Professional Documents
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Business Partnership, Taxable Associations, Joint Venture, Joint Accounts or Co-Ownerships
Business Partnership, Taxable Associations, Joint Venture, Joint Accounts or Co-Ownerships
a. Non-resident alien individuals or non-resident foreign corporations entitled to claim preferential tax
rate pursuant to applicable tax treaty
b. domestic corporations or resident foreign corporations
c. Overseas Filipino investors- exempt from REIT dividend tax until August 12, 2018 (7 years from the
effectivity of RR13-2011 which took effect on August 12, 2011)
Note: A partner, member or venture who is an NRA-ETB, NRA-NETB or NRFC shall be subject respectively
to 20%, 25% and 30% final tax rate.
Royalties
Passive royalty income received from sources within the Philippines is subject to the following final tax
rates:
Recip ient
Source of passive royalties Individuals Corporations
Books, literary works and 10% final tax 20% final tax
musical compositions
Other Sources 20% final tax 20% Final tax
NOTE:
1. Under the regulations, the 10% preferential royalty final tax on books and literary works pertain to
printed literature. Royalties on books sold on e-copies or CDs such as e-books are subject to the 20%
final tax.
2. Royalties on cinematographic films and similar works paid to NRA-ETBs, NRA-NETBs, or NRFCs is
subject to a final tax of 25%
Passive vs. Active royalties
Royalties of a passive nature such as royalties of claim owners or land owners of mining properties,
royalties of inventors from companies that manufacture and sell their invention and royalty from
licensing agreements that transfers the use of trademark or technology are subject to 20% final tax.
When royalties accrues from an undertaking where the taxpayer has active involvement, it is an active
income subject to the regular income tax.
The royalties from application programs are active income subject to regular income tax. The royalty
from the utility programs is passive income subject to final withholding tax, but if the e-marketer is not a
resident in the Philippines, the passive income from abroad shall be subject to regular tax.
Royalties, active or passive, earned from sources abroad are subject to regular income tax.