final withholding system - imposes upon the person making income Interest income or yield (currency bank payments the responsibility to withholding deposits or deposits substitutes) tax
features of final income taxation:
Recipient - tax which will be deducted at source is FINAL Sources of Individual Corporation - receipt is net of tax interest (C, RC, s (DC/RFC) - inherently teritorial income NRE, RA, - applies only to certain passive income NRAETB) earned from sources within the philippines Short term 20% 20% deposits (< How about earned abroad by a resident 5 years) citizen or domestic corp? - earnings from passive income shall be Long term exempt Reg. ITR deposits > 5 (not subjected to regular income tax (part of years included in gross income) final tax) however Passive income include in - earned minimal involvement from taxpayer computing - generally irregular in time and amount corporate final tax illustration: NRA-NETB 25% 25%
A earned 10,000 interest income from his NRFC 25% 25%
deposits from ABC bank. (beginning (beginning july 1, 2020) july 1, 2020) it was 30% it was 30% Interest Income: 10,000 before. before. final tax (20%) (2,000) Income net of FT 8,000
Tax on pre-terminated long-term deposits of
Passive Income subject to final tax individuals Interest or yield from bank Domestic dividends Holding period Final tax Dividend income from real estate Less than 3 years 20% investment trust Share in NI of business partnership, taxable 3 years to less than 12% associaties 4 years Royalties Prices and winnings 5% 4 years to less than 5%
