FRATERNITAS SCINTILLA LEGIS TAXATION CASE DIGEST CASE 1>G.R. No.

L-54908 January 22, 1990 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MITSUBISHI METAL CORPORATION, ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION and the COURT OF TAX APPEALS, respondents. G.R. No. 80041 January 22, 1990 COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. MITSUBISHI METAL CORPORATION, ATLAS CONSOLIDATED MINING AND DEVELOPMENT CORPORATION and the COURT OF TAX APPEALS, respondents. FACTS: The records reflect that on April 17, 1970, Atlas Consolidated Mining and Development Corporation (hereinafter, Atlas) entered into a Loan and Sales Contract with Mitsubishi Metal Corporation (Mitsubishi, for brevity), a Japanese corporation licensed to engage in business in the Philippines, for purposes of the projected expansion of the productive capacity of the former's mines in Toledo, Cebu. Under said contract, Mitsubishi agreed to extend a loan to Atlas 'in the amount of $20,000,000.00, United States currency, for the installation of a new concentrator for copper production. Atlas, in turn undertook to sell to Mitsubishi all the copper concentrates produced from said machine for a period of fifteen (15) years. It was contemplated that $9,000,000.00 of said loan was to be used for the purchase of the concentrator machinery from Japan. 1 Mitsubishi thereafter applied for a loan with the Export-Import Bank of Japan (Eximbank for short) obviously for purposes of its obligation under said contract. Its loan application was approved on May 26, 1970 in the sum of ¥4,320,000,000.00, at about the same time as the approval of its loan for ¥2,880,000,000.00 from a consortium of Japanese banks. The total amount of both loans is equivalent to $20,000,000.00 in United States currency at the then prevailing exchange rate. The records in the Bureau of Internal Revenue show that the approval of the loan by Eximbank to Mitsubishi was subject to the condition that Mitsubishi would use the amount as a loan to Atlas and as a consideration for importing copper concentrates from Atlas, and that Mitsubishi had to pay back the total amount of loan by September 30, 1981. 2 Pursuant to the contract between Atlas and Mitsubishi, interest payments were made by the former to the latter totalling P13,143,966.79 for the years 1974 and 1975. The corresponding 15% tax thereon in the amount of P1,971,595.01 was withheld pursuant to Section 24 (b) (1) and Section 53 (b) (2) of the National Internal Revenue Code, as amended by Presidential Decree No. 131, and duly remitted to the Government. 3 On March 5, 1976, private respondents filed a claim for tax credit requesting that the sum of P1,971,595.01 be applied against their existing and future tax liabilities. Parenthetically, it was later noted by respondent Court of Tax Appeals in its decision that on August 27, 1976, Mitsubishi executed a waiver and disclaimer of its interest in the claim for tax credit in favor of Atlas. 4 ISSUES: 1. whether or not the interest income from the loans extended to Atlas by Mitsubishi is excludible from gross income taxation pursuant to Section 29 b) (7) (A) of the tax code and, therefore, exempt from withholding tax. 2. whether or not Mitsubishi is a mere conduit of Eximbank which will then be considered as the creditor whose investments in the Philippines on loans are exempt from taxes under the code.

