Let’s Talk About Taxes

Issue 68 — Key Developments Across the Philippines, Singapore, and Vietnam

Oct 02, 2026

Editor’s Note

by Karen Ysabelle David, Lead Editor - Pacific Corridor Desk

In this week’s Pacific Corridor newsletter, we talk about one of life’s great inevitabilities: taxes.

In the Philippines, a proposed 15% global minimum tax on large multinational enterprises (MNEs) continues to make progress. But for investors, this begs the question: what happens when tax incentives result in an MNE’s effective tax rate falling below the 15% threshold? Meanwhile, Singapore’s small and medium enterprises are joining in on the AI adoption race that is fast becoming a trend in the region. But with the city-state’s larger firms still far ahead, can government initiatives such as tax deductions for AI spending do the trick in closing the gap?

Vietnam this week is focused on bigger problems as it tries to maintain its balance between two opposing giants, following Chinese President Xi Jinping’s visit to the United States in late September. With every move, the US and China can send shockwaves throughout the world, forcing smaller countries like Vietnam to be on constant alert.

The Philippines 🇵🇭

New Philippine Bill Proposes 15% Global Minimum Tax (GMT), But What Happens to Tax Incentives?

by Arianne De Guzman, in Bulacan

The Philippines has made progress toward imposing a 15% global minimum tax (GMT) on large multinational enterprises (MNEs), with the introduction of measures on how they would be supported during the transition and how tax incentives under the CREATE MORE and other special laws would be treated.

On 3 September 2026, Congressman Adrian Salceda filed House Bill (HB) 11114

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, a bill that would implement the Qualified Minimum Top-Up Tax (QDMTT) Tax based on the GMT. The bill is currently pending before the House Committee on Ways and Means. Under the proposed framework, in-scope MNEs would be mandated to pay a top-up tax in the Philippines when their effective tax rate (ETR) falls below 15%.

The policy issue for investors is what happens when tax incentives result in an MNE’s ETR falling below the given 15% threshold.

According to the latest technical guide by the Fiscal Incentives Review Board (FIRB), the adoption of the Organization for Economic Co-operation and Development’s Global Anti-Base Erosion (GloBE) Rules (Pillar 2) would not automatically strip covered MNEs of their registered status or entitlement to tax incentives.

However, the FIRB made it clear that income tax-based incentives can lower an MNE’s tax liability and can translate into a lower ETR, which could, in turn, lead to potential QDMTT exposure, effectively attenuating the savings gained. These benefits include tax holidays, the 5% special corporate income tax rate, and reduced corporate tax brackets.

To maintain the Philippines’ investment competitiveness while complying with the GloBE Rules, the government is actively exploring non-income tax mechanisms and plans to expand the enhanced deductions regime. Those measures would shift the conversation toward expenditure- and production-based incentives, making tax incentives linked to investment rather than profits.

HB 11114 addresses the treatment of qualifying incentives through a Substance-based Tax Incentive Safe Harbor. As an option for an in-scope MNE, qualifying tax incentives under the Global Anti-Base Erosion (GloBE) Rules may be treated as Covered Taxes when determining the jurisdictional ETR, subject to a substance-based limitation. In practice, the safe harbor does not mean that the incentives stop reducing the taxes counted in the ETR calculation. Rather, qualifying incentives may be added to Covered Taxes when calculating the GloBE ETR, subject to the applicable limitation.

It is important to note that this distinction matters because the treatment of an incentive under the GloBE Rules can affect whether it contributes to a top-up tax liability. MNEs planning to invest in the Philippines must also look into their investment’s value after taxes.

Beyond tax incentives, HB 11114 also provides non-fiscal support for qualifying investments, such as research and development, workforce training, high-technology production, and enabling infrastructure. The FIRB would be required to conduct a quantified cost-benefit analysis and determine that the support is necessary to secure the investment and limited to the minimum amount necessary.

