Section 7Sec./Art. 7

Section 28 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"Section 28. Rates of Income Tax on Foreign Corporations. -

(A) Tax on Resident Foreign Corporations. -

(1) In General. - x x x

The corporate income tax rate shall be applied on the amount computed by multiplying the number of months covered by the new rate within the fiscal year by the taxable income of the corporation for the period, divided by twelve.

Interest, intercorporate dividends, capital gains on sale, exchange, or other disposition of shares of stock not traded in a local or foreign stock exchange, and royalties shall be subject to the applicable taxes prescribed under Section 27(D) of this Code.

x x x

(6) 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 the 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%).

(7) Offshore Gaming Licenses. - x x x

(B) Tax on Nonresident Foreign Corporations. -

(1) In General. - Except as otherwise provided in this Code, a foreign corporation not engaged in trade or business in the Philippines, effective January 1, 2021 shall pay a tax equal to twenty-five percent (25%) 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 Section 28(A)(1).

x x x

(5) Tax on Certain Incomes Received by a Nonresident Foreign Corporation. -

x x x

(c) Capital Gains from Sale of Shares of Stock not Traded in a Local or Foreign Stock Exchange. - A final tax at the rate of fifteen percent (15%) is hereby imposed upon the net capital gains realized during the taxable year from the sale, exchange, or other disposition of shares of stock in a domestic corporation, except shares sold, or disposed of through a local or foreign stock exchange."