Article 15p. 15

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

(b) Regional operating headquarters as defined

in Section 22(EE) shall pay a tax of ten percent

(10%) of their taxable income.

(7) Tax on Certain Incomes Received by a Resident

Foreign Corporation. -

(a) Interest from Deposits and Yield or any

other

Monetary

Benefit

from

Deposit

Substitutes,

Trust

Funds

and

Similar

Arrangements and Royalties. - Interest from

any currency bank deposit and yield or any

other

monetary

benefit

from

deposit

substitutes and from trust funds and similar

arrangements

and

royalties

derived

from

sources within the Philippines shall be subject

to a final income tax at the rate of twenty

percent

(20%)

of

such

interest:

Provided,

however, That interest income derived by a

resident foreign corporation from a depository

bank under the expanded foreign currency

deposit

system

shall

be subject to a final

income tax at the rate of seven and one-half

percent (7 1 / 2 %) of such interest income.

(b)

Income

Derived

under

the

Expanded

Foreign Currency Deposit System. - Income

derived

by

a

depository

bank

under

the

expanded

foreign

currency

deposit

system

from

foreign

currency

transactions

with

nonresidents, offshore banking units in the

Philippines, local commercial banks including

branches

of

foreign

banks

that

may

be

authorized by the Bangko Sentral ng Pilipinas

(BSP)

to

transact

business

with

foreign

currency

deposit

system

units,

and

other

depository banks under the expanded foreign

currency deposit system shall be exempt from

all

taxes,

except

net

income

from

such

transactions

as

may

be

specified

by

the

Secretary of Finance, upon recommendation by

the Monetary Board to be subject to the regular

income

tax

payable

by

banks:

Provided,

however, That interest income from foreign

currency loans granted by

such depository

banks under said expanded system to residents

other

than

offshore

banking

units

in

the

Philippines or other depository banks under the

expanded system shall be subject to a final tax

at the rate of ten percent (10%). [25]

Any

income

of

nonresidents,

whether

individuals or corporations, from transactions

with depository banks under the expanded

system shall be exempt from income tax.

(c) Capital Gains from Sale of Shares of Stock

Not Traded in the Stock Exchange. - A final

tax at the rates prescribed below is hereby

imposed upon the net capital gains realized

during the taxable year from the sale, barter,

exchange or other disposition of shares of stock

in a domestic corporation except shares sold or

disposed of through the stock exchange:

Not over P 100,000

On any amount in excess

of P 100,000

(d)

Intercorporate

Dividends.

-

Dividends

received by a resident foreign corporation from

a domestic corporation liable to tax under this

Code shall not be subject to tax under this Title.

(B) Tax on Nonresident Foreign Corporation. -

(1) In General. - Except as otherwise provided in this

Code, a foreign corporation not engaged in trade or

business in the Philippines shall pay a tax equal to

thirty-five

percent

(35%)

of

the

gross

income

received during each taxable year from all sources

within the Philippines, such as interests, dividends,

rents,

royalties,

salaries,

premiums

(except

reinsurance premiums), annuities, emoluments or

other fixed or determinable annual, periodic or

casual gains, profits and income, and capital gains,

except

capital

gains

subject

to

tax

under

subparagraph 5 ( c ): Provided, That effective January

1, 2009, the rate of income tax shall be thirty percent

(30%). [26]

(2)

Nonresident

Cinematographic

Film Owner,

Lessor or Distributor. - A cinematographic film

owner,

lessor,

or

distributor

shall pay a tax of

twenty-five percent (25%) of its gross income from

all sources within the Philippines.

(3)

Nonresident

Owner

or

Lessor

of

Vessels

Chartered by Philippine Nationals. - A nonresident

owner or lessor of vessels shall be subject to a tax of

four and one-half percent (4 1 / 2 %) of gross rentals,

lease or charter fees from leases or charters to

Filipino citizens or corporations, as approved by the

Maritime Industry Authority.

(4)

Nonresident

Owner

or

Lessor

of

Aircraft,

Machineries

and

Other

Equipment.

-

Rentals,

charters and other fees derived by a nonresident

lessor of aircraft, machineries and other equipment

shall be subject to a tax of seven and one-half

percent (7 1 / 2 %) of gross rentals or fees.

(5)

Tax

on

Certain

Incomes

Received

by

a

Nonresident Foreign Corporation. -

(a)

Interest

on

Foreign

Loans.

-

A

final

withholding tax at the rate of twenty percent

(20%) is hereby imposed on the amount of

interest on foreign loans contracted on or after

August 1, 1986;

(b)

Intercorporate

Dividends.

-

A

final

withholding tax at the rate of fifteen percent

(15%) is hereby imposed on the amount of cash

and/or

property

dividends

received

from

a

domestic corporation, which shall be collected

and paid as provided in Section 57 (A) of this

Code, subject to the condition that the country

in which the nonresident foreign corporation is

domiciled, shall allow a credit against the tax

due from the nonresident foreign corporation

taxes

deemed

to

have

been

paid

in

the

Philippines equivalent to twenty percent (20%),

which represents the difference between the

regular income tax of thirty-five percent (35%)

and the fifteen percent (15%) tax on dividends

as provided in this subparagraph: Provided, that

effective January 1, 2009, the credit against the

tax due shall be equivalent to fifteen percent

(15%), which represents the difference between

the regular income tax of thirty percent (30%)

and the fifteen percent (15%) tax on dividends;

[27]

(c) Capital Gains from Sale of Shares of Stock

not Traded in the Stock Exchange. - A final tax

at

the

rates

prescribed

below

is

hereby

imposed upon the net capital gains realized

during the taxable year from the sale, barter,

exchange or other disposition of shares of stock

in a domestic corporation, except shares sold, or

disposed of through the stock exchange:

Not over P 100,000

On any amount in excess

of P 100,000

SEC.

29.

Imposition

of

Improperly

Accumulated

Earnings Tax. -

© Compiled by RGL

15 of 201