Companies that are resident of the Philippines are taxed on worldwide income. Non-resident companies are taxed only Philippines income (branch office in the Philippines). Dividends received by Philippine Corporations or resident foreign corporations are not taxed.
Capital Gains Taxes
Capital Gains Taxes are usually taxed as income. The sale of shares that are not listed on the stock exchange are taxed as capital gains:
– 5% withholding tax on the first Php 100,000.00 and 10% on anything above.
The sale of shares listed and traded on the stock exchange is taxed at ½ of 1 % of the gross selling price.
Real Estate Sales are taxed at 6% on the sales price or the zonal value; whichever is higher.
Corporate Income Tax
The tax rate for Domestic Corporations is 30% on worldwide income.
Foreign Branch Offices have a tax rate of 30% on Philippines based income.
Dividends distributed to non resident entities are subject to a 15% withholding tax as long as the country where the foreign corporation resides allows for a tax credit of 15%. Otherwise all dividends are subject to a 30% tax.
Interest paid to Non-residents is taxed at 20%.
Royalties paid to non-residents are taxed at 30%. Royalties paid to a domestically to a Filipino entity or a resident foreign corporation are taxed at 20%.
Branch Office Profit Remittances:
After tax profits remitted by a branch office to its parent are taxed at 15%
VAT (Value Added Taxes)
Most sales of goods and services are subject to a value added tax of 12%
Last updated May, 2009.
Tax incentives are available to investors who register with BOI or PEZA