Cash Dividends Declared in 1981 but Actually Received by Stockholders in 1983 Subject to 15% Final Tax Only in 1983

May 28, 1985 BIR RULING NO. 080-85 21 (e) 000-00 080-85 S i r : This refers to your letter dated April 26, 1985 requesting confirmation of your opinion to the effect that the 15% final tax on cash dividends should be withheld in the year the dividends were actually paid to the stockholders. It is represented that your client, Flexo Manufacturing Corporation declared on November 12, 1981 by Board Resolution No. 65 cash dividends of P1,821,360.00 to all stockholders of record; that on November 25, 1981 in a special meeting of the Board of Directors, Resolution No. 66-A was passed whereby it was resolved that in view of the urgent need of cash by the company for purposes of financing the purchases of raw materials both local and imported and for payment of maturing bank loans, the payment of the balance of cash dividends to stockholders of record in the amount of P1,821,360.00 was deferred to a later date or until such time that the financial condition of the company shall permit; and that the cash dividends were later paid in October, November and December 1983 and the corresponding tax of 15% was withheld and paid to the Bureau of Internal Revenue. In reply thereto, I have the honor to inform you that pursuant to Section 21(e) of the Tax Code, dividends received by an individual who is a citizen of the Philippines or resident alien from a domestic corporation shall be subject to a final tax at the rate of 15% on the total amount thereof which shall be collected and paid as provided in Sections 53 and 54 of the Tax Code. Considering that the aforementioned cash dividends although declared on November 12, 1981 were actually received by the stockholders in October, November and December 1983, the dividends shall be subject to the 15% final tax only in 1983. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner