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MINISTRY OF FINANCE DRAFT DECREE

The Ministry of Finance published a draft decree on the tax treatment of dividends paid or credited to foreign portfolio investors

Withholding tax rates provided in section 245 of the Tax Code will be applied to these dividends

 

The Ministry of Finance published a draft decree which determines the applicable tax rate applicable to dividends paid to foreign portfolio investors, as well as the withholding agents and the withholding tax procedure.

Dividends paid or credited to foreign portfolio investors will be subject to the rates provided by section 245 of the Tax Code (5% tax for dividends distributed out of profits that were taxed at the corporate level or an income tax rate of 38.25% for the distribution of dividends out of profits that were not taxed at the corporate level). The withholding constitutes the definitive tax imposed to foreign portfolio investors.

Likewise, the draft decree stipulates that the administrator of the foreign portfolio investment or whoever is acting on his or her behalf will be the withholding agent.