  
Tax Treatment of Nonresident Foreign Corporations Nonresident foreign corporations which are not engaged in trade or business to the Philippines are taxed on their gross income from Philippine sources. Since the CTRP reduced the regular corporate income tax rate, the tax which is applicable to nonresident foreign corporations was also reduced. In 1999, the applicable tax rate is thirty-four percent (34%) and this would be further reduced to thirty-two percent (32%) in the year 2000. |
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The CTRP maintained the special tax regime applicable to the following primarily because of issues on tax administration and compliance:
A nonresident cinematographic film owner, lessor or distributor is taxed at twenty-five percent of its gross in come from Philippine sources.
A nonresident owner or lessor of vessels chartered by Philippine nationals is taxed at four and one-half percent of gross rentals, lease or charter fees.
A nonresident owner or lessor of aircraft, machinery and other equipment is subject to a tax of seven and one-half percent (7 ½%) of gross rental fees.
Interest on foreign loans which is paid to a nonresident foreign corporation is subject to a twenty percent final withholding tax at source.
Cash or property dividends which are declared to nonresident foreign corporations are subject to a fifteen percent final withholding tax if their countries of residence allow a credit on the tax which was spared in the Philippines.
