Final Withholding Tax

Question 1

Determine the applicable tax and tax rate

Interest income on short-term peso currency bank deposit

Answer 1

• 20% FWT - RC, NRC, RA, NRA-ETB, DC, RFC
• 25% FWT - NRA-NETB, NRFC

Question 2

Interest income on long-term peso currency bank deposit

Answer 2

• Exempt - RC, NRC, RA, NRA-ETB
• 25% FWT - NRA-NETB, NRFC
• RIT - DC, RFC (RR 14-2012)

RR 14-2012: Interest income from long-term deposit or investment shall be subject to regular income tax if received by a domestic corporation and resident foreign corporation.

Question 3

Interest income on a pre-terminated long-term peso currency bank deposit earned by exempt taxpayers (taxpayers who are exempt on FWT on interest income of long-term peso currency bank deposit)

Answer 3

Holding period:

• 4 to less than 5 years - 5% FWT
• 3 to less than 4 years - 12% FWT
• less than 3 years - 20% FWT

Question 4

Interest income on foreign currency deposit under the foreign currency deposit system of a local bank

Answer 4

• 15% FWT - Residents
• Exempt - Nonresidents

Joint account owned by a resident and a nonresident - 50% subject to 15% FWT; 50% exempt

Question 5

Royalty income earned on books, literary works and musical compositions

Answer 5

• 10% FWT - RC, NRC, RA, NRA-ETB
• 20% FWT - DC, RFC
• 25% FWT - NRA-NETB, NRFC

Question 6

Royalty income on sources other than books, literary works and musical compositions

Answer 6

• 20% FWT - RC, NRC, RA, NRA-ETB, DC, RFC
• 25% FWT - NRA-NETB, NRFC

Question 7

Prizes

Answer 7

• greater than 10,000
  
  • 20% FWT - RC, NRC, RA, NRA-ETB
  • 25% FWT - NRA-NETB
• 10,000 or less
  
  • RIT - RC, NRC, RA, NRA-ETB
  • 25% FWT - NRA-NETB

Question 8

Winnings

Answer 8

• 10,000 or less PCSO winning
  
  • exempt - RC, NRC, RA, NRA-ETB
  • 25% - NRA-NETB
• greater than 10,000 PCSO winning and winnings from other sources
  
  • 20% FWT - RC, NRC, RA, NRA-ETB
  • 25% - NRA-NETB

Question 9

Dividend income from domestic corporations

Answer 9

• 10% FWT - RC, NRC, RA
• 20% FWT - NRA-ETB
• 25% FWT - NRA-NETB
• Exempt - DC