Final Income Taxation:

Conditions Individuals Corporation

Resident Non- Resident Non- Domestic Resident Non-
Citizen Resident Alien resident Corporation Foreign Resident
Citizen Alien Corporation Foreign
(within) Corporation
NRA- NRA-
NETB ETB
Interest Income
Local Currency Deposits
Short term (less than five years) 20% 20% 20% 25% 20% 20% 20% 30%
Long term (more than five years) Exempt E E 25% E 20% 20% 30%
Pre—termination
Less than 3 years 20% 20% 20% 25% 20% 20% 20% 30%
Less than 4 years 12% 12% 12% 25% 12% 20% 20% 30%
Less than 5 years 5% 5% 5% 25% 5% 20% 20% 30%
Foreign Currency Deposit
Foreign currency deposit with 7.5% old Exempt 7.5% old E E 7.5% old 7.5% old E
foreign currency depository banks 15% new 15% new 15% new 15% new
(no short term or long term)
Joint account on forex deposits 50% subjected to FIT n/a n/a n/a n/a n/a n/a
(7.5% old; 15% new)
50% exempted (Non-
resident)
Interest Income FCDUs/OBU 10% Exempt 10% E E 10% 10% E
depository banks
Interest income on foreign loans n/a
 Dividend Income
From Domestic Corporation 10% 10% 10% 25% 20% Exempt Exempt 30%
From Foreign Corporation Regular Tax 25% Regular tax 30%
Historical
Earnings before Jan 01 1998 Exempt
Earnings from 1998 6% 6% 6% 25% 20% Exempt Exempt 30%
Earnings from 1999 8% 8% 8% 25% 20% Exempt Exempt 30%
Earnings from 2000 and 10% 10% 10% 25% 20% Exempt Exempt 30%
thereafter
From Real Estate Investment 10% Exempt 10% 10% 10% Exempt Exempt 10%
Trust or REIT
From Foreign Corporations Regular Income Tax
SHARE IN NET INCOME of 10% 10% 10% 25% 20% 10% 10% 30%
taxable partnership, joint
venture and co-ownership
Royalties Individuals Corporation
Resident Non- Resident Non- Domestic Resident Non-
Citizen Resident Alien resident Corporation Foreign Resident
Citizen Alien Corporation Foreign
(within) Corporation
Passive royalties NRA- NRA-
NETB ETB
In general 20% 20% 20% 25% 20% 20% 20% 30%
Books, literary works and musical 10% 10% 10% 25% 10% 20% 20% 30%
compositions
Other sources 20% 20% 20% 25% 20% 20% 20% 30%
Cinematographic films 20% 20% 20% 25% 25% 20% 20%
Active Royalties Regular Tax 25% Regular tax 30%
Prizes
Prizes exceeding 10.000 20% 20% 20% 25% 20% Regular Tax 30%
Prizes not exceeding 10.000 Regular Tax Regular Tax Regular Tax 25% RT Regular Tax Regular Tax 30%
Winnings
PCSO or Lotto winnings (10.000 +) 20% 20% 20% 20% 20% 20% 20% 20%
Other winnings; in General Regular Tax Regular Tax Regular Tax 25% RT Regular Tax Regular Tax Regular Tax

Tax informer’s reward

10% of the amount or; 10%
1.000.000 (whichever is lower) 10%

Tax-free corporate covenant bonds

Tax on interest income 30% Regular Tax

Exceptions to the General Final Tax on Non-Resident Persons not Engaged in Trade or Business in the Philippines

NRA-NETB NRFC
General Final Tax Rate 25% 30%
Exceptions:
1. Capital gain on sale of domestic stocks directly to buyer 5%-10% capital 5%-10% capital
gains tax gains tax
2. Rentals on cinematographic films and similar works 25% of rentals 25% of rentals
3. Rentals of vessels 25% of rentals 4.5% of rentals
4. Rentals of aircrafts, machineries, and other equipments 25% of rentals 7.5% of rentals
5. Special Aliens (Special employees) 15% of gross n/a
income from
employer
6. Interest Income under the foreign currency deposit system Exempt Exempt
7. Interest on foreign loan n/a 20%
8. Dividend income 25% final tax 15% if tax sparing
rule is applicable
9. Tax on corporate bonds 30% final tax 30% final tax