Dividend Tax in the Philippines

Updated on Monday 16th April 2018

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Foreign investors who open companies in the Philippines take into consideration various aspects which include the restrictions, the company registration process and the taxation level. The last aspect is one of the most important because it has a huge impact on the profits of the company.

Companies in the Philippines are subject to several levies, among which the corporate tax and the dividend tax are some of the most important. Below, our Philippines company formation agents explain how dividend payments are taxed in this country.

How is the Philippines dividend tax computed?

In order to understand how dividends are taxed, it is important to know that these represent a distribution of the earnings made by a company to its shareholders. Dividends are distributed after the corporate tax was applied to the company.

The distribution of dividends is made at the end of a quarter or of the financial year.

It should be noted that dividends received by Philippines residents and companies with permanent establishments located in other countries are not subject to the dividend tax. Foreign companies and investors will be imposed with the Philippines dividend tax when conducting business activities in this country.

Our company registration specialists in the Philippines can assist foreign enterprisers who want to open companies here.

Tax rates applied to dividend payments in the Philippines

As mentioned above, both individuals and companies are subject to the dividend tax in the Philippines.

Individuals are imposed with the following dividend tax rates in the Philippines:
  • a 10% rate if they are citizens or residents of the Philippines;
  • a 20% rate if they are foreign citizens involved in trading activities in the Philippines, if their home countries have a double tax treaty with the Philippines;
  • a 25% rate if they are foreign citizens doing business in the Philippines, if no double tax treaty applies.
Foreign companies are subject to a 15% or 30% dividend tax rate depending on whether a double tax treaty with the Philippines is enforced.

For full information on the taxation system applied in the Philippines, please contact us. You can rely on us if you want to open a company in the Philippines.