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PRESIDENTIAL DECREE NO. 913
PRESIDENTIAL DECREE NO. 913 -
AMENDING Section 24 (C) OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED BY PRESIDENTIAL DECREE NO. 778
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WHEREAS, it
is the policy of the government to encourage the foreign investments in
the Philippines to augment domestic capital; chanroblesvirtualawlibrary
WHEREAS, some domestic corporations and resident foreign corporations
obtain loans from abroad to be used in acquiring equity capital in
other domestic corporations;chanroblesvirtualawlibrary
WHEREAS, some intercorporate dividends are derived from equity
investments in domestic corporations financed with foreign borrowings;chanroblesvirtualawlibrary
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
by virtue of the powers in me vested by the Constitution, do hereby
order and decree the following:cralaw:red
Section 1. Section 24(c) of the National Internal
Revenue Code is hereby amended to read as follows:cralaw:red
"(c) Rate of tax on certain dividends. — Dividends
received by a domestic or resident foreign corporation from a domestic
corporation liable to tax under this Code —chanroblesvirtualawlibrary
(1) shall be subject to a final tax at 10% on the
total amount thereof, which shall be collected and paid as provided in
Sections 53 and 54 of this Code, and
(2) shall not be included in the determination of the
gross income of the recipient corporation:cralaw:red
Provided, however; That interest paid or incurred on indebtedness
abroad by a domestic or resident foreign corporation, which
indebtedness was incurred to provide funds for investment in a domestic
corporation shall be allowed as a deduction from the intercorporate
dividends before computing the 10% final tax. Any excess of the
interest herein allowed as deduction from intercorporate dividends may
be deducted from the other gross income of the recipient corporation,
subject to the provisions of Section 30(b) of this Code.
"The above deduction of interest from intercorporate dividends shall be
allowed only if the recipient domestic or resident foreign corporation
submits an authenticated copy of the foreign loan agreement stipulating
the end-use of the loan proceeds and such other information as may be
required for its determination. chanroblesvirtualawlibrary
"The Secretary of Finance, upon recommendation of the Commissioner of
Internal Revenue, shall promulgate rules and regulations to implement
the provisions of this paragraph."
Section 2. Effectivity. — This Decree shall take
effect immediately.
Done in the City of Manila,
this 29th day of March, in the year of Our Lord, nineteen hundred and
seventy-six.
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