By Wilnard Bacelonia
MANILA – The Senate unanimously approved on Wednesday proposed Senate Resolution Nos. (SRN) 790 and 878 on the Philippines’ pacts with Brunei Darussalam and South Korea.
SRN 790 sought to concur with the agreement signed between the Philippines and Brunei Darussalam aimed at eliminating double taxation and preventing fiscal evasion on taxes on income arising from cross-border transactions between the two Southeast Asian countries.
Meanwhile, the ratified SRN 878 will allow the Philippine government to pursue its agreement with South Korea to allow Filipinos, including their dependents and survivors, to be equally eligible for social security benefits like South Korean nationals.
Senator Imee Marcos, sponsor of both resolutions as chairperson of the Committee on Foreign Relations, said that under the Philippines-Brunei Double Taxation Avoidance Agreement (DTAA), business profits will be taxed only in the state where the company is doing business, unless that company has a permanent establishment in the other state.
“Independent personal services such as professional services by lawyers, engineers, architects, dentists, and accountants, shall be taxed only in the worker’s state of residence provided he does not stay for an aggregate period of over 183 days in any 12-month period,” Marcos said in a statement.
“Otherwise, professors, teachers and researchers who teach or research, upon the invitation of any educational institution in the other contracting state shall be exempted from that state’s income tax. Likewise cross-border remittances for a student’s or a trainee’s maintenance, education, study, or training shall be exempt from tax, as well as, on the grants, allowances, and awards given to them abroad,” she added.
The DTAA allocates taxing jurisdiction between the two contracting states, clearly eliminating double taxation of income.
On the other hand, the Philippines shall allow as a tax credit any tax payable in Brunei on income or profits and in turn, Brunei shall credit taxes paid in the Philippines on income or profits derived from the Philippines.
SRN 878 refers to the renegotiated agreement wherein the social security of Filipino workers in Korea will remain under Korea’s National Pension Service (NPS) and there will be no transfer of contributions from the NPS to the Social Security System or Government Service Insurance System.
The Filipino worker has an option to refund the NPS contributions at the end of their overseas employment contract under the same conditions given to Korean nationals.
“There will be a totalization of insurance periods which will help those who are unable to complete the required and extended insurance period under the South Korean and Philippine social security systems to still qualify for social security benefits from either of the two countries,” Marcos said.
Mutual administrative assistance will also allow covered beneficiaries to file their claims with the designated liaison agencies of the Philippines or Korea.
The Social Security Agreement was signed by then Foreign Affairs Secretary Teodoro Locsin and Korean Foreign Minister Kang Kyung-wha in November 2019 on the sidelines of the ASEAN – Republic of Korea Commemorative Summit in Busan, attended by former president Rodrigo Duterte. (PNA)