HELD:

respectively. Intramuros.720 and withheld the corresponding 10% final dividend tax thereon. CASE 2<G. From the categorical language used in the document.The loan and sales contract between Mitsubishi and Atlas does not contain any direct or inferential reference to Eximbank whatsoever. The specific terms and the reciprocal nature of their obligations make it implausible. WHEREFORE. Marubeni Corporation. not to be distorted by other considerations aliunde." 14 It is too settled a rule in this jurisdiction. For the first quarter of 1981 ending March 31. We are not impressed. if not vacuous to give credit to the cavalier assertion that Mitsubishi was a mere agent in said transaction. Co. 2801 and 3015. but all that this proves is the justification for the loan as represented by Mitsubishi. a standard banking practice for evaluating the prospects of due repayment. must see to it that the same are in line with the provisions and objectives of its charter. the decisions of the Court of Tax Appeals in CTA Cases Nos. The contract between Eximbank and Mitsubishi is entirely different. It should also be noted that Eximbank's loan to Mitsubishi imposes interest at the rate of 75% per annum. No. Limiting the disbursement of the amount borrowed to a certain person or to a certain purpose is not unusual. Respondents postulate that Mitsubishi had to be a conduit because Eximbank's charter prevents it from making loans except to Japanese individuals and corporations. or more than a month after the contract between Mitsubishi and Atlas was entered into on April 17. petitioner. 1970. representing itself as a foreign corporation duly organized and existing under the laws of Japan and duly licensed to engage in business under Philippine laws with branch office at the 4th Floor. that laws granting exemption from tax are construed strictissimi juris against the taxpayer and liberally in favor of the taxing power. especially in the case of Eximbank which. 1981. AG&P declared and paid cash dividends to petitioner in the amount of P849. The allegation that the interest paid by Atlas was remitted in full by Mitsubishi to Eximbank.40 representing alleged overpayment of branch profit remittance tax withheld from dividends by Atlantic Gulf and Pacific Co.. 76573 September 14. Taxation is the rule and exemption is the exception. FACTS Petitioner.424. dated April 18. Furthermore. It is complete in itself. the remittance of the interest payments may also be logically viewed as an arrangement in paying Mitsubishi's obligation to Eximbank. Manila seeks the reversal of the decision of the Court of Tax Appeals 1 dated February 12. one prestation was in consideration of the other. There is nothing wrong with such stipulation as the parties in a contract are free to agree on such lawful terms and conditions as they see fit. 1989 MARUBENI CORPORATION (formerly Marubeni — Iida. Mitsubishi agreed to use the amount as a loan to and in consideration for importing copper concentrates from Atlas. Whatever arrangement was agreed upon by Eximbank and Mitsubishi as to the manner or procedure for the payment of the latter's obligation is their own concern. 1970. COMMISSIONER OF INTERNAL REVENUE AND COURT OF TAX APPEALS. The agreement is strictly between Mitsubishi as creditor in the contract of loan and Atlas as the seller of the copper concentrates. of Manila (AG&P). 1980 and January 15. for the third quarter of 1981 ending September 30. 1986 denying its claim for refund or tax credit in the amount of P229. AG&P declared and paid P849. The burden of proof rests upon the party claiming exemption to prove that it is in fact covered by the exemption so claimed. assuming the truth thereof.720 as cash dividends to . Similarly. respondents. which onus petitioners have failed to discharge. Marubeni Corporation of Japan has equity investments in AG&P of Manila.R. It is true that under the contract of loan with Eximbank. vs. as to dispense with the need for citations. while Mitsubishis contract with Atlas merely states that the "interest on the amount of the loan shall be the actual cost beginning from and including other dates of releases against loan. FEEMI Building. does not appear to be suppletory or collateral to another contract and is. Ltd.). is too tenuous and conjectural to support the proposition that Mitsubishi is a mere conduit. are hereby REVERSED and SET ASIDE. therefore. aside from protecting its financial exposure. Aduana Street. The application for the loan was approved on May 20.

petitioner and withheld the corresponding 10% final dividend tax thereon. only profits remitted .40 3 650.60 The 10% final dividend tax of P84.31. 1981 under Central Bank Receipt No. Japan.748. 1981 under Central Bank Confirmation Receipt No.712 for the third quarter of 1981 were paid to the Bureau of Internal Revenue by AG&P on August 4.00 84.720.20 114.80 1.972 and the 15% branch profit remittance tax of P114.424. In reply to petitioner's query. but also of the withheld 15% profit remittance tax based on the remittable amount after deducting the final withholding tax of 10%.30. Acting Commissioner Ruben Ancheta ruled: Pursuant to Section 24 (b) (2) of the Tax Code.00 1.00 169. sought a ruling from the Bureau of Internal Revenue on whether or not the dividends petitioner received from AG&P are effectively connected with its conduct or business in the Philippines as to be considered branch profits subject to the 15% profit remittance tax imposed under Section 24 (b) (2) of the National Internal Revenue Code as amended by Presidential Decrees Nos.81) (In Pesos) 849.496. Velayo and Company.035. as amended. the 10% final intercorporate dividend tax and the 15% branch profit remittance tax paid thereon. 7905930. the 10% final dividend tax of P84. Gorres. A schedule of dividends declared and paid by AG&P to its stockholder Marubeni Corporation of Japan. net not only of the 10% final dividend tax in the amounts of P764.972.748 for the first and third quarters of 1981. Likewise. 1981. for the first and third quarters of 1981.440.00 764. 2 AG&P directly remitted the cash dividends to petitioner's head office in Tokyo. AG&P as withholding agent paid 15% branch profit remittance on cash dividends declared and remitted to petitioner at its head office in Tokyo in the total amount of P229.712. 5 In a letter dated January 29. petitioner.40 on April 20 and August 4.748.699.44 84.071.20 for the first quarter of 1981 were paid to the Bureau of Internal Revenue by AG&P on April 20.00 1. 4 Thus.81) TOTAL OF FIRST and THIRD quarters Cash Dividends Paid 10% Dividend Tax Withheld Cash Dividend net of 10% Dividend Tax Withheld 15% Branch Profit Remittance Tax Withheld Net Amount Remitted to Petitioner 849.720.972 and the 15% branch profit remittance tax of P114.712. 1981.035.20 229.944.300. is shown below: 1981 FIRST QUARTER (three months ended 3.529. 1705 and 1773.00 THIRD QUARTER (three months ended 9.00 764.424. through the accounting firm Sycip.972.00 114.712.80 650. 6757880.

