Such distributions can also give rise to tax leakage in the form of withholding taxes or tax on receipt by the relevant shareholder. It will then need to distribute any such amounts to its shareholders (generally either through a repayment of any debt financing, or through the payment of dividends). The JV company will be subject to tax on its own profits and so there will be leakage at the level of the JV company. One of the key considerations for shareholders is how they are able to extract profits from the joint venture, and the tax treatment of any such receipts. If a partnership (or limited partnership or limited liability partnership) is chosen for the joint venture vehicle, different tax considerations will apply, as in many cases the vehicle will then be tax transparent. We illustrate these principles by reference to a joint venture in the form of a corporate entity (rather than a partnership) with corporate shareholders, as opposed to individuals.

One of the primary goals in structuring a joint venture is to ensure that it is set up in a tax-efficient way so as to minimise tax leakage on any profits made. Here we summarise some of the key tax considerations when structuring a joint venture and then managing the joint venture on an ongoing basis.

He said the fund will be invested in a wide range of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate, and high-impact infrastructure projects.As with most corporate transactions, tax is a key component in determining the ultimate structure and operation of a joint venture. “The economic team is resolute in its commitment to ensure that the entity created will be able to generate returns that will redound to inclusive and sustainable economic growth,” he added.ĭiokno said the MIF, the country’s first-ever sovereign wealth fund, will optimize national funds by generating returns to support the Marcos administration’s economic goals. “I thank our legislators for their thoughtful deliberation and timely approval of the Maharlika Investment Fund bill,” Diokno said. Last June 1, Diokno lauded Congress for the swift approval of the MIF Act of 2023 after the House of Representatives adopted the Senate version of the bill. “The expeditious establishment of the Maharlika Investment Fund (MIF) will provide the government cushion against external headwinds that now imperil the attainment of our near- and medium-term macroeconomic and fiscal targets,” Diokno said. The approved legislation is now in the process of enrollment and will be transmitted for the approval and signature of President Marcos. He added that “The MIF bill provided the necessary safeguards to maintain transparency, accountability, fund integrity, and robust risk management.” “We believe that the version crafted by our legislators will create a Fund that can accelerate investments in high-impact infrastructure and development projects,” Diokno said. The Maharlika Investment Fund bill was approved by Congress last May 31 after it underwent thoughtful deliberation by the House of Representatives and the Senate. Under the final version of the proposed sovereign wealth fund, GOCCs such as GSIS, SSS as well as the Philippine Health Insurance Corp., Home Development Mutual Fund, among others are prohibited from contributing to the capitalization of the MIC. Diokno pointed out that they can still engage in joint venture agreements for potential business opportunities.ĭiokno said MIC and government-owned and -controlled corporations (GOCCs) may collaborate in undertaking large infrastructure projects. While the state-owned pension and insurance funds are barred from making investments in the MIC, Finance Secretary Benjamin E. (MIC) has the option to partner with the Government Service Insurance System (GSIS) and Social Security System (SSS) through joint ventures. The Department of Finance (DOF) revealed that the Maharlika Investment Corp.

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