Tax rates at a glance
(As of August 20 2009)
| Corporate income tax rate |
30% (a) |
| Capital gains tax rate |
30% (b) |
| Branch tax rate |
30% (c) |
Withholding tax |
| Dividends |
30% (d) |
| Interest |
30% (e) |
| Royalties from patents and licences |
30% (e) |
| Branch remittance tax |
15% |
Net operating losses (years) |
|
| Carryback |
Not allowed |
| Carryforward |
3 years |
(a) From January 1 2009, the corporate income tax has been reduced to 30% from 35%. A minimum corporate income tax (MCIT) of 2% of gross income may be imposed on a resident foreign corporation when the MCIT is greater than the normal income tax. The excess of the MCIT over the normal income tax shall be carried forward and credited against the normal income tax for the three succeeding taxable years.
(b) Generally, capital gains received by a non-resident foreign corporation are subject to a final withholding tax of 30%. However, the net capital gains realised by a nonresident foreign corporation from the sale, barter, exchange or other disposition of shares of stock in a domestic corporation, except shares sold or disposed through the stock exchange, are subject to tax at 5% for net capital gains not more than Php100,000 ($2,046) and 10% on any amount more than Php100,000. The capital gains derived by a nonresident foreign corporation from Philippine sources may be exempt from tax under certain conditions under double tax treaties.
(c) Philippine branch offices of foreign corporations are taxed as resident foreign corporations.
(d) The withholding tax on dividends may be reduced to 15% subject to the condition that the country where the non-resident foreign corporation is domiciled shall allow a credit against the tax due from the non-resident foreign corporation taxes deemed to have been paid in the Philippines equivalent to 15%. The tax rate may also be reduced under double tax treaties.
(e) These rates are usually reduced under double tax treaties.
Source: Professionals from Salvador & Associates, Attorneys-at-Law, the Philippine member of the Taxand, the global network of leading independent tax firms