IMPOSING A 15% TAX ON DIVIDENDS RECEIVED BY A DOMESTIC OR RESIDENT FOREIGN CORPORATION FROM A DOMESTIC CORPORATION, AMENDING SECTIONS 24, 29, 53 and 65 OF THE NATIONAL INTERNAL REVENUE CODE FOP THE PURPOSE.

• Number: Presidential Decree No. 299-A
• Sections: 10

Preamble

WHEREAS, it is imperative to adopt measures responsive to

the requirements of a developing economy foremost of which is the financing of

economic development programs; and

WHEREAS, in order to encourage more capital investment for

large projects, an appropriate tax be imposed on dividends in the same manner as

the tax imposed on interest on foreign loans;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the

Philippines, by virtue of the powers in me vested by the Constitution as

Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to

Proclamation No. 1081, dated September 21, 1972, and General Order No. 1, dated

September 22, 1972, as amended, do hereby order and decree as follows:

Section 1

SECTION 1. The provisions of subsection (d) of Section 24 of

the National Internal Revenue Code are hereby transferred to a new Subsection

(e) added to said section and said Subsection (d) shall now read as follows:

"(d) Rate of tax on certain dividends. — Dividends received by a

domestic or resident foreign corporation from a domestic corporation liable to

tax under this Chapter shall be subject to tax at 15% on the total amount

thereof which shall be collected and paid as provided in Section 53 of this

Code."

Section 2

SEC. 2. — A new subsection is hereby added to Section 24 of

the National Internal Revenue Code to contain the former provisions of

Subsection (d) of the same Section amended to read as follows:

"(e) The provisions of existing special or general laws to the contrary

notwithstanding, all corporate taxpayers not specifically exempt under Sections

24(c) (1) and (d) and 27 of this Code shall pay the rates provided in this

Section. All corporations, agencies, or instrumentalities owned or controlled by

the Government, including the Government Service Insurance System and the Social

Security System but excluding educational institutions, shall pay such rate of

tax upon their taxable net income as are imposed by this Section upon

associations or corporations engaged in a similar business or

industry."

Section 3

SEC. 3. Subsection (e) of Section 29 of the National

Internal Revenue Code is hereby repealed.

Section 4

SEC. 4. A new Subsection is hereby added to Section 53 of

the National Internal Revenue Code to be denominated as Subsection (d) and to

read as follows:

"(d) Withholding tax on certain dividends. — The tax imposed under

Section 5

SEC. 5. Subsection (a) of Section 65 of the National

Internal Revenue Code is hereby amended to read as follows:

"(a) Dividends (other than dividends subject to tax under Section 24 (d) of

this Code), interest (other than interest constituting rent as defined in

Subsection (g) hereof), royalties (other than mineral oil, or gas royalties),

and annuities. The term royalties, as herein used, includes income from

copyrights, patent, and other similar revenues."

Section 6

SEC. 6. Dividends already received and reported in the

corporation's quarterly income tax return shall no longer be subject to the tax

imposed in Section 24 (d) of the National Internal Revenue Code as now amended

but considered as if it was subject thereto for purposes of Section 65 (a) of

the same Code as now amended.

Section 7

SEC. 7. The Commissioner of Internal Revenue shall

promulgate the rules and regulations to implement this Decree subject to the

approval of the Secretary of Finance.

Section 8

SEC. 8. This Decree takes effect immediately.

Done in the City of Manila, this 21st day of September, in the year of Our

Lord, nineteen hundred and seventy-three.

(Sgd.) FERDINAND E. MARCOS

President

Republic of the Philippines

By the President:

(Sgd.) ROBERTO V. REYES

Assistant Executive Secretary

Section 24

Section 24 (d) of this Code on dividends shall be withheld by the payor

corporation and paid to the Commissioner of Internal Revenue under appropriate

return at the same time that the dividends are paid to the recipient

corporations."