Philippines - Dividend

Article 10. Dividends

1.  Dividends paid by a company which is a resident of one of the States to a resident of the other State may be taxed in that other State. 

2.  However, such dividends may also be taxed in the State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed: 

a  10 per cent of the gross amount of the dividends if the recipient is a company the capital of which is wholly or partly divided into shares and which holds directly at least 10 per cent of the capital of the company paying the dividends; 

b  15 per cent of the gross amount of the dividends in all other cases. 

3.  The competent authorities of the States shall by mutual agreement settle the mode of application of paragraph 2. 

4.  The provisions of paragraph 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 

5.  The term “dividends” as used in this Article means income from shares, “jouissance “ shares or “jouissance” rights, mining shares, founders' shares or other rights participating in profits, as well as income from debt-claims participating in profits and income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation law of the State of which the company making the distribution is a resident. 

6.  The provisions of paragraphs 1 and 2 shall not apply if the recipient of the dividends, being a resident of one of the States, carries on business in the other State, of which the company paying the dividends is a resident, through a permanent establishment situated therein or performs in that other State professional services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such a case, the provisions of Article 7 or Article 14, as the case may be, shall apply. 

7.  If a resident of one of the States has a permanent establishment in the other State, this permanent establishment may be subject to an additional tax on the profits remitted by that permanent establishment to its head office in accordance with the law of the last-mentioned State, but the additional tax so charged shall not exceed 10 per cent of the amount of the remitted profits. This provision shall not apply to profits mentioned in Article 8. 

8.  Where a company which is a resident of one of the States derives profits or income from the other State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State. 

Protocol:

III. Ad Article 10

The provisions of sub-paragraph a of paragraph 2 of Article 10 shall not apply, if the company which is a resident of the Netherlands suffers Netherlands company tax on the dividends which it receives from the company which is a resident of the Philippines. In such case the provisions of sub-paragraph b of paragraph 2 of Article 10 shall apply.

IV. Ad Articles 10. 11 and 12

Applications for the restitution of tax levied and paid not in accordance with the provisions of Articles 10, 11 and 12 have to be lodged with the competent authority of the State having levied the tax within a period of two years after which the tax has been levied and paid.