. . the amount refundable offsets the liability. and that the taxes withheld of 10 % as intercorporate dividend tax and 15 % as profit remittance tax totals (sic) 25 %. dividends . Inasmuch as the cash dividends remitted by AG&P to Marubeni Corporation. nevertheless. 6 Consequently.40 "representing profit tax remittance erroneously paid on the dividends remitted by Atlantic Gulf and Pacific Co. 55-80).40 on the following grounds: While it is true that said dividends remitted were not subject to the 15% profit remittance tax as the same were not income earned by a Philippine Branch of Marubeni Corporation of Japan.. Japan is subject to 25 % tax. petitioner claimed for the refund or issuance of a tax credit of P229. 1981 and filed with the Commissioner of Internal Revenue on September 24. it is sufficient that the income arises from the business activity in which the corporation is engaged.abroad by a branch office to its head office which are effectively connected with its trade or business in the Philippines are subject to the 15% profit remittance tax. the dividends thus earned are not considered 'effectively connected' with its trade or business in this country. which shall be collected and paid as provided in Sections 53 and 54 of this Code . Marubeni Japan is likewise a resident foreign corporation subject only to the 10 % intercorporate final tax on dividends received from a domestic corporation in accordance with Section 24(c) (1) of the Tax Code of 1977 which states: Dividends received by a domestic or resident foreign corporation liable to tax under this Code — (1) Shall be subject to a final tax of 10% on the total amount thereof. if a resident foreign corporation is engaged in the buying and selling of machineries in the Philippines and invests in some shares of stock on which dividends are subsequently received.424. are of the contrary view that Marubeni. 8 Petitioner appealed to the Court of Tax Appeals which affirmed the denial of the refund by the Commissioner of Internal Revenue in its assailed judgment of February 12.. the dividends received by Marubeni from AG&P are not income arising from the business activity in which Marubeni is engaged. said dividend income is subject to the 25 % tax pursuant to Article 10 (2) (b) of the Tax Treaty dated February 13.. 1981 to . — A foreign corporation not engaged in trade or business in the Philippines shall pay a tax equal to thirty-five per cent of the gross income received during each taxable year from all sources within the Philippines as . Japan. . 7 On June 14. being a non-resident foreign corporation and not engaged in trade or business in the Philippines. 9 Hence. being a non-resident stockholder.. . head office in Tokyo. (Revenue Memorandum Circular No. respondent Commissioner of Internal Revenue denied petitioner's claim for refund/credit of P229. 1986. in a letter dated September 21. In the instant case. is subject to tax on income earned from Philippine sources at the rate of 35 % of its gross income under Section 24 (b) (1) of the same Code which reads: (b) Tax on foreign corporations — (1) Non-resident corporations.. To be effectively connected it is not necessary that the income be derived from the actual operation of taxpayer-corporation's trade or business. as amended . 1982. Accordingly.. Public respondents. however. 1980 between the Philippines and Japan. hence. of Manila (AG&P) on April 20 and August 4. 1981. the recipient of the dividends. the instant petition for review.424. and neither is it subject to the 10% intercorporate dividend tax. nothing is left to be refunded. It is the argument of petitioner corporation that following the principal-agent relationship theory... For example. said dividends if remitted abroad are not considered branch profits for purposes of the 15% profit remittance tax imposed by Section 24 (b) (2) of the Tax Code..

