With more than ₱50 billion in revenues being forgone due to the non-imposition of top-up taxes on large multinational enterprises (MNEs) in the Philippines, the Department of Finance (DOF) is eyeing to slap “very large” corporations with such a levy to contain the flight of potential tax earnings.

Finance Undersecretary Karlo Fermin S. Adriano told the House committee on ways and means on Wednesday, Sept. 3, that besides the excise tax on single-use plastics (SUPs), general tax amnesty, and estate tax amnesty, the DOF is also pushing to legislate the qualified domestic minimum top-up tax (QDMTT) in the 20th Congress—another tax measure that will amass additional revenues from MNEs.

This comes as Finance Secretary Ralph G. Recto urged legislators last Tuesday, Sept. 2, to file bills designed to increase revenues instead of measures giving away dole-outs and freebies that would cost billions of pesos. Such moves, he said, could further reduce the national government’s already meager fiscal space.

Adriano, who oversees the DOF’s fiscal policy and monitoring group, said the QDMTT stems from an Organization for Economic Cooperation and Development (OECD) rule requiring very large MNEs—those earning at least €750 million, or about ₱50 billion, in two of the past four years—to pay a minimum global tax rate of 15 percent.

If an MNE operates in the Philippines and pays less than the 15-percent minimum tax rate due to tax incentives, it will be required to settle the shortfall. This gap—such as paying only five percent and adding the remaining 10 percent—is what constitutes the top-up tax, according to Adriano.

For instance, since United Kingdom (UK)-based Unilever’s global income exceeds €750 million, if it pays less than 15 percent in taxes in the Philippines, it will be charged a top-up tax equal to the difference between the 15-percent minimum rate and what it actually paid in the country.

“If we do not have the legislated domestic top-up tax here, we won’t collect the 10 percent. Instead, it will be paid in another jurisdiction that has such a tax,” Adriano asserted. As such, failure to capture these taxes effectively forgoes potential tax revenue, bloating other countries’ coffers.

Based on Adriano’s report, the bulk of MNEs in the Philippines that satisfy the criteria for the global tax rule are headquartered in Japan, at 32 percent of total, followed by the United States (US) and the UK at six percent, Germany at five percent, and France at four percent. The headquarters of the remaining MNEs are scattered across other countries.

On average, ₱54.3 billion worth of revenues could have been collected in the previous years had the QDMTT already been implemented. In particular, the government could have raked in ₱48.3 billion in 2021, ₱60.5 billion in 2022, and ₱54.1 billion in 2023—totaling ₱162.9 billion across the three-year period.

To note, domestic tax incentives are covered by the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Law.

Speaking to the Lower House, Adriano also outlined the coverage, rates, discounts, and exclusions of the planned general tax amnesty, which has been attracting massive interest from businesses, according to Sen. Imee Marcos.

According to Adriano, general tax amnesty would cover collections of the Bureau of Internal Revenue (BIR), including income, withholding, capital gains, donor’s, value-added (VAT), percentage, excise, and documentary stamp (DST) taxes.

For the Bureau of Customs (BOC), it would cover VAT and excise on importations, whether or not assessments have been issued.

When it comes to tax rates, the DOF seeks to set it at two percent of a taxpayer’s total assets as of the end of 2024, or alternatively, an amnesty rate based on total net worth as of the same date.

Individual taxpayers will be subject to an amnesty rate of five percent or ₱75,000, whichever is higher.

For corporations, those with subscribed capital above ₱50 million will pay five percent or ₱1 million, whichever is higher; above ₱20 million up to ₱50 million, five percent or ₱500,000; ₱5 million up to ₱20 million, five percent or ₱250,000; and below ₱5 million, five percent or ₱100,000.

Other juridical entities will also be charged five percent or ₱75,000, whichever is higher.

“We are allowing a discount depending on when you comply or pay the amnesty tax, which ranges from 10 percent to 20 percent. Of course, the immunities and privileges would include exemption from taxes, penalties, and legal cases for 2024 and prior years’ tax liabilities,” DOF Assistant Secretary Nina Asuncion told the House committee.

“Excluded from the general tax amnesty are those taxpayers with pending court cases related to those under the Presidential Commission on Good Government’s (PCGG) jurisdiction, unexplained wealth, anti-graft and money laundering, and tax evasion, as well as specific items under the National Internal Revenue Code (NIRC) and the Revised Penal Code,” Asuncion added.

Likewise, taxpayers with final and executory cases, delinquencies, existing assessments, and those already covered by the 2019 estate and delinquency amnesty programs will be excluded.

Meanwhile, the DOF also proposes to extend estate tax amnesty, which expired last June 2025, to June 30, 2028.

Asuncion noted the rate will remain at six percent, covering estates of those who died on or before May 31, 2024.

As such, estates that avail of this amnesty program are exempt from all estate taxes, penalties, and charges, and are shielded from cases and sanctions under the NIRC of 1997, or the Tax Code, for deaths on or before the effective date the proposed measure applies.

Total estate tax collection stood at ₱6.6 billion in 2024, of which 40.5 percent was accounted for by collections from the estate tax amnesty.

In particular, ₱2.7 billion was collected from more than 52,000 taxpayers who availed of the amnesty, while the BIR raised ₱3.9 billion in regular estate tax collection from over 103,000 filers.

Notably, 2024 recorded the highest share of amnesty availers in six years, or since 2019, accounting for 35.6 percent of the total 159,996 estate tax filings during the year.