Philippines: Reduction in the withholding tax rates
Clearstream Banking1 would like to inform customers that effective
11 April 2021
the withholding tax rate has been reduced from 30% to 25% for dividends in equities, from 30% to 25% and 20% for coupons in corporate bonds.
On 26 March 2021, Philippines approved the measures proposed by the Congress under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act.
One of the measures under the CREATE Act is to reduce the withholding tax rate from 30% to 25% for dividends in equities, to 25% and 20% for coupons in corporate bonds effective 1 January 2021 (retroactively).
Impact on customers
All dividend payments in equities processed from 11 April 2021 will be paid with 25% withholding tax rate by issuing companies.
All coupons payments in corporate bonds processed from 11 April 2021 will be paid with 25% or 20% withholding tax rate by issuing companies.
For the income payments already taxed at the higher withholding tax rate from 1 January 2021 to 10 April 2021, the Bureau of Internal Revenue (BIR) has yet to release their Implementing Rules and Regulations (IRR) on the withholding tax adjustments to be made. A follow up news bulletin should be released once the IRR have been issued. We continue to monitor the Philippines market for new developments and will provide more information as it becomes available.
The Market Taxation Guide – Philippines will be updated in due course.
For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.