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Final Income Tax Rates: Short-Term Interest or Yield Long-Term Interest or Yield

This document summarizes final income tax rates for different types of passive income received by individuals and corporations in the Philippines. Some key points: 1. Interest income from local bank deposits is taxed at 20% for individuals and 20-30% for corporations, depending on residency status. Lower rates apply for longer-term deposits. 2. Dividend income is generally taxed at 6-10% for individuals and is exempt for certain resident corporations. Foreign dividends are taxed at regular income tax rates. 3. Royalties from passive income sources like patents are taxed at 10-20% for individuals and 20-30% for corporations. Active royalties are taxed at

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Julie Mae Caling Malit
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1K views4 pages

Final Income Tax Rates: Short-Term Interest or Yield Long-Term Interest or Yield

This document summarizes final income tax rates for different types of passive income received by individuals and corporations in the Philippines. Some key points: 1. Interest income from local bank deposits is taxed at 20% for individuals and 20-30% for corporations, depending on residency status. Lower rates apply for longer-term deposits. 2. Dividend income is generally taxed at 6-10% for individuals and is exempt for certain resident corporations. Foreign dividends are taxed at regular income tax rates. 3. Royalties from passive income sources like patents are taxed at 10-20% for individuals and 20-30% for corporations. Active royalties are taxed at

Uploaded by

Julie Mae Caling Malit
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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FINAL INCOME TAX RATES

RECIPIENT
PASSIVE INCOME INDIVIDUAL CORPORATION
RC NRC RA NRA-ETB NRA-NETB DC RFC NRFC

1. INTEREST INCOME
Local Currency Deposit
Short-term interest or yield 20% 20% 20% 20% 25% 20% 20% 30%
Long-term interest or yield Exemp
Exempt Exempt Exempt 25% 20% 20% 30%
t
Pre-termination interest rate
− Less than 3 years 20% 20% 20% 20% 25% 20% 20% 30%
− 3 years to less than 4 years 12% 12% 12% 12% 25% 20% 20% 30%
− 4 years to less than 5 years 5% 5% 5% 5% 25% 20% 20% 30%
− 5 years or more 0% 0% 0% 0% 25% 20% 20% 30%
Foreign Currency Deposit
Interest income from FCDUs/OBU depositary banks 15% Exempt 15% Exempt Exempt 15% 15% Exempt
Interest income of EFCDU/OBU banks 10% Exempt 10% Exempt Exempt 10% 10% Exempt
Interest income on foreign loans N/A N/A N/A N/A N/A N/A N/A 20%
Tax-free Covenant Bond 30% 30% 30% 30% 30% N/A N/A N/A

2. DIVIDEND INCOME
From domestic corporations, in general
− January 1, 1998 earnings Exemp Exemp
6% 6% 6% 20% 25% 15% (1)
t t
− January 1, 1999 earnings Exemp Exemp
8% 8% 8% 20% 25% 15% (1)
t t
− January 1, 2000 earnings and thereafter Exemp Exemp
10% 10% 10% 20% 25% 15% (1)
t t
From domestic corporations, in general Exemp Exemp
10% Exempt (2) 10% <10% (3) <10% (3) <10% (3)
t t
From foreign corporations RIT RIT RIT RIT RIT RIT RIT RIT

3. SHARE IN NET INCOME of taxable partnership, joint


10% 10% 10% 20% 25% 10% 10% 30%
venture and co-ownership

4. ROYALTIES
Passive Royalties
In general, 20% 20% 20% 20% 25% 20% 20% 30%
From cinematographic films and similar works 20% 20% 20% 25% 25% 20% 20% 25%
From books, literary works, and musical compositions 10% 10% 10% 10% 25% 20% 20% 30%
Active Royalties RIT RIT RIT RIT 25% RIT RIT 30%
RECIPIENT
PASSIVE INCOME INDIVIDUAL CORPORATION
RC NRC RA NRA-ETB NRA-NETB DC RFC NRFC

5. TAXABLE PRIZES
P10,000 and below RIT RIT RIT RIT 25% RIT RIT 30%
Above P10,000 20% 20% 20% 20% 25% RIT RIT 30%

6. WINNINGS
In general, 20% 20% 20% 20% 25% RIT RIT 30%
PCSO and lotto winnings > P10,000 20% 20% 20% 20% 25% 20% 20% 30%
PCSO and lotto winnings ≤ P10,000 Exempt Exempt Exemp Exempt 25% Exemp Exemp
30%
t t t

7. INFORMER’S TAX REWARD 10% 10% 10% 10% 25% 10% 10% 30%

NOTES:

1. Subject to tax sparing rule; otherwise, 30%


2. For OFW, exempt up to 7 years from August 12, 2011 (i.e., up to August 12, 2018)
3. Subject to preferential tax rate under applicable tax treaty
4. Item of income that may arise sources marked “N/A” shall be subject to RIT.

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