Philippines Dividend Tax Calculator & Guide
Learn how dividends are taxed in the Philippines, including the 10% final withholding tax for residents, rules for stock dividends, and rates for non-resident investors.
How Dividends Are Taxed in the Philippines
In the Philippines, cash dividends received by individual resident citizens from domestic corporations are subject to a 10% final withholding tax. This was a significant reduction from the previous 20% rate, introduced under the TRAIN Law (Tax Reform for Acceleration and Inclusion Act), which took effect on 1 January 2018.
The term "final" withholding tax means the tax is deducted at source by the paying corporation and represents the full and final tax on that income. You do not need to include these dividends in your annual income tax return, and no further tax is due regardless of your income bracket.
Stock dividends (distributions of additional shares rather than cash) are generally not taxable at the time of receipt, as they represent a capitalization of retained earnings and do not result in any economic gain until the shares are sold. However, if a stock dividend changes the shareholder's proportionate ownership interest, it may become taxable.
Dividend Tax Rates in the Philippines
| Shareholder Type | Tax Rate |
|---|---|
| Resident citizen — cash dividends | 10% (final withholding tax) |
| Resident alien — cash dividends | 10% (final withholding tax) |
| Non-resident alien engaged in trade or business | 20% (final withholding tax) |
| Non-resident alien NOT engaged in trade or business | 25% (final withholding tax) |
| Domestic corporation from another domestic corporation | Exempt |
| Non-resident foreign corporation | 25% (may be reduced by tax treaty) |
| Stock dividends (no change in proportionate interest) | Not taxable |
Key Rules & Allowances
- TRAIN Law reduction: The TRAIN Law (Republic Act No. 10963) reduced the final withholding tax on cash dividends from domestic corporations from 20% (previously 10% for citizens, 20% for resident aliens) to a uniform 10% for both citizen and resident alien individuals, effective 1 January 2018.
- Inter-corporate dividends: Dividends paid by a domestic corporation to another domestic corporation are fully exempt from tax. This eliminates double taxation at the corporate level within the Philippines.
- Tax treaty benefits: Non-resident shareholders may benefit from reduced withholding rates under Double Taxation Agreements (DTAs) between the Philippines and their country of residence. The Philippines has treaties with over 40 countries.
- Property dividends: Dividends paid in the form of property (other than stock) are taxed based on the fair market value of the property at the time of distribution, using the same rates as cash dividends.
- No additional tax: Since the withholding tax is final, no additional income tax, surcharge, or local tax is levied on dividend income. The 10% rate represents the total tax burden for resident individuals.
Try Our Free Dividend Calculator
Use our Dividend Yield Calculator to estimate your annual dividend income from PSE-listed stocks. Multiply the result by 0.90 to get your after-tax income (after the 10% withholding tax).
Open Calculator →Frequently Asked Questions
What is the dividend tax rate in the Philippines?
The dividend tax rate for resident citizens and resident aliens in the Philippines is 10%, applied as a final withholding tax on cash dividends received from domestic corporations. This rate was set by the TRAIN Law, which took effect on 1 January 2018. For non-resident aliens not engaged in trade or business in the Philippines, the rate is 25%. For non-resident aliens engaged in trade or business, the rate is 20%. The tax is withheld by the paying corporation before the dividend is distributed.
Are stock dividends taxable in the Philippines?
Generally, no. Stock dividends received by shareholders of a corporation are not subject to income tax at the time of receipt, provided they do not change the proportionate ownership interest of any shareholder. Stock dividends represent a capitalization of retained earnings and are only taxed when the shares are subsequently sold. However, if a stock dividend effectively alters shareholders' proportionate interests (which is rare), it may be treated as a taxable distribution.
Do I need to file dividends on my Philippine income tax return?
No. Because Philippine dividends are subject to a final withholding tax, they are not included in your annual income tax return (BIR Form 1700 or 1701). The 10% tax withheld by the corporation is the full and final tax on that income. You do not need to report it again or pay any additional tax. However, it is good practice to keep records of your dividend income and the corresponding tax certificates (BIR Form 2306) for your personal financial records.
How are foreign dividends taxed for Philippine residents?
Dividends received from foreign corporations by Philippine resident citizens are included in their gross income and taxed at the regular graduated income tax rates (0% to 35%). These are not subject to the 10% final withholding tax because that rate applies only to dividends from domestic corporations. Resident citizens are taxed on worldwide income, so foreign dividends must be reported. A tax credit may be claimed for any foreign tax already paid on the dividend income to avoid double taxation.