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"(b) Regional operating headquarters as defined
in Sec. 22 (EE) shall pay a tax of ten percent (10%) of their
taxable income.
"(7) Tax on Certain Incomes Received by a Resident Foreign
Corporation. -
"(a) Interest from Deposits and Yield or any other Monetary Benefit
from Deposits Substitutes, Trust Funds and Similar Arrangements and
Royaties. - Interest from any currency bank deposit and yield or any
other monetary benefit from deposit substitutes and from trust funds
and similar arrangements and royalties derived from sources within
the Philippines shall be subject to a final income tax at the rate
of twenty percent (20%) of such interest: Provided, however, That
interest income derived by a resident foreign corporation from a
depository bank under he expanded foreign currency deposit system
shall be subject to a final income tax at the rate of seven and
one-half percent (71/2%) of such interest income.
"(b) Income Derived under the Expanded Foreign Currency Deposit
System. - Income derived by a depository bank under the expanded
foreign currency deposit system from foreign currency transactions
with nonresidents, offshore banking units in the Philippines, local
commercial banks including branches of foreign banks that may be
authorized by the Bangko Sentral ng Pilipinas (BSP) to transact
business with foreign currency deposit system units and other
depository banks under the expanded foreign currency deposit system
shall be exempt from all taxes, except net income from such
transactions as may be specified by the secretary of Finance, upon
recommendation by the Monetary Board to be subject to the regular
tax payable by banks: Provided, however. That interest income from
foreign currency loans granted by such depositors banks under said
expanded system to residents other than offshore banking units in
the Philippines or other depository banks under the expanded system
shall be subject to a final tax at the rate of ten percent (10%).
"Any income of nonresidents, whether individuals or corporations,
from transactions with depository banks under the expanded system
shall be exempt from income tax.
"(c) Capital Gains from Sales of Shares of Stock Not Traded in the
Stock Exchange. - A final tax at the rates prescribed below is
hereby imposed upon the net capital gains realized during the
taxable year from the sale, barter, exchange or other disposition of
shares of stock in a domestic corporation except shares sold or
disposed of through the stock exchange:
Not over P100,000 - 5%
Or any amount in excess of P100,000 - 10%
"(d) Intercorporate Dividends. - Dividends received by a resident
foreign corporation from a domestic corporation liable to tax under
this Code shall not be subject to tax under this Title.
"(B) Tax on Nonresident Foreign Corporation. -
"(1) In General. - Except as otherwise provided in this Code, a
foreign corporation not engaged in trade or business in the
Philippines shall pay a tax equal to thirty-five percent (35%) of
the gross income received during each taxable year from all sources
within the Philippines, such as interests, dividends, rents,
royalties, salaries, premiums (except reinsurance premiums),
annuities, emoluments or other fixed or determinable annual periodic
or casual gains, profits and income, and capital gains, except
capital gains subject to tax under subparagraphs 5 (c) and (d);
Provided, That effective January 1, 1998, the rate of income tax
shall be thirty-four percent (34%); effective January 1, 1999, the
rate shall be thirty-three percent (33%); and, effective January 1,
2000 and thereafter, the rate shall be thirty-two percent (32%).
"(2) Nonresident Cinematographic Film Owner Lessor or Distributor. -
A cinematographic film owner, lessor, or distributor shall pay a tax
of twenty-five percent (25%) of its gross income from all sources
within the Philippines.
"(3) Nonresident Owner or Lessor of Vessels Charactered by
Philippine Nationals. - A nonresident owner or lessor of vessels
shall be subject to a tax of four and one-half percent (41/2%) of
gross rentals, lease or charter fees from leases or charters to
Filipino citizens or corporations, as approved by the Maritime
Industry Authority.
"(4) Nonresident Owner or Lessor of Aircraft, Machineries and Other
Equipment. - Rentals, charter and other fees derived by a
nonresident lessor of aircraft, machineries and other equipment
shall be subject to a tax of seven and one-half percent (71/2%) of
gross rentals or fees.
"(5) Tax on Certain Incomes Received by a Nonresident Foreign
Corporation. -
"(a) Interest on Foreign Loans. - A final withholding tax at the
rate of twenty percent (20%) is hereby imposed on the amount of
interest on foreign loans contracted on or after August 1, 1996;
"(b) Intercorporate Dividends. - A final withholding tax at the rate
of fifteen percent (15%) is hereby imposed on the amount of cash
and/or property dividends received from a domestic corporation which
shall be collected and paid as provided in Sec. 57(A) Of this Code,
subject to the condition that the country in which the nonresident
foreign corporation is domiciled, shall allow a credit against the
tax due from the nonresident foreign corporation taxes deemed to
have been paid in the Philippines equivalent to twenty percent (20%)
for 1997, nineteen percent (19%) for 1998, eighteen percent (18%)
for 1999, and seventeen percent (17%) thereafter, which represents
the difference between the regular income tax of thirty-five percent
(35%) in 1997, thirty-four percent (34%) in 1998, thirty-three
percent (33%) in 1999, and thirty-two percent (32%) thereafter on
corporations and the fifteen percent (15%) tax on dividends as
provided in this subparagraph;
"(c) Capital Gains from Sale of Shares of Stock not Traded in the
Stock Exchange. - A final tax at the rates prescribed below is
hereby imposed upon the net capital gains realized during the
taxable year from the sale, barter, exchange or other disposition of
shares of stock in a domestic corporation, except shares sold, or
disposed sold, or disposed of through the stock exchange;
Not over P 100,000 - 5%
On any amount in excess of P10,000 - 10%"
Sec. 3. Separability Clause. - If any part or provision of this Act
shall be held unconstitutional or invalid, other provisions hereof
which are not affected thereby shall continue to be in full force
and effect.
Sec. 4. Repealing Clause. - All laws, decrees, orders, rules and
regulations and other issuances or parts thereof inconsistent with
this Act are hereby repealed or modified accordingly.
Sec. 5. Effectivity. - This Act shall take effect fifteen (15) days
after its publication in the Official Gazette or in two (2)
newspapers of general circulation.
Approved: April 28, 2004
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