Two questions this desk names and does not answer
Maricel DizonEditor, cross-border holdingsA treaty governs what the paying country may take, and says nothing about what the holder's own country does with the same income afterwards. That sits in domestic law, which this desk has not read at its source and therefore does not summarise. The tax on a dividend and the tax on a gain from selling are separate questions with separate answers.
The treaty is not the whole tax story
The convention between the United States and the Philippines sets a ceiling on what the United States may withhold from a dividend paid to a Philippine resident. It says nothing about what the Philippines may do with the same income after it arrives. The Philippine side of the dividend sits in domestic tax law.
This desk has not read Philippine domestic tax law at its source. It does not summarise it, and it does not answer questions about it. The treaty is one piece of the story, but it is not the whole story.
A dividend and a gain are separate questions
The tax on a dividend is a tax on income. The tax on a gain from selling a share is a tax on capital appreciation. They are separate questions with separate answers, and the treaty may have different rules for each.
This desk has not read the rules for gains at their source. It does not answer the question of whether a non-resident's capital gain on a US share is taxed in the United States. The answer to one question is not an answer to the other.
Why an unread question is named
A confident sentence about tax is worse than an admitted gap. A summary found elsewhere may be accurate or may be not; it may be current or may be not. This desk names the open questions rather than filling them in from a summary.
The reader who knows what has not been read can look for it elsewhere, or can ask a professional. The reader who is given a confident but wrong answer may act on it and be harmed. The gap is named so the reader knows it is there.
What the Philippine side is
The Philippine side of the same dividend is the tax the Philippines may impose on a Philippine resident who receives a dividend from a US company. The treaty may set a ceiling on what the Philippines may take, but the actual tax is set by Philippine law.
This desk does not state what the Philippine tax is, and it does not state whether there is a credit for the US tax. Those are questions for a Philippine tax professional, and they are not answered here.
What the gain question is
The gain question is whether a non-resident who sells a US share at a profit is taxed in the United States. The treaty may have a rule for this, but the rule is separate from the rule for dividends.
This desk does not answer the gain question. It is not a question about the dividend, and it is not answered by the form that claims the lower dividend rate. The reader should not assume that the form has anything to do with a gain.
The limits of this desk
This desk has read the treaty at its source, and it has priced one clause. It has not read Philippine domestic tax law, and it has not read the rules for capital gains. It does not answer those questions.
The reader should not conclude from the absence of an answer that there is no tax. The absence of an answer means this desk has not read the source and will not guess. A gap is better than a guess.
What this desk has not read
Read next
Questions about the two rates
Does the treaty cover the Philippine tax?
No. The treaty covers what the United States may withhold from the dividend. It says nothing about what the Philippines may do with the same income afterwards. That is domestic law.
What is the Philippine tax on a US dividend?
This desk has not read Philippine domestic tax law at its source and does not answer that question. You should ask a Philippine tax professional.
Is a capital gain taxed in the US?
The tax on a gain from selling a share is a separate question from the tax on a dividend. This desk has not read the rules for gains at their source and does not answer that question.
Why do you name a question you do not answer?
Because a confident sentence about tax is worse than an admitted gap. Naming the question tells you what has not been read, so you can look for it elsewhere or ask a professional.
Can I use the dividend form for a gain?
No. The form that claims the lower dividend rate is for dividends only. It has nothing to do with a gain from selling a share. The two are separate questions with separate answers.
The account where a position is opened
Opening an account means holding a contract whose value follows a share price, not the share itself. No share is registered in your name, and no dividend is paid to you as a holder. The account is denominated in a foreign currency, so money sent in pesos passes through one conversion before it becomes a balance.