10% Final Withholding Tax — Dividends

September 11, 1981 BIR RULING NO. 172-81 24-c 000-00 172-81 San Miguel Corporation 6766 Ayala Avenue, Makati, Metro Manila Attention: B . R . Enriquez Asst . Vice-President Gentlemen : This refers to your letter dated March 30, 1981 requesting a ruling on whether or not the dividends being paid to a religious corporation which is one of your stockholders are subject to the final withholding tax of 10%. In reply thereto, I have the honor to inform you that pursuant to the last paragraph of Section 27 of the Tax Code, as amended by Presidential Decree No. 1457, income of whatever kind and character of all the organizations enumerated therein derived either from any of their properties, real or personal, or from any of their activities conducted for profit is subject to internal revenue taxes, one of which is income tax, regardless of the disposition made of such income. Consequently, although religious corporations are exempt from income tax pursuant to Section 27(e) of the Tax Code, the dividends received on shares of stock being income derived from personal property, are subject to income tax. Pursuant to Section 24(c) of the Tax Code as amended by Presidential Decree No. 1800, dividends received by a domestic corporation from another domestic corporation are subject to a final withholding tax of 10% on the total amount thereof. In view thereof, the dividends received by one of your stockholders, a religious corporation are subject to the 10% final withholding tax on the total amount thereof. cdtech Very truly yours, RUBEN B. ANCHETA Acting Commissioner