If enacted, the bill would shift the investment conversation from simply offering tax relief to determining which incentives remain effective under a 15% global tax floor and what other forms of support can be used alongside them under the proposed framework.

Arianne has experience in policy research at De La Salle University’s Jesse M. Robredo Institute of Governance, where she contributed to projects on systemic reform. She earned a degree in Political Science from Colegio de San Juan de Letran. Currently, she works in government relations, specializing in advocacy strategy, legislative monitoring, and stakeholder engagement. Beyond her professional work, she is actively involved in youth development and grassroots initiatives through the Rotaract Club of Santa Maria.

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Singapore 🇸🇬

Singapore's AI Adoption and the Gap It Still Has to Close

by Ryan

When a hotel chef phoned Alan Tan in March 2025 to ask about a missing order of 2,000 pieces of kueh (bite-sized snack), the third-generation owner of Peranakan heritage brand HarriAnns Nonya Table did not have a supply problem. He had a paperwork problem. Several pages of the hotel’s purchase order had failed to print, so the missing items never made it into the manual tally that administrative staff compiled each day for the central kitchen. “I told my kitchen staff: ‘I don’t care, you have to make the order right now,’” Tan recalled to The Straits Times. That scramble pushed a business built on three generations of handmade recipes toward an AI-enabled ordering and billing system, developed for under SGD 50,000 with half the cost underwritten by Enterprise Singapore’s Enterprise Development Grant, which now catches the tally errors that once threatened HarriAnns’ contracts with five-star hotels, which includes the Shangri-La and the Fullerton.

Across town, the beachside Italian restaurant Fico had a different kind of problem: it was leaving revenue on the table. Operator The Lo & Behold Group had long refused to overbook Fico’s East Coast Park capacity for fear of long waits, until a project team built a tool on Anthropic’s Claude Code that analyzed historical reservations, dining durations, and guest habits to identify windows when the restaurant could safely accept more bookings than its seating allowed. Within a month of its June rollout, the tool lifted weekend revenue by 2%, Chief Operating Officer Rifeng Gao told The Straits Times, noting that the underlying pattern was too granular for staff to track by hand.

Neither story involves a dramatic robotic overhaul, and that, increasingly, is the point of Singapore’s AI push. The Infocomm Media Development Authority

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(IMDA) reported in October that AI adoption among small and medium enterprises tripled in a single year, from 4.2% in 2023 to 14.5% in 2024, even as adoption among larger firms climbed from 44% to 62.5%. That gap matters as much as either figure: AI is fast becoming standard practice for big firms while remaining a minority pursuit among the smaller enterprises that dominate Singapore’s economy. Closing that gap is the explicit goal of the city-state’s policy architecture. The Productivity Solutions Grant and Enterprise Development Grant have underwritten AI purchases for years, and Budget 2026 layered on a 400% tax deduction for qualifying AI spending, capped at SGD 50,000 a year, alongside a new “Champions of AI” program run jointly by Enterprise Singapore and Digital Industry Singapore. A newer National AI Impact Program targets 10,000 firms and 100,000 workers by 2029.

That difference travels well past Singapore’s borders. A Lazada and Kantar survey of online sellers across ASEAN found Indonesian and Vietnamese merchants already using AI across 42% of business functions, with Singaporean and Thai sellers close behind and Malaysian sellers trailing at 26%, even as every government in the bloc claims a national AI strategy. What grants and targets cannot buy is the moment of decision that actually moves a small business from strategy to shop floor. That moment belongs to people like Alan Tan, insisting his kitchen make the order right now instead of writing off the loss, and Rifeng Gao, betting a single restaurant’s weekend on a tool nobody had tested before June. Ten thousand subsidized firms become ten thousand transformed ones only when enough owners, from Tiong Bahru to Ho Chi Minh City, make that same unglamorous choice: trusting the machine with the one problem that has quietly cost them money for years.

