The OECD’s Forum on Harmful Tax Practices (FHTP) has approved the Philippines’ appeal to end its ROHQ regime by January 3, 2022.
 Act, which abolishes preferential tax rates for regional operations centers (ROHQs) of multinational corporations (MNEs), paved the way for the deletion, the ministry said.</p><p>The OECD’s Forum on Harmful Tax Practices (FHTP) has approved the Philippines’ appeal to end its ROHQ regime by January 3, 2022.</p><p>The FHTP regards the special tax rates for ROHQs as “detrimental tax characteristics” as they gave foreign taxpayers undue tax advantages and discriminated against local taxpayers; and recipients were not required to demonstrate “sufficient substance for the activities carried out”.</p><p>From the previous preferential rate of 10 percent, ROHQs will be taxed until January 1, 2022 as part of CREATE at the general corporate income tax rate that is imposed on other companies.</p><p>The ministry pointed out before the FHTP that the abolition of the ROHQ regime would not allow grandfathering (a transitional period during which the taxpayers concerned can continue to benefit from a system that may have harmful characteristics for a certain number of years). It also told the FHTP that economic data from the Bureau of Internal Revenue (BIR) shows that “there has been a decreasing number of users of the ROHQ regime since 2018, with only one new entry in 2019”.</p><p>The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and regularly writes news on transfer pricing and international tax law. Alex can be reached at editor@transferpricingnews.com</p><p><h3 class=)
The OECD’s Forum on Harmful Tax Practices (FHTP) has approved the Philippines’ appeal to end its ROHQ regime by January 3, 2022.