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).

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State;
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State;
• Gains from the alienation of stocks and shares of a company issued in the other State; and
• Gains from the alienation of shares of a company or of an interest in a partnership or trust where the property of the company, partnership, or trust consists principally of immovable property situated in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

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).

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.

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

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

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

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.

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.