15% Tax on Dividends of Domestic Corporations

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PRESIDENTIAL DECREE NO. 299-A: 15% Tax on Dividends of Domestic Corporations

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Title Source: Supreme Court: 15% Tax on Dividends of Domestic Corporations

Law: Presidential Decree No. 299-a

Decision Date: Sep 21, 1973

Presidential Decree No. 299-A imposes a 15% tax on dividends received by domestic or resident foreign corporations in order to support economic development programs in the Philippines, with the tax collected to be paid to the Commissioner of Internal Revenue.

Application of Tax Rates to Government-Owned or Controlled Corporations and Corporate Taxpayers

All corporate taxpayers, except those specifically exempted, must pay the tax rates under Section 24.
Government-owned or controlled corporations and agencies, including GSIS and SSS but excluding educational institutions, are subject to the same tax rates as similar private corporations.
This regulation is stipulated in the new Subsection (e) added to Section 24.

Repeal and Amendments to Existing Code Provisions

Subsection (e) of Section 29 is repealed.
Amended Subsection (a) of Section 65 clarifies the treatment of dividends, interest, royalties, and annuities, excluding those dividends subject to the 15% tax under Section 24(d).

Withholding Tax Responsibilities on Dividends

Payor corporations are required to withhold the 15% tax on dividends payable to domestic or resident foreign corporations.
The withheld tax must be remitted to the Commissioner of Internal Revenue at the time dividends are paid.
This withholding requirement is codified as Subsection (d) in Section 53.

Treatment of Previously Received and Reported Dividends

Dividends previously received and reported in quarterly income tax returns are exempted from the 15% tax imposed in the amended Section 24(d).
These dividends are treated as if subject to this tax for purposes related to Section 65(a).

Rulemaking Authority

The Commissioner of Internal Revenue is authorized to issue rules and regulations to implement this decree.
Such rules are subject to approval by the Secretary of Finance.

Effectivity of the Decree

The decree takes effect immediately upon issuance on September 21, 1973.

This decree aims to foster economic development by imposing a uniform tax on dividends parallel to interest on foreign loans, encouraging capital investment while securing government revenues.

END