SECTION 28. RATES OF INCOME TAX ON FOREIGN CORPORATIONS (A) Tax on Resident Foreign Corporations (1) In General.

(2) MCIT. (3) International Carrier. (a) International Air Carrier a. Taxable Income: 30% b. Gross income: 15% a. Gross income: 2% Gross Philippine Billings: 2.5% b. Same conditions as Section 27(A). a. As prescribed under Section 27(E), under same conditions on a RFC taxable under par. (1) of this Subsection. a. IC doing business in the Philippines. (a.) GPB- the amount of gross revenue derived from carriage of persons, excess baggage, cargo & mail originating from the Ph in a continuous and uninterrupted flight, irrespective of the place of sale or issue & the place of payment of ticket or passage document.. Provided: tickets revalidated, exchanged &/or indorsed to another international airline form part of the GPB if the passenger boards a plane in a port or point in the Ph. Provided further, for a flight which originates from the Ph, but transshipment of passenger takes place at any port outside the Ph on another airline, only the aliquot portion of the cost of the ticket corresponding to the leg flown from the Ph to the point of transshipment shall form part of GPB.

(b) International Shipping

(b) GPB- gross revenue whether for passenger, cargo or mail originating from the Ph up to final destination, regardless of the place of sale or payments of the passage or freight documents. (4) Offshore Banking Units a. Exempt from ALL taxes EXCEPT a. Income derived by OBU authorized by the BSP, from foreign currency transactions with (OBU) Net Income from such transactions. NONRESIDENTS, other OBU, local commercial banks, including branches of foreign banks that may be authorized by the BSP etc. b. Final Tax: 10% b. Interest income derived from foreign currency loans granted to RESIDENTS, other than OBU or local commercial banks that may be authorized by the BSP to transact business with OBU. *Income of NONRESIDENTS: EXEMPT from Income Tax. (5) Tax on Branch Profits Based on total profits: Tax rate of Must be effectively connected with the conduct of its trade or business in the Ph. Remittances. 15% (6) Regional or Area HQ & Regional Operating HQ of Multinational Companies. (a) Regional or Area HQ (Sec. (a) NOT subject to Income Tax.

22, DD) (b) Regional Operating HQ (b) Taxable Income: 10% (Sec. 22, EE) (7) Tax on Certain Incomes Received by a RFC (a) Interests from deposits, (a) Final Tax: 20% yields etc. (b) Income derived under the (b) Net Income EFCDS. (c) Capital gains from sale of (c) Final Tax: shares of stock NOT traded in Not over P100k- 5% the stock exchange. >P100k- 10%. (d) Intercorporate dividend (d) Tax exempt. (a) Provided, interest income derived by a RFC from depository bank under the EFCDS: Final tax: 7.5% (b) Exempt from all taxes EXCEPT Net Income from such transactions, subject to regular income tax (c) Except: shares sold or disposed through the stock exchange.

(d) DC-to-RFC

(B) TAX ON NONRESIDENT FOREIGN CORPORATION (1) In General (2) Nonresident Cinematographic Film Owner, Lessor or Distributor. (3) Nonresident Owner or Lessor of Vessels Chartered by Ph Nationals (4) Nonresident Owner or Lessor of Aircraft, Gross income: 30% Gross income: 25% .Gross rentals, lease or charter fees: As approved by Maritime Industry Authority. 4.5%. Gross rentals/fees:7.5% From all sources within Ph; except capital gains subject to tax under subparagraph 5(c).

Machineries & Other Equipment. (5) Tax on Certain Incomes Received by a NRFC (a) Interest on Foreign Loans (b) Intercorporate Dividends (a) Final withholding tax: 20% (b) FWT: 15% (a) Contracted on or after Aug.1, 1986. (b) Imposed on amount of cash &/or property dividends from DC, subject to the condition that the country in which the NRFC is domiciled shall allow a credit against the tax due from the NRFC taxes deemed to have been paid in the Ph equivalent to 15%, which represents the difference between the regular income tax of 30% and the 15% tax on dividends. (As of 1/1/2009). (c) Except: shares sold or disposed of through the stock exchange.

(c) Capital Gains from Sale of Shares of Stock

(c) Final Tax: 5% or 10%