The 10% final withholding tax on dividends paid to a resident individual.
Net dividend received
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Final tax (10%)
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Gross dividend
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The tax is taken before the cash reaches you
When a domestic Philippine corporation pays a cash or property dividend to a resident individual, the tax is handled by withholding. The company deducts a final tax at source and sends you the rest, so by the time the dividend lands in your account the tax is already settled. This calculator applies that final tax at 10 percent, which is the rate modelled here. Treat that figure as the tool's assumption and confirm the current rate with the Bureau of Internal Revenue, since rates on passive income are set by statute and can change.
The word "final" is doing real work. A final withholding tax is not a prepayment you reconcile later on an annual return. It closes the matter. You do not add the dividend to your other income, you do not compute graduated tax on it, and there is nothing further to file for that dividend. That is what separates this from how your salary is taxed, where withholding is only an estimate trued up at year-end.
A PHP 50,000 dividend, after withholding
Run the default. A gross dividend of PHP 50,000 has the 10 percent final tax applied, which is PHP 5,000. The company keeps that back for the BIR and pays you the remaining PHP 45,000. You receive 90 percent of the declared dividend, full stop.
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The split below is deliberately lopsided, because at 10 percent the tax slice is small next to what you keep.
Who the payer is changes the rate
The 10 percent rate here is specific to a resident individual receiving dividends from a domestic corporation. Shift the recipient and the rate shifts with it. A nonresident foreign corporation faces a much higher final withholding rate, which the tool notes as 25 percent, and that headline rate can sometimes be reduced under a tax treaty between the Philippines and the corporation's home country. Dividends between two domestic corporations are treated differently again and are often not taxed at the receiving company level. Because these distinctions hinge on the recipient's exact status, confirm your own category and rate with the BIR before relying on a number.
A common error is double-counting. Because the company already withheld and remitted the tax, declaring the dividend again as ordinary income on your annual return and paying graduated tax on it would mean paying twice. The final tax has done its job; the net PHP 45,000 in the example is yours to keep without further BIR filing for that item.
Do I still need to report dividends on my income tax return?
Dividends already subjected to the final withholding tax are not included again in your taxable income, because the tax on them is final and complete. You generally do not recompute them under the graduated brackets. If you have other income that requires you to file a return, you file for that income; the dividend itself sits outside it. Confirm the reporting treatment for your situation with the BIR, especially if you also have business or foreign income.
Are stock dividends taxed the same as cash dividends?
Not necessarily. A pure stock dividend, where you receive additional shares rather than cash and your proportional ownership is unchanged, is generally not treated as taxable income at the point of issue, unlike a cash or property dividend which carries the final tax this tool applies. The treatment can turn on the specific facts of how the shares are issued, so verify with the BIR whether a particular stock dividend is taxable before assuming it is exempt.