Book a Meeting
background image
Philippines - Finland — Orbitax Withholding Tax Rates

Capital Gains

  • Best Rates0%
  • Domestic Rates 15%
  • Treaty Rates0%
  • EU Rates-

Domestic

Effective 12 April 2021, tax is withheld at the rate of 15% on capital gains arising to non-resident corporates from the sale of shares not traded on the stock exchange (increased from the 5%/10% progressive rates).

Dividend

  • Best Rates15%
  • Domestic Rates 25%
  • Treaty Rates15%
  • EU Rates-

Domestic

Effective 1 January 2021, tax is withheld at the rate of 25% on dividends paid to non-resident corporate recipients (30% previously). However, the rate is reduced to 15% if the country in which the recipient is domiciled either (a) does not tax the dividends received, or (b) allows a deemed-paid tax credit of at least 10% (i.e., calculated as the difference between the standard corporate tax rate of 25% and the 15% tax rate on inter-corporate dividends).

Treaty

15% rate applies where dividends are paid to a company (other than a partnership) that owns at least 10% of the voting stock of the payer company; otherwise, the domestic withholding tax rate applies.

Interest

  • Best Rates15%
  • Domestic Rates 20%
  • Treaty Rates15%
  • EU Rates-

Domestic

Tax is withheld at the rate of 20% on interest paid to non-resident corporate recipients.

A reduced withholding tax rate of 10% applies on interest paid to Offshore Banking Units (OBUs) and Foreign Currency Deposits Units (FCDUs) in relation to foreign currency transactions or loans.

Treaty

10%:15%. The 10% rate applies to interest paid in respect of public issues of bonds, debentures or similar obligations.

Royalty - Copyright

  • Best Rates15%
  • Domestic Rates 25%
  • Treaty Rates15%
  • EU Rates-

Domestic

Effective 1 January 2021, tax is withheld at the rate of 25% on royalties paid to non-resident corporate recipients (30% previously).

Treaty

15%:25% The 15% rate applies to royalties paid by an enterprise registered with and engaged in preferred areas of activities and also to royalties in respect of cinematographic films or tapes for television or broadcasting, and royalties for the use of, or the right to use any copyright of literary, artistic or scientific work.

Royalty - Patent

  • Best Rates25%
  • Domestic Rates 25%
  • Treaty Rates25%
  • EU Rates-

Domestic

Effective 1 January 2021, tax is withheld at the rate of 25% on royalties paid to non-resident corporate recipients (30% previously).

Treaty

15%:25% The 15% rate applies to royalties paid by an enterprise registered with and engaged in preferred areas of activities and also to royalties in respect of cinematographic films or tapes for television or broadcasting, and royalties for the use of, or the right to use any copyright of literary, artistic or scientific work.

Royalty - Trademark

  • Best Rates25%
  • Domestic Rates 25%
  • Treaty Rates25%
  • EU Rates-

Domestic

Effective 1 January 2021, tax is withheld at the rate of 25% on royalties paid to non-resident corporate recipients (30% previously).

Treaty

15%:25% The 15% rate applies to royalties paid by an enterprise registered with and engaged in preferred areas of activities and also to royalties in respect of cinematographic films or tapes for television or broadcasting, and royalties for the use of, or the right to use any copyright of literary, artistic or scientific work.

Sales

  • Best Rates0%
  • Domestic Rates 0%
  • Treaty Rates0%
  • EU Rates-

Service - Management

  • Best Rates0%
  • Domestic Rates 25%
  • Treaty Rates0%
  • EU Rates-

Domestic

Tax is withheld at the rate of 25% on management service fees paid to non-resident corporate recipients for services materially rendered in the Philippines (30% previously). The question as to whether services delivered online or digitally may be deemed to be rendered abroad (and thus not subject to withholding tax in the Philippines) is disputed. However, an old ruling from the tax authority seems to suggest that management services so delivered should be treated as rendered outside the Philippines.

Treaty

The treaty does not specifically deal with technical, management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with technical, management and similar service fees. Where the relevant country has a developed policy regarding the treatment of technical, management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes). For a technical analysis of the issue of services Vs. royalties, ##HowToReadTreatyLink##. For a quick reference as to whether any of a selection of some 350 widely-used tax treaties specifically addresses technical service fees, ORBITAX has developed a proprietary Treaty Analysis allowing you to quickly and easily capture the most salient features of the relevant treaty. In order to access the Treaty Analysis of a particular bilateral tax treaty, select the pair of countries under the Treaties Tab.

Service - Technical

  • Best Rates0%
  • Domestic Rates 25%
  • Treaty Rates0%
  • EU Rates-

Domestic

Technical service fees are not subject to withholding tax in the Philippines unless they fall under the definition of royalties. If they do, then they are treated similarly to royalties for withholding tax purposes. Note that technical service fees may be characterized as business profits under some of the tax treaties entered into by the Philippines. In that case, the fees would be taxable in the Philippines only if attributable to a permanent establishment therein.

Treaty

The treaty does not specifically deal with technical, management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with technical, management and similar service fees. Where the relevant country has a developed policy regarding the treatment of technical, management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes). For a technical analysis of the issue of services Vs. royalties, ##HowToReadTreatyLink##. For a quick reference as to whether any of a selection of some 350 widely-used tax treaties specifically addresses technical service fees, ORBITAX has developed a proprietary Treaty Analysis allowing you to quickly and easily capture the most salient features of the relevant treaty. In order to access the Treaty Analysis of a particular bilateral tax treaty, select the pair of countries under the Treaties Tab.

Latest Tax News

Algeria and Singapore to Conclude Tax Treaty

According to a release from Algeria's Ministry of Finance, officials from Algeria and Singapore met to discuss bilateral cooperation on 24 September ...

U.S. IRS Expands Use of Chatbots to Help Answer Taxpayer Questions on Key Notices

The U.S. IRS has announced the expanded use of chatbots to help answer taxpayer questions on key notices and is planning to introduce additional bot ...

Austria Providing Further Inflation Relief for Taxpayers Including Increased Tax Brackets in 2024

The Austrian government has approved a resolution to provide further inflation relief for individual taxpayers. In 2023, Austria implemented reforms t...