Philippine Taxation

The statements made regarding taxation in the Philippines are based on the laws in force as of the date of this Document and are subject to any changes in law occurring after such date. The following summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to participate.

Income Tax and Withholding on Interest Income

Under the National Internal Revenue Code of 1997, as amended (the “Tax Code”), interest payments from loans by a Philippine corporation are subject to tax at rates based on the classification of the creditor. The applicable tax rates on interest payments are set out as follows:

Creditor Tax Rate
Domestic Corporations30%
Resident Foreign Corporations30%
Non-Resident Foreign Corporations20%*

Documentary Stamp Tax

Under the Tax Code, certain documents, instruments, papers, acceptances, assignments, sales and transfers of obligations, rights or property are subject to documentary stamp tax. Documentary stamp tax will be levied, collected and paid for by the person making, signing, issuing, accepting or transferring the document, wherever the document is made, signed, issued, accepted or transferred, when the relevant obligation or right arises from a Philippine source or the relevant property is situated in the Philippines.

The issuance of a debt instrument shall be subject to Documentary Stamp Tax (DST) in accordance with Section 179 of the Tax Code. Thus, on every original issue of debt instruments, a DST of P1.00 for every P200.00, or fractional part thereof, of the price of any such debt instrument. The documentary stamp tax due will be for the account of the Company.

Corporate Income Tax

The Tax Code, as a general rule, imposes on a domestic corporation a tax of 30% on its taxable income from all sources within and without the Philippines. A minimum corporate income tax of 2% of the gross income of the corporation as of the end of the taxable year, beginning on the fourth taxable year in which the corporation commenced its business operations, may be imposed in lieu of the ordinary income tax if the minimum corporate income tax is greater than the computed ordinary income tax for the taxable year.

The law allows the corporation to carry forward and credit against the ordinary corporate income tax, for three immediately succeeding taxable years, any excess of the minimum corporate income tax over the ordinary income tax. Further, the Secretary of Finance is authorized to suspend the imposition of the minimum corporate income tax on any corporation which suffers losses on account of a prolonged labor dispute, force majeure, or legitimate business reverses.