Petitioner reasons that since the Philippine branch and the Tokyo head office are one and the same entity. There is one final point that must be settled. Republic Act No..Court of Tax Appeals is covered by Batas Pambansa Blg. Respondent Commissioner of Internal Revenue is laboring under the impression that the Court of Tax Appeals is covered by Batas Pambansa Blg. the alleged overpaid taxes were incurred for the remittance of dividend income to the head office in Japan which is a separate and distinct income taxpayer from the branch in the Philippines. In other words. 129 which provides that "the period of appeal from final orders. is a resident foreign corporation because it is transacting business in the Philippines. This is completely untenable.whether Marubeni is a resident or a non-resident foreign corporation under Philippine laws. award. but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed. (b) 25 per cent of the gross amount of the dividends in all other cases. awards. Thus. a resident foreign corporation is one that is "engaged in trade or business" within the Philippines. 129. such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident. or decisions of any court in all cases shall be fifteen (15) days counted from the notice of the final order.. Records show that petitioner received notice of the Court of Tax Appeals's decision denying its . 129 does not include the Court of Tax Appeals which has been created by virtue of a special law. (2) However. but certainly not of the branch in the Philippines. the head office and the office branch constitute but one corporate entity. Accordingly. whoever made the investment in AG&P. ruling or decision of the Court of Tax Appeals is given thirty (30) days from notice to appeal therefrom. It is thus clear that petitioner.. 2. 1125. Manila does not matter at all. or decision shall become final. cannot now claim the increments as ordinary consequences of its trade or business in the Philippines and avail itself of the lower tax rate of 10 %.but expressly made subject to the special rate of 25% under Article 10(2) (b) of the Tax Treaty of 1980 concluded between the Philippines and Japan. ISSUES: 1. Respondent court is not among those courts specifically mentioned in Section 2 of BP Blg.260 shares including that of nominee) was made for purposes peculiarly germane to the conduct of the corporate affairs of Marubeni Japan. whether the dividends are paid directly to the head office or coursed through its local branch is of no moment for after all. and according to the laws of that Contracting State. 1125. which. otherwise known as the Judiciary Reorganization Act of 1980 HELD: Under the Tax Code. under both Philippine tax and corporate laws. 129. Otherwise. having made this independent investment attributable only to the head office. . otherwise known as the Judiciary Reorganization Act of 1980. Petitioner contends that precisely because it is engaged in business in the Philippines through its Philippine branch that it must be considered as a resident foreign corporation. judgments. There can be no other logical conclusion considering the undisputed fact that the investment (totalling 283. a party adversely affected by an order. The cited BP Blg. A single corporate entity cannot be both a resident and a non-resident corporation depending on the nature of the particular transaction involved. the Marubeni Corporation. ruling. (a) . resolutions. 11 Thus: Article 10 (1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State. said order. He alleges that the instant petition for review was not perfected in accordance with Batas Pambansa Blg. 129 as falling within its scope. . judgment or decision appealed from . resolution. under Section 18 of Republic Act No.

