How dividend tax works in Philippines
Cash or property dividends paid by a Philippine domestic corporation are generally subject to 10% final withholding tax when received by a resident individual. The domestic corporation normally withholds and remits the tax.
Dividends received by a domestic corporation from another domestic corporation are generally exempt from income tax, avoiding a second corporate income-tax charge on the same domestic distribution.
Dividends paid to a non-resident foreign corporation are generally subject to 25% withholding, but a 15% rate can apply when the statutory tax-credit or no-tax condition is met. An applicable tax treaty can reduce the rate. Other alien and non-resident cases have their own final-tax rules.
A resident Filipino citizen can have foreign dividends within the worldwide-income base. Foreign withholding tax, Philippine source rules, treaty relief and foreign tax credits should be documented separately from the simple 10% domestic-dividend rule.
Tax rates at a glance
- Domestic dividend to resident individual
- 10%Final withholding tax
- Domestic dividend to domestic corporation
- 0%
- Domestic dividend to qualifying NRFC
- 15%
- Domestic dividend to other NRFC
- 25%
- Treaty rate
- May be lower
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
InvestorsFoundersHolding companiesFamily businessesForeign shareholders
Watch out for
- The 10% domestic dividend rate is usually a final withholding tax for resident individuals; it is not the same as the graduated 0% to 35% tax on salary or business income.
- A company distributing dividends has usually already paid corporate income tax. Founders should model the corporate layer and shareholder layer together rather than comparing 10% in isolation.
- The 15% non-resident corporate rate is conditional. The recipient's residence country, deemed-paid-credit position, beneficial ownership and treaty paperwork can change the result.
- Foreign dividends received by resident citizens do not automatically receive the domestic Philippine 10% final-tax treatment. Their source, character and foreign tax paid need separate review.
Frequently asked questions
What is the dividend tax rate in the Philippines?
Domestic dividends paid to resident individual shareholders are generally subject to 10% final withholding tax. Other recipients, especially foreign corporations, can face 15%, 20% or 25% rates depending on statutory conditions and treaty relief.
Are Philippine dividends tax-free for companies?
Dividends received by a domestic corporation from another domestic corporation are generally exempt from income tax under the intercorporate dividend rule.
Are foreign dividends taxable in the Philippines?
They can be. A resident Filipino citizen is generally taxable on worldwide income, so foreign dividends require a source, foreign-withholding, treaty and foreign-tax-credit analysis.