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Northern CPAR: Taxation Final Income Taxation: Final Withholding Tax Table

FINAL TAX RATES ON CERTAIN PASSIVE INCOME (Sec. 24 B, 25 A (2), 27 D, 28 A (7); 28 B (5), NIRC)
Individual
PASSIVE INCOME
Alien
Citizen
Non-resident
Resident
NonNot
Resident resident
Engage
engage
d
d
INTEREST:
Interest or yield on local currency deposit:
1. Bank deposit (savings, time)
20%
20%
20%
20%
25%
2. Deposit substitute
3. Money market placements
4. Trusts funds (CTF, UITF, IMA)
Interest income from long term:
1. Deposit
2. Investments in the form of savings
3. Common or Individual Trust Funds
Exempt
Exempt
Exempt
Exempt
25%
4. Investment Management Accounts
5. Deposit substitute
6. Other investments evidenced by certificates
prescribed by the BSP
Pre-termination of long-term deposit or investment:
1. Less than 3 years held
20%
20%
20%
20%
25%
2. 3 years to less than 4 years held
12%
12%
12%
12%
3. 4 years to less than 5 years held
5%
5%
5%
5%
7 %
Exempt
7 %
Exempt Exempt
Interest Income on FCDU Deposit from a
depositary bank
N/A
Interest Income by FCDU Depositary banks
N/A
Interest Income on foreign loans
DIVIDENDS (Cash or Property):
1. From a Domestic Corporation
- January 1, 1998 earnings
- January 1, 1999 earnings
- January 1, 2000 earnings
2. From a Foreign Corporation (resident and
non-resident)

6%
8%
10%

6%
8%
10%

Corporations
Domesti
c

Residen
t

Nonresident

20%

20%

30%

20%

20%

30%

20%

20%

30%

7 %

7 %

Exempt

10%

10%

N/A
20%

Exempt

15%*

6%
8%
20%
25%
Exempt
10%
Regular Income Tax rules apply.

NCPARdriven for real excellence!


H004

TAX by Rex B. Banggawan, CPA, MBA

TAX 5

th

Batch

Northern CPAR: Taxation Final Income Taxation: Final Withholding Tax Table
Note: Business partnerships are taxable similar to corporations. Partners share in the net income of business partnership is subject to
10% final withholding tax.

Individual
PASSIVE INCOME
Citizen
NonResident resident

NOTE SECTION 42 A(2) on Dividends


ROYALTIES:
1. In general
2. From books, literary works and musical
compositions
PRIZES (Taxable):
1. P10,000 and below
2. Above P10,000
WINNINGS
1. In general
2. PCSO and Lotto winnings
INFORMERS TAX REWARD

20%
10%

20%
10%

Resident

20%
10%

Alien
Non-resident
Not
Engage
engage
d
d
20%
10%

25%
25%

Corporations
Domesti
c

Residen
t

Nonresident

20%

20%

30%

Regular (Progressive) Income Tax rules apply.


20%
20%
20%
20%
25%

N/A**

20%

N/A**

20%

20%

20%
25%
Exempt
10%

* subject to condition that the country where the foreign corporation is domiciled shall allow a credit against the tax due from the non-resident
corporation taxes deemed to have been paid in the Philippines equivalent to 20% effective 1997, 19% January 1, 1998, 18% for 1999 and 17%,
Nov. 1, 2005 20%, January 1, 2009 15% (R.A. 9337) [Statutory formula: Philippine Regular Corporate Income Tax Dividend Tax (15%)].
** If a corporation derives prizes or winnings, regular income taxation (the general rule) would apply since there is no similar provision imposing
final tax.
Note on Prizes:
The following prizes are exempt:
1. The recipient is selected without active effort on his part to join the contest such as Nobel Prize, Most Outstanding Citizen Award and similar
awards.
2. Prizes earned with active participation are generally subject to tax except in cases of sports competitions that are sanctioned by a national sport
organization (such as Philippine Olympic Committee).
A cash reward may be given to any person instrumental in the a. ) discovery of violations of the National Internal Revenue Code or b. ) discovery
and seizure of smuggled goods
2

NCPARdriven for real excellence!


H004

TAX by Rex B. Banggawan, CPA, MBA

TAX 5

th

Batch

Northern CPAR: Taxation Final Income Taxation: Final Withholding Tax Table
Requisites:
1. Definite sworn information which is not yet in the possession of the BIR.
2. The same lead to the discovery of fraud upon internal revenue laws or provisions thereof.
3. Enforcement results in recovery of revenues, surcharges and fees and or conviction of the guilty party or imposition of any fine or penalty
4. The informer is other than a/an:
a. Internal Revenue officials or employees
b. Other public officials or employees
c. Relatives of those in a. and b. within the 6 degree of consanguinity
Cash Reward Whichever is the lower of the following per case:
1. 10% of revenues, surcharges or fees recovered and or fine or penalty imposed and collected or
2. P1,000,000
**It should be noted that the maximum net cash reward of the informer is P900,000 per case due to the 10% withholding final tax. Even if a case is
filed if there is no recovery, there is no cash award.

NCPARdriven for real excellence!


H004

TAX by Rex B. Banggawan, CPA, MBA

TAX 5

th

Batch