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RESIDENT NON-RESIDENT

DOMESTIC FOREIGN FOREIGN

Definition Sec 22 (B) & (C ) Sec 22 (H) Sec 22 (I)

Applies to corporation

created or organizedin the Philippines or

under its laws

Applies to foreign

corporation engagedin trade or business

within the Philippines

Applies to a foregin

corporation notengaged in trade or

business within the

Philippines

Tax Code Reference Sec 27 Sec 28 (A) Sec 28 (B)

Tax Base taxable incomefrom

all sources wi thin

and wi thoutthe

Philippines

taxable incomefrom

all sources wi thin

the Philippines

gross incomefrom

all sources wi thint

Philippines

Tax Rates - In general 34% in 1998

33% in 199932% in 2000-2005

35 % in 2006-2008

30% in 2009 &

thereafter

34% in 1998

33% in 199932% in 2000-2005

35 % in 2006-2008

30% in 2009 &

thereafter

34% in 1998

33% in 199932% in 2000-2005

35 % in 2006-2008

30% in 2009 &

thereafter

Interest on any currency bank deposit and

yield or any other monetary benefit from

deposit substitutes and from trust funds

and similar arragements

20% FT 20% FT 34% in 1998

33% in 1999

32% in 2000-2005

35 % in 2006-2008

30% in 2009 &

thereafter

Interest on foreign currency deposit system 7.5% FT 7.5% FT EXEMPT

Interest Income on Foreign Loans

contracted on or after August 1, 1986

N/A N/A 20% FT

Income derived by a depository bank under

the expanded foreign currency deposit

system from foreign currency transactions

wi th no nresidents, of fshore banking

uni ts in th e Phi l ippines, local

comm ercial banks including branches

of foreign banksthat may be authorized

by the Bangko Sentral ng Pilipinas (BSP) to

transact business with foreign currency

deposit system

EXEMPT [RA No.

9294]

EXEMPT [RA No.

9294]

N/A

INCOME TAXATION OF CORPORATIONS

CORPORATIONS

Tax Rates - on Passive Income (Subject to Final Tax [FT])

Interest Income received by a FCDU

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RESIDENT NON-RESIDENT

DOMESTIC FOREIGN FOREIGN

INCOME TAXATION OF CORPORATIONS

CORPORATIONS

Interest income from foreign currency loans

granted by such depository banks under

said expanded system to residents otherthan of fshore banking uni ts in the

Phi l ippines or o ther deposi tory banks

under the expanded sys tem

10% FT 10% FT N/A

Income derived by a depository bank under

the expanded foreign currency deposit

system from foreign currency transactions

wi th no nresidents, of fshore banking

uni ts in th e Phi l ippines, local

comm ercial banks including branches

of foreign banksthat may be authorized

by the Bangko Sentral ng Pilipinas (BSP) to

transact business with foreign currency

deposit system

N/A EXEMPT [RA No.

9294]

N/A

Interest income from foreign currency loans

granted to residents other than of fshore

banking uni ts or local commercial

banks , including local branches of

foreign banks that m ay be author ized

by B SP to t ransact wi th of fsho re

banking uni ts

N/A 10% FT N/A

Royalties 20% FT 20% FT 34% in 1998

33% in 1999

32% in 2000-2005

35 % in 2006-2008

30% in 2009 &

thereafter

Dividends EXEMPT EXEMPT 15% FT (conditiona

Tax Rates - on capital gains

On shares of stock not traded (based on

net capital gains)

5% / 10% FT 5% / 10% FT 5% / 10% FT

On Land or Buildings (classified as capital

assets)

6% FT

based on gross

selling price or FMV

whichever is higher

34% in 1998

33% in 1999

32% in 2000-2005

35 % in 2006-2008

30% in 2009 &

thereafter

34% in 1998

33% in 1999

32% in 2000-2005

35 % in 2006-2008

30% in 2009 &

thereafter

Tax Rate - Minimum Corporate Income Tax

(MCIT)

2% 2% N/A

Interest Income received by an OBU

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RESIDENT NON-RESIDENT

DOMESTIC FOREIGN FOREIGN

INCOME TAXATION OF CORPORATIONS

CORPORATIONS

Tax Rate - Branch Profit Remittance Tax

(BPRT)

N/A 15% N/A

Tax Rate - Improperly AccumulatedEarnings Tax (Sec 29)

10% 10% N/A

Atty. Marissa O. Cabreros (Ateneo School of Law)