Taxability of Dividends Received from a Domestic Corporation and the Share of an Individual Partner in a Partnership

April 18, 1990 BIR RULING NO. 063-90 21 (c) (2) 283-88 063-90 Gentlemen : This refers to your letter dated March 15, 1990 requesting clarification as to whether dividends received from a corporation as well as the share of individual partners in the net profit of a taxable partnership which are virtually exempt from final tax, will still be subject to the graduated income tax. cdtech In reply thereto, please be informed that pursuant to Section 21(c)(2) of the Tax Code, as amended, dividends received from a domestic corporation and the share of an individual partner in a partnership subject to tax under Section 24(a) of the same Code shall be subject to tax at the rate of 15% in 1986; 10% effective January 1, 1987; 5% effective January 1, 1988; and 0% effective January 1, 1989. Such being the case, beginning January 1, 1989 dividends received from a domestic corporation as well as the share of individual partners in the net profit of taxable partnership are no longer includible as part of taxable income computed in accordance with Section 28 in relation to Section 21 both of the Tax Code, as amended. (Sec. 61, Revenue Regulations No. 2) cd Very truly yours, (SGD.) JOSE U. ONG Commissioner