Philippines Corporate Tax & Withholding Tax BEST Guidelines

Philippines Corporate Tax & Withholding Tax BEST Guidelines

Corporate Tax
The corporate income tax rate both for domestic and resident foreign corporations is 30%
based on net taxable income. Excluded from the income tax are dividends received from
domestic corporations; interest on Philippine currency bank deposit and yield from trust
funds. It is important to note that foreign corporations, whether resident or nonresident, are
taxable only on income derived from sources within the Philippines.



Withholding Tax

Types of taxable income  Tax rate
                                         (For non-resident)
Dividend                          15%3
Interest                             20%
Royalty                            30%
Technical Fee                   30%


 All other taxable income earned by domestic and resident foreign corporations is
subject to a 20% final withholding tax. However, Regional operating headquarters are
taxed at 10% on taxable income. Special economic zone enterprises duly registered
with the Philippines Economic Zone Authority are taxed at the rate of 5% on gross
income.
 The net capital gains from the sale of shares of stock of a domestic corporation are
taxed on a per transaction basis at the rate of 5% on the first PhP 100,000 and 10% in
excess of said amount. On the other hand, the sale of shares of stock of a domestic
corporation through the Philippine Stock Exchange or through the initial public
offering is subject to a percentage tax on the transaction at the rate of 0.5% of the
selling price.
 The sale of land, building and other real properties classified as capital asset is subject
to 6% final capital gains tax based on the gross selling price.
 Any branch profit to be remitted to the Head Office is additionally taxed at the rate of
15%.