BIR Ruling

October 5, 1977 Dividends to be Remitted to a Corporation, Subject to 15% Withholding Tax This refers to your letter dated May 19, 1976, requesting confirmation that the dividends to be remitted by your client, Philippine Products, Inc., to one of its nonresident foreign corporate stockholders Foodstaff, Inc. are subject only to 15% withholding tax in accordance with Section 24(b)(1) of the Tax Code, as amended by Presidential Decree No. 369. It is represented that Foodstaff, Inc. is a foreign corporation domiciled at Panama and organized under the laws of Panama, and that the Income Tax Law of Panama (Law No. 9 of December 23, 1964 Chapter 1, Article 694, Proviso 2) does not impose any income tax on foreign-source income. It appearing that dividends derived by a Panamanian corporation not doing business in the Philippines from sources outside of Panama are not subject to income tax under the laws of Panama, are subject to withholding tax at the rate of 15% only, in accordance with Section 24(b)(1) of the Tax Code, as amended. cda