a roundtable organized by the Joint Foreign Chambers (JFC).

“For the Joint Foreign Chambers of the Philippines, tax certainty is an important component of the investment environment, affecting how companies plan operations, structure transactions, and make investment decisions,” it said in a statement on Thursday.

The roundtable was discussing Revenue Memorandum Circular (RMC) No. 5-2024 on Aug. 19. The meeting was convened by Arangkada Philippines, with R.G. Manabat & Co. and SyCipLaw as the co-presenters.

Representatives from the Bureau of Internal Revenue (BIR), Department of Finance, Presidential Legislative Liaison Office, business community, tax and legal professions, and academia participated in the discussion.

The JFC noted that RMC No. 5-2024 has practical implications for companies providing or receiving services across borders, including tax treatment, documentation, reporting, contracts, and internal compliance systems.

Released by the BIR in 2024, the RMC subjects cross-border services to 25% withholding tax and 12% final withholding value-added tax (VAT).

According to the circular, services to a Philippine entity that are performed by an international entity are now taxable, to level the playing field between domestic and foreign providers. 

Roundtable participants noted that clearer implementation of the RMC will help businesses meet their obligations while providing greater predictability for investment and business decisions.

“The discussion highlighted the importance of translating tax policy into clear and consistent implementation, particularly as companies assess compliance requirements and the potential impact of tax treatment on cross-border transactions,” the JFC said.

The dialogue forms part of Arangkada Philippines’ push to facilitate government-business discussions on policies affecting investment and competitiveness.

“Arangkada serves as a vital bridge between government and business, creating a platform where practical policy concerns can be openly discussed and translated into clear, actionable implementation that supports both compliance and competitiveness,” Arangkada Project Director Matthew Scanlin said.

The group will consolidate the issues and recommendations raised and pursue the appropriate follow-through with government agencies and stakeholders, it said.

Arangkada Philippines is a flagship advocacy program of the JFC, which pushes for initiatives to boost growth, investment, and create jobs in the country.

The JFC is composed of the Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines, Inc., Korean Chamber of Commerce of the Philippines, Inc., Philippine Association of Multinational Companies Regional Headquarters, Inc., and the American Chamber of Commerce of the Philippines.