R. 1984. the Glaro S.00. 1984. 14 From the foregoing. 1977.00.700. having failed to act on the above-said claim for refund.320. the whole 30-day period to appeal having begun to run again from notice of the denial of petitioner's motion for reconsideration. Inc.2884.00 was withheld and paid to the Bureau of Internal Revenue. Wander filed with the Appellate Division of the Internal Revenue a claim for refund and/or tax credit in the amount of P115. L-68375 April 15. petitioner simultaneously filed a notice of appeal with the Court of Tax Appeals and a petition for review with the Supreme Court. Hence. 1986. WANDER PHILIPPINES.00. the questioned decision of respondent Court of Tax Appeals dated February 12. or on May 15. 1984 Decision of the Court of Tax Appeals * in C. 1986 (the last day for appeal). Herein private respondent.000. 1975. Case No. a non-resident foreign corporation.400. On July 18. WHEREFORE. Wander Philippines. Glaro dividends in the amount of P222. 1976 on the dividends it remitted to Glaro amounting to P355.A. 1986 which affirmed the denial by respondent Commissioner of Internal Revenue of petitioner Marubeni Corporation's claim for refund is hereby REVERSED. On the 30th day. the decretal portion of which reads: WHEREFORE.452. on wich 35% tax in the amount of P124. FACTS: This is a petition for review on certiorari of the January 19. Commissioner of Internal Revenue. of Switzerland during the second and 1976.00 representing overpaid withholding tax on to the Glaro S.A. 1976. 369 and 778. Inc. the instant petition. 1977. petitioner.A. The Commissioner of Internal Revenue is ordered to refund or grant as tax credit in favor of petitioner the amount of P144. On January 19. holding that Wander Philippines. Ltd.A. Two days later. No. . 1125. as amended by Presidential Decree Nos. it is evident that the instant appeal was perfected well within the 30-day period provided under R. On March 7. (Glaro for short). respondent petitioner in the amount dividends remitted by it quarter of the years 1975 is hereby ordered to grant a refund and/or tax credit to of P115. respondents.440. for short). and notice of which was received by petitioner on November 26. of Switzerland. INC. 1984. 1986.A. (Wander. On July 5. contending that it is liable only to 15% withholding tax in accordance with Section 24 (b) (1) of the Tax Code. vs. on which 35% withholding tax thereof in the amount of P77. Petitioner herein. petitioner filed a motion for reconsideration which respondent court subsequently denied on November 17.00 was withheld and paid to the Bureau of Internal Revenue. AND THE COURT OF TAX APPEALS. Wander filed a petition with respondent Court of Tax Appeals. on July 14. 1986. petitioner file his Answer. on July 15. On October 6. 1988 COMMISSIONER OF INTERNAL REVENUE. or on November 28. entitled Wander Philippines. 1977. Ltd.T. is entitled to the preferential rate of 15% withholding tax on the dividends remitted to its foreign parent company. a Swiss corporation not engaged in trade or business in the Philippines. respondent Court of Tax Appeals rendered a Decision.claim for refund on April 15. Inc.40 representing overpayment of taxes on dividends received. Ltd.200. petitioner filed a Motion for Reconsideration but the same was denied in a Resolution dated August 13. No. Wander filed its withholding tax return for the second quarter ending June 30. Wander filed a withholding tax return for the second quarter ending June 30. is a domestic corporation organized under Philippine laws. 1986. CASE 3 >G. and not on the basis of 35% which was withheld and paid to and collected by the government. 1975 and remitted to its parent company. It is wholly-owned subsidiary of the Glaro S. Again. vs.

1. on the judicial level. A foreign corporation not engaged in trade or business in the Philippines. In any event. that Petitioner's above-entitled argument is being raised for the first time in this Court. It was never raised at the administrative level. Glaro. Section 24 (b) (1) of the Tax Code.Issues: 1. subject to the condition that the country in which the non-resident foreign corporation is domiciled shall allow a credit against the tax due from the non-resident foreign corporation taxes deemed to have been paid in the Philippines equivalent to 20% which represents the difference between the regular tax (35%) on . the remitter or payor of the dividend income and a mere withholding agent for and in behalf of the Philippine Government. is untenable. annuities. shall pay a tax equal to 35% of the gross income received during its taxable year from all sources within the Philippines. or the difference between the regular 35% rate of the preferential 15% rate. — 1) Non-resident corporation. reads: Sec. it is well settled that under the same underlying principle of prior exhaustion of administrative remedies. Wander may be assessed for deficiency withholding tax at source. and income. NLRC). derived from sources in the Philippines. issues not raised in the lower court cannot be raised for the first time on appeal. and not Wander. or at the Court of Tax Appeals. which shall be collected and paid as provided in Section 53 (d) of this Code. Whether petitioners appeal is proper. the submission of petitioner that Wander is but a withholding agent of the government and therefore cannot claim reimbursement of the alleged overpaid taxes. Provided. the foreign country where Glaro is domiciled. The fact that it became a withholding agent of the government which was not by choice but by compulsion under Section 53 (b) of the Tax Code.. as the Philippine counterpart. Closely intertwined with the first assignment of error is the issue of whether or not Switzerland. dividends. profits. emoluments or other fixed or determinable. The first paragraph of subsection (b) of Section 24 of the National Internal Revenue Code. including a foreign life insurance company not engaged in the life insurance business in the Philippines. however. remuneration for technical services or otherwise. and capital gains: . premiums. Thus. Therefore. 