Stock Transaction Tax (STT)
The
profits you earn from selling shares in the stock market, is NOT for income
tax, but for CAPITAL GAIN tax. Therefore, you do not need to file any income
tax from these profits. If ever the capital gain tax was not deducted,
your stock broker is accountable for that. But stock brokers and individual
companies are required to send a list of all the names of shareholders of a
company to the Securities and Exchange Commission. As of 2017, the rate is 0.5%
of the gross value but it will be increased to 0.6% starting 2018 for listed companies. It’s called
transaction tax rather than capital gain tax since it’s not related with the
actual gain or loss.
Notes: If the stock is not listed in the PSE, it's 15% effective Jan 2018.
Dividend Tax
For tax purpose, "resident" means if he/she stays in the Philippines more than 180 days. Some stock brokerage firms ask some proof but some don't. You can ask when you open stock account what are the documents for 10% tax.
Tax Rate of Dividend for Individuals
|
|
Citizen and Resident Alien
|
10%
|
Non-Resident Alien Engaged in Trade or Business
|
20%
|
Non-Resident Alien Not Engaged in Trade or Business
|
25%
|
Tax Rate of
Dividend for Corporations
|
|
Domestic Corporation
|
0%
|
Resident Foreign Corporation
|
0%
|
Non-Resident Foreign Corporation
|
30%
|
Interest Tax
Some brokerage firms, especially banks, give you interest for cash fund which is not used for buying stocks same as Savings Bank Account. It's of course small but there will be tax on interest income.
Surprised? Not really..I think the interest rate is 0.x...besides, 0.6% STT is quite big compared to other countries...where some don't charge STT at all.