Introduction
Understanding tax for investors in the Philippines is essential if you trade on the Philippine Stock Exchange (PSE) or other local instruments.
As of 2025, the Bureau of Internal Revenue (BIR) continues to impose taxes on stock transactions, dividends, and certain investment instruments — all of which are automatically deducted by brokers or fund managers.
This guide explains the latest Philippine tax rates for investors, including capital gains, dividends, and REITs.
1. Stock Trading Tax for Investors in the Philippines
When you trade shares listed on the Philippine Stock Exchange, you are charged a Stock Transaction Tax (STT) of 0.6% on the gross selling price of every sale.
| Type | Rate | Notes |
|---|---|---|
| Stock Transaction Tax (STT) | 0.6% per sale | Automatically withheld by broker |
| Value-Added Tax (VAT) | 12% of broker’s commission | Charged on service fee only |
| PSE & SCCP Fees | ≈0.015% combined | Minimal clearing and exchange costs |
🧠 Example:
If you sell ₱100,000 worth of stock, your tax will be ₱600 (0.6%).
No tax is charged when you buy — only when you sell.
2. Capital Gains Tax for Unlisted Shares
If you trade unlisted company shares (not traded on the PSE), the gain is subject to 15% capital gains tax based on the net profit.
| Type | Rate | Tax Base |
|---|---|---|
| Capital Gains Tax (Unlisted) | 15% | Sale price − acquisition cost |
💡 These are typically shares in private companies or family corporations, not PSE-listed firms.
3. Dividend Income Tax
Cash dividends from Philippine corporations are subject to 10% withholding tax.
| Investor Type | Rate | Tax Deducted Automatically |
|---|---|---|
| Resident Individual / Foreigner | 10% | Yes |
| Corporation | 0–10% | Depending on treaty or structure |
✅ This tax is automatically deducted before dividends are credited to your brokerage account.
You don’t need to file it manually.
4. REIT and ETF Taxation (2025 Rules)
REITs (Real Estate Investment Trusts) and ETFs (Exchange-Traded Funds) follow slightly different rules:
| Investment Type | Tax Type | Rate |
|---|---|---|
| REIT Dividends | Withholding tax | 10% |
| REIT Share Sale (PSE) | Stock Transaction Tax | 0.75% |
| ETF Sale | Stock Transaction Tax | 0.6% |
REITs are traded like regular stocks but taxed slightly higher on sale.
However, they remain one of the most tax-efficient instruments for dividend investors.
5. Mutual Funds and Unit Investment Trust Funds (UITFs)
For investors in mutual funds or UITFs, there is no tax on capital gains since these are pooled investment vehicles.
Earnings are already net of all applicable taxes, and redemptions do not incur additional capital gains tax.
| Instrument | Capital Gains Tax | Notes |
|---|---|---|
| Mutual Fund | Exempt | Fund pays taxes on your behalf |
| UITF | Exempt | Net returns already adjusted |
6. Double Taxation and Foreign Investors
Foreign investors are taxed only on income earned within the Philippines.
They do not pay additional taxes in the Philippines on foreign-source income.
To avoid double taxation, many countries (like the U.S., Japan, and the U.K.) have tax treaties with the Philippines.
Under these treaties, the dividend tax may be reduced (for example, from 10% to 5%).
Foreigners must submit a Tax Residency Certificate (TRC) from their home country to the BIR via their broker to qualify.
7. Annual Tax Filing for Individual Investors
If you trade through a licensed Philippine broker, all taxes are already withheld, so you generally don’t need to file an additional return.
However, if you have:
- Unlisted share sales
- Private business interests
- Overseas income
Then you must file an Annual Income Tax Return (BIR Form 1701 or 1700) by April 15 each year.
8. Practical Tips for 2025
- ✅ Keep all trade confirmations and dividend records.
- 💡 Ask your broker for a BIR tax certificate each year.
- 🧾 If you’re a foreign investor, coordinate with your home country’s tax authority regarding credits.
- 📊 Consider REITs or dividend stocks for tax-efficient investing.
Conclusion
Understanding taxes is an essential part of being a smart investor.
In the Philippines, taxes are straightforward and mostly automated — your broker deducts them before you even receive your proceeds.
The key for 2025 is to know what rates apply to your investments and keep proper documentation for your records.
Internal Link Example
If you’re new to investing, check our Minimum Capital to Invest in PSE Stocks for Beginners guide.
🔑 Key Takeaways
- Stock Transaction Tax: 0.6% per sale on PSE
- Unlisted Shares Capital Gains Tax: 15%
- Dividend Tax: 10% withheld at source
- REIT Sale Tax: 0.75%
- All taxes automatically deducted by brokers