369 and 778. the law involved in this case. as interest (except interest on foreign loans which shall be subject to 15% tax). 2." It is a device to insure the collection by the Philippine Government of taxes on incomes. as amended. cannot by any stretch of the imagination be considered as an abdication of its responsibility to its mother company. compensations. whether or not private respondent Wander is entitled to the preferential rate of 15% withholding tax on dividends declared and remitted to its parent corporation. that said corporation is first and foremost a wholly owned subsidiary of Glaro. this Court construing Section 53 (b) of the Internal Revenue Code held that "the obligation imposed thereunder upon the withholding agent is compulsory. equivalent to 20%. HELD: Petitioner maintains and argues that it is Glaro the tax payer. still further That on dividends received from a domestic corporation liable to tax under this Chapter. plus penalties consisting of surcharge and interest (Section 54.. It will be noted. as amended by P. is hereby further amended to read as follows: (b) Tax on foreign corporations. annual. grants to Glaro a tax credit against the tax due it. Wander is the proper entity who should for the refund or credit of overpaid withholding tax on dividends paid or remitted by Glaro. It will be recalled. by aliens who are outside the taxing jurisdiction of this Court. In fact.D. the tax shall be 15% of the dividends received. which should be legally entitled to receive the refund if any. periodical or casual gains. Thus. The dispute in this issue lies on the fact that Switzerland does not impose any income tax on dividends received by Swiss corporation from corporations domiciled in foreign countries.

this Court will not set aside the conclusion reached by an agency such as the Court of Tax Appeals which is. In the instant case. the condition imposed under the above-mentioned section is satisfied. Accordingly. Wander claims that full credit is granted and not merely credit equivalent to 20%. the fact that Switzerland did not impose any tax or the dividends received by Glaro from the Philippines should be considered as a full satisfaction of the given condition. it is significant to note that the conclusion reached by respondent Court is but a confirmation of the May 19. which is not present in the instant case. nevertheless. the withholding tax rate of 15% is hereby affirmed. would run counter to the very spirit and intent of said law and definitely will adversely affect foreign corporations" interest here and discourage them from investing capital in our country. on the other hand. 24 SCRA 198. 369. Accordingly. as a matter of principle. such as the Philippine 35% dividend tax. dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject unless there has been an abuse or improvident exercise of authority (Reyes vs. of the foreign tax so spared or waived or considered as if paid by the foreign country. subject to the condition that the country in which the non-resident foreign corporation is domiciled shall allow a credit against the tax due from the non-resident foreign corporation taxes deemed to have been paid in the Philippines equivalent to 20% which represents the difference between the regular tax (35%) on corporations and the tax (15%) dividends. as the case may be. WHEREFORE. While it may be true that claims for refund are construed strictly against the claimant. the tax shall be 15% of the dividends received. From the above-quoted provision. avers the tax sparing credit is applicable only if the country of the parent corporation allows a foreign tax credit not only for the 15 percentage-point portion actually paid but also for the equivalent twenty percentage point portion spared. that private respondent does not cite anywhere a Swiss law to the effect that in case where a foreign tax. is spared waived or otherwise considered as if paid in whole or in part by the foreign country. a Swiss foreign-tax credit would be allowed for the whole or for the part. by the very nature of its function. 1977 ruling of petitioner that "since the Swiss Government does not impose any tax on the dividends to be received by the said parent corporation in the Philippines. Besides. GOOD LUCK BRODS!!! . Commissioner of Internal Revenue. the petition filed is DISMISSED for lack of merit.PAPA P . Petitioner." Moreover. waived or otherwise deemed as if paid in the Philippines.. For. to deny private respondent the privilege to withhold only 15% tax provided for under Presidential Decree No.corporations and the tax (15%) dividends as provided in this section: . the dividends received from a domestic corporation liable to tax. amending Section 24 (b) (1) of the Tax Code.. Switzerland did not impose any tax on the dividends received by Glaro. as aptly stated by respondent Court.