When a foreign company operates in the Philippines through a branch office rather than a locally incorporated subsidiary, it pays corporate income tax as a resident foreign corporation (RFC) — at the standard 25% RCIT rate on Philippine-source income. But when it comes to sending those after-tax profits back to the foreign head office, a second tax applies: the Branch Profit Remittance Tax (BPRT).
The BPRT Rate and Base
The BPRT rate is 15%, levied on the total amount of profits applied or earmarked for remittance, without any deduction for the BPRT itself. This gross-up basis means the effective cost of the BPRT is slightly higher than the headline 15% would suggest when calculated on after-BPRT amounts.
The BPRT is a final tax — once paid, no further Philippine income tax applies to the remitted profits at the branch level.
When BPRT Does Not