Ryan is a final-year finance student at the Singapore University of Social Sciences (SUSS) with experience across venture capital, venture debt, and business development. He also holds a diploma in Law and Management from Temasek Polytechnic. His interests lie in how emerging technologies and economic trends shape business ecosystems and regional development in Asia.

Vietnam 🇻🇳

Two Giants vs. Vietnam’s Strategic Balancing

by Hang Nguyen, in Ho Chi Minh City

Looking back on past decades, any political or diplomatic moment by the United States and China caused ripples in the trajectory of global affairs. The world has arguably been operating in a prolonged state of U.S.–China hegemonic competition, evident through prevalent themes and popularized International Relations terminology dedicated to navigating great power rivalry, including “BANI” (Brittle, Anxious, Nonlinear, Incomprehensible), “resilience”, and “hedging.”

Subsequent to President Trump’s state visit to Beijing in May, from 23 to 25 September, General Secretary of the Chinese Communist Party (CCP) and President Xi Jinping made his first official state visit to Washington D.C. in more than a decade. The delegation was welcomed by the Trump administration as a two-day high-level dialogue covering issues as varied as trade, Taiwan, Iran, AI, and fentanyl. Many thought pieces focused on analyzing the changes, symbolic or substantive, to U.S.–China relations. However, this article directs anticipation toward the implications on Vietnam.

Skeptic discourse with regard to Vietnam’s capacity to strategically balance cooperation with the United States and China already exists, only becoming more amplified with different possible developments.

In the scenario of U.S.–China’s mutual concession on regional issues, Vietnam may become vulnerable in its maritime disputes in the South China Sea, as Washington’s priority on a stable bilateral relationship could come at the expense of smaller claimants. Hanoi has long relied on the American naval presence and diplomatic support for the 2016 arbitral ruling to complicate Beijing’s calculations. Should détente lead Washington to quietly downplay these signals, China would face fewer external constraints in pressuring Vietnamese fishing and energy activities. The concern, therefore, is less a dramatic abandonment than a gradual erosion, in which the costs of resistance rise while American attention falls.

Economically, Vietnam has thrived on supply chain diversification away from China. A trade thaw could weaken firms’ incentive to relocate, while renewed scrutiny of transshipment could expose Vietnamese exporters to penalties from both sides. Yet the opposite scenario carries its own risks. Should the summit’s goodwill prove short-lived, Vietnam would again face pressure to choose sides through technology restrictions, security partnerships, or investment screening. Its “bamboo diplomacy” depends on both giants tolerating ambiguity, and confrontation narrows that space.

A subtler implication concerns leverage. Vietnam’s value to Washington has rested on being both a counterweight and a manufacturing alternative, and warmer U.S.–China ties may dilute both roles, making its hedging less rewarded. Beijing, meanwhile, may read a softer American posture as the green light to push bilateral negotiations over the South China Sea, where the asymmetry between the two claimants is at its starkest.

Doubts over Washington’s commitments could also strain ASEAN cohesion, weakening the collective voice Vietnam needs on maritime issues, while visible concessions at sea would test the domestic legitimacy Hanoi draws from both economic growth and the defense of sovereignty.

Ultimately, both outcomes of the summit carry costs for Vietnam. Détente risks making Hanoi less relevant, while rivalry risks making its choices harder. In an era of “BANI” dynamics, stability between giants is not necessarily stability for those beside them, further forcing countries like Ha Noi to be highly adaptive.

Hang is a young researcher with academic experience in Vietnam and the United States. She has previously worked in public relations at the U.S. Consulate General in Ho Chi Minh City and the YSEALI Academy. Her research focuses on ASEAN centrality in the evolving Asia-Pacific landscape, with particular attention to Vietnam’s approach to trade, regional cooperation, and political economy in the face of external power dynamics and global volatility.

Editorial Deadline 29/09/2025 11:59 PM (UTC +8)

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