The Philippines Issues Restraining Order on Investor Disclosure Rules

Posted by Reading Time: 3 minutes

On September 9th, the Philippines’ Supreme Court issued a temporary restraining order on the Bureau of Internal Revenue (BIR), which prevented it from enforcing regulations requiring withholding agents to submit lists of their investors receiving taxable income. These regulations were laid out in Revenue Regulations (RR) No. 1-2014, which were promulgated earlier this year.

This recent restraining order is the result of a petition for nullification organized by Philippine associations representing banks, fund managers, security brokers and dealers, trust officers and the Philippine Stock Exchange.

One of the key problems highlighted by the petition organizers centered on the issue of dividend income payments to their investors. Under Revenue Regulations (RR) No. 1-2014, listed companies were unable to use the PCD Nominee Corporation (PCD Nominees) as the paying agent of their dividends. This regulation was thus seen as an attempt by the government to force the companies to disclose the details of their investors.

RELATED: Hong Kong Signs on to New OECD Global Tax Standards

In its quest to clarify the rules for investors, on September 12 the BIR issued Revenue Memorandum Circular No. 73-2014, which stated that, with regards to payment of dividends to Philippine Central Depository Nominees (PCD), companies must withhold the appropriate tax payments.

In the case that the investor is a PCD Nominee Filipino, the payment should be the net of a ten percent final withholding tax. However, this does not apply in the case that the recipient of the payment is a company.

For a PCD Nominee non-Filipino investor, they will be classified as a non-resident foreign corporation and will pay a final withholding tax of 30 percent. However, this will not apply if it can be shown that the investor is one of the following:

  • A resident alien
  • A non-resident alien, regardless of whether they are engaged or not engaged in a business in the Philippines
  • A resident foreign corporation

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email or visit

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Related Reading

Tax, Accounting, and Audit in Vietnam 2014-2015
The first edition of Tax, Accounting, and Audit in Vietnam, published in 2014, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in Vietnam in order to effectively manage and strategically plan their Vietnam operations.

An Introduction to Tax Treaties Throughout Asia
In this issue of Asia Briefing Magazine, we take a look at the various types of trade and tax treaties that exist between Asian nations. These include bilateral investment treaties, double tax treaties and free trade agreements – all of which directly affect businesses operating in Asia.