(b) in order to constitute double taxation in the sense at issue, the same asset must be taxed twice if it were to be taxed, but only once; Both taxes must be levied on the same property or property for the same purpose by the same State, government or tax authority during the same tax period and must have the same type or character of tax. (Villanueva vs. City of Lloilo, G.R. No. L-262521, December 28, 1968.) For individual taxpayers, subjecting shares to the net income of ordinary partnerships is quite straightforward, since the Tax Code, as amended, imposes an FWT pursuant to section 24(B)(2) or section 25(A)(2), whichever is applicable. The wisdom of the above provisions should be examined, as they place the shares of the net income of the ordinary company in virtually the same place and in the same tax liability as dividends received by individual taxpayers of domestic corporations. With this in mind, it may be logical to argue that the source of income at all levels should be grouped in the same way and, therefore, exempt from tax when obtained from COUNTRIES and RFCs. The flaw in this logic, however, lies in the fact that tax exemptions strictissimi juris (Latin for “the strictest letter of the law”) are interpreted against the taxpayer and generously in favor of the government. In simpler terms, a taxpayer cannot successfully rely on a tax exemption unless the law expressly provides for it. However, the levying of a tax on it may be interpreted as double taxation, since the same income is effectively taxed in two places: on the one hand, at the instigation of the partnership and, on the other hand, at the instigation of the recipient company. If you`re worried about double taxation (Philippines and US), don`t sweat: the US has three tools you can use to reduce your US bill and avoid the Philippines/US. Double taxation: In some cases, however, our tax laws seem less focused on preventing double taxation.

These articles can get very complicated, but the most important conclusion is that there is a limit to the amount of tax that can be issued and, of course, the double taxation rules will further limit any double taxation. Resident citizens and national entities are taxable on all income from global sources, and it is not unlikely that income from sources other than the Philippines may be exposed to the risk of international legal double taxation, i.e. the collection of comparable taxes in two (or more) states on the same taxpayer in relation to the same purpose and for identical periods. Our current tax system offers us measures to avoid what is called double taxation. This is best reflected in our various tax treaties with other countries, which allow for income tax exemption or preferential tax rates for certain income payments to residents of those contracting countries. The cable operator filed its claim for reimbursement in court. On appeal, the Tax Appeals Court (CTA) upheld previous decisions that the municipal government`s collection of the business and franchise tax does not constitute inappropriate double taxation (or “direct double taxation”). What the law prohibits is the levying of two taxes on the same object for the same purpose by the same tax administration in the same country and during the same tax period; Therefore, double taxation must be of the same nature or nature in order to be a valid issue. To this end, there is virtually no exemption for the same source of income without amending the relevant provisions of the Tax Code or the regulations on the tax treatment of the source of income concerned.

It should also be noted that while double taxation in the Philippines is frowned upon in the Philippines by the state and taxpayers in general, it is not totally illegal and prohibited unless, in certain circumstances, such double taxation violates constitutional restrictions on the power to impose. For those people who reside in another country but receive income from the Philippines, double taxation may occur. While our legislators are making progress in reducing the tax burden – especially with the passage of Republic Law No. 10653 to increase the amount of the 13th month`s tax-free salary and other benefits from 30,000 to 82,000 pesos – it can be said that there is still a long way to go to make our current tax system more investor-friendly. Perhaps, beyond the rhetoric, further progress is needed to dispel the claims often made about Philippine taxation, which is one of the highest in the ASEAN region. In the context of this new development, the question of the liability to profits of shares received by a national company (“DC”) or a resident foreign company (“RFC”) as a partner or joint venture arises: what tax is levied on them? One of the arguments is that these income shares are representative of the flow of wealth, which is not a mere return of capital, and like any other increase in net worth, they should be taxed at the ordinary corporate income tax of 30% (RCIT) under Articles 27 (A) or 28 (A) of the Tax Code. However, it should be recalled that, since commercial partnerships and joint ventures, with the exception of those established for the purpose of carrying out construction projects or participating in oil, coal, geothermal and other energy transactions, are already taxed in the same way as domestic companies, the subsequent taxation of RCIT on the respective source of income can be interpreted as a case of double taxation. which can be avoided if they are to be combined with intercorporative dividends that are exempt under Article 27(D)(4) or Article 28(A)(7)(d) of the Tax Code. However, the second argument may be refuted by the fact that the share of partnerships` profits does not fall within the definition of `dividends` in Article 73(A) of the Tax Code, which refers to partnerships exclusively as distributions of income to shareholders. In addition, Section 28(B)(5)(b) of the Tax Code generally imposes a withholding tax (“FWT”) on intercorporative dividends or a lower rate of 15% in respect of non-resident foreign corporations (“NRFC”), provided that the country in which the NRFC resides allows a credit on tax due from NRFC taxes deemed to have been paid in the Philippines.

It is also questionable whether the same rule applies to shares in the net profit of partnerships and joint ventures received by NFRCs. U.S. taxation in the Philippines can be hard to understand, but we`re here to make it easier for you. U.S. Taxation of Philippine Income, Pensions, and Investments:& IRS Offshore Reporting: The United States has entered into several tax treaties with various countries around the world, including the Philippines. There are many U.S. taxpayers who are originally from the Philippines and still maintain offshore accounts, assets, and investments in the Philippines — and/or generate income from the Philippines. Since there is a tax treaty between the United States and the Philippines, it helps to limit and minimize the taxation of certain income between the respective countries. Certain agreements to reduce tax rates, abolish tax on certain types of income such as corporate income, capital gains and real estate – and/or restrict the taxation of retirement income. When there is no tax treaty, the U.S. government generally relies on the basic principles of U.S. tax law to assess how foreign income should be taxed.

Let`s review the fundamentals of the U.S.-Philippines tax treaty — and what income is taxable. .