Clarification of the 0% Withholding Tax on Dividends

June 29, 1988 BIR RULING NO. 283-88 21 (c) (2) 080-85 283-88 Gentlemen : This refers to your letter dated February 24, 1988 requesting clarification as to whether the 0% withholding tax on dividends effective January 1, 1988 is applicable only on dividends received in 1988 although declared in 1987 or whether it is applicable on dividends declared and received in 1988. 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 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. Accordingly, the 5% withholding tax shall be imposed on dividends received in 1988 although said dividends were declared in 1987. In other words, it is the date when the dividends were received that determines the imposition of the tax and not the date of declaration. Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner