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# Instrument Information This document describes the tax treatment of foreign corporations in the Philippines. ## Taxable Income 1. Foreign corporations, whether operating in the Philippines or not, are taxable on income derived from sources both within and outside the country. 2. Income deriv...

# Instrument Information This document describes the tax treatment of foreign corporations in the Philippines. ## Taxable Income 1. Foreign corporations, whether operating in the Philippines or not, are taxable on income derived from sources both within and outside the country. 2. Income derived from offshore banking units authorized by the BSP (Bangko Sentral ng Pilipinas) for foreign currency transactions with local commercial banks is subject to a 10% final tax. ## Resident Foreign Corporations 3. A Resident foreign corporation applies to other foreign corporations that do not engage in trade or business activities within the Philippines. ## Deductions 4. Domestic, resident foreign, and non-resident foreign corporations may deduct itemized deductions from their business income, as defined under the Tax Code. ## Return Filing Requirements 5. A return demonstrating the cumulative income and deductions for a quarter and preceding quarters does not need to be filed if the operations did not generate any income tax due. ## Non-Resident Foreign Corporations 6. Non-resident foreign corporations receive similar tax treatment to domestic and resident foreign corporations concerning capital gains from shares of stock not traded on exchanges. ## Specific Industries 7. Educational and non-profit hospitals are subject to a 10% tax on their taxable income. 8. Foreign corporations are established and organized according to the laws of countries other than the Philippines. ## Dividends from Domestic Corporations 9. Effective January 1, 2021, all dividends received from a domestic corporation by a non-resident foreign corporation are subject to a 15% final withholding tax. ## Domestic Corporations 10. Domestic corporations are taxable on all income derived from sources both within and outside the Philippines. ## Government-Controlled Entities 11. Government-owned or controlled corporations, agencies, and instrumentalities are subject to the tax rates that apply to similar corporations, industries, or activities, as defined in the tax code. ## Branch Profits 12. Any profit transferred from a branch to its head office will be subject to a 15% tax based on the total profits earmarked or applied for remittance, excluding those registered activities with the Philippine Economic Zone Authority.