Sec

2.57.1 (B) Revenue Regulations 2-98 as amended by Revenue Regulations Nos. 8-

98, 6-2001, 30-2003, 11-2018, 2-2021

§2.57.1 (B) Income Payment to Non-resident Aliens Engaged in Trade or Business in
the Philippines. — The following forms of income derived from sources within the
Philippines shall be subject to final withholding tax in the hands of a non-resident
alien individual engaged in trade or business within the Philippines, based on the
gross amount thereof and at the rates prescribed therefor:

(1) On Certain Passive Income — A tax of twenty (20%) percent is hereby
imposed on certain passive income received from all sources within the
Philippines.

(a) Cash and/or property dividend from a domestic corporation or from a
joint stock company, or from an insurance or mutual fund company or
from a regional operating headquarter of a multinational company;

(b) Share in the distributable net income after tax of a partnership (except
general professional partnership) of which he is a partner, or share in
the net income after tax of an association, a joint account, or a joint
venture of which he is a member or a co-venturer;

(c) Interests from any currency bank deposit and yield or any other
monetary benefit from deposit substitutes and from trust funds and
similar arrangements;

(d) Royalties (except royalties on books, as well as other literary works and
musical compositions which shall be subject to 10% final withholding
tax);

(e) Prizes (except prizes amounting to ten thousand pesos (P10,000.00) or
less subject to tax under Subsection [B][1] of Section 24 of the Tax Code,
as amended) Sec. 25 (A) (1) of the Code for the normal rates of income
tax for individuals) and other winnings (except Philippine Charity
Sweepstakes Office [PCSO] games amounting to P10,000 or less which
shall be exempt from tax winnings and lotto winnings); [RR 2-2021,
CREATE Law]

(2) Interest income derived from long-term deposit or investment in the form of
savings, common or individual trust funds, deposit substitutes, investment
management accounts and other investments evidenced by certificates in such
form prescribed by the Bangko Sentral ng Pilipinas which was pre-terminated
by the holder before the fifth (5th) year at the rates herein prescribed to be
deducted and withheld from the proceeds thereof based on the length of time
that the instrument was held by the taxpayer —

Holding Period Rate
Four (4) years to less than five (5) years 5%
Three (3) years to less than four (4) years 12%
Less than three (3) years 20%


(3) On capital gains presumed to have been realized from the sale exchange
or other disposition of real property located in the Philippines, classified
as capital assets, including pacto de retro sales and other forms of
conditional sales based on the gross selling price or fair market value as
determined in accordance with Sec. 6(E) of the Code (i.e. the authority of the
Commissioner to prescribe zonal values), whichever is higher — Six percent
(6%). (see Section 2, RR No. 8-98) (this entire portion restated in RR No.
30-2003)

In case of sale on installment of real property classified as capital asset,
the procedures stated under Sec. 2.57.2(J) hereof on the sale of real
property classified as ordinary asset shall apply with the exception that
the withholding tax on the former shall be final whereas that on the latter
shall be creditable. (RR No. 30-2003)

In case of dispositions of real property made by individuals to government or
any of its political subdivisions or agencies or to government-owned or
controlled corporations, the tax to be imposed shall be determined either
under Section 24(A) of the code for the normal rate of income tax for
individual citizens and residents or under Section 24(D)(1) of the Code for the
final tax on capital gains from sale of property at six percent (6%), at the option
of the taxpayer. (see Section 2, RR No. 8-98) In case of dispositions of real
property classified as capital asset by individuals to the government or any
of its political subdivisions or agencies or to government-owned or
controlled corporations, the tax to be imposed shall be determined either
under Sec. 24(A) of the Code for the normal rate of income tax for
individual citizens or residents or under Sec. 24(D)(1) of the Code for the
final tax on the presumed capital gains from sale of property at six percent
(6%) at the option of the taxpayer-seller. (RR No. 30-2003)

(4) Gross income from all sources within the Philippines derived by non-
resident cinematographic film owners, lessors or distributors — Twenty
Five percent (25%). (Section 2, RR No. 6-01)

For purposes of these regulations, the term 'cinematographic film'
includes motion picture films, films, tapes, discs and other such similar or
related products. (Section 2, RR No. 6-01)

 (5) Gross income derived from contracts by subcontractors from service
contractors engaged in 'petroleum operations' as defined under P.D. 87
(also known as the 'Oil Exploration and Development Act') in the
Philippines — Eight percent (8%) of its gross income derived from such
contracts in lieu of any and all taxes, national and local, as imposed under
P.D. 1354. (Section 2, RR No. 6-01)

(6) Capital Gains from Sale of Shares of Stock Not Traded in the Stock
Exchange. - On the net capital gains realized during the taxable year from
the sale, barter, exchange or other disposition of shares of stock in a
domestic corporation - Fifteen percent (15%) (per Section 1 of RR No. 11-
2018, dated 15 March, retroactively effective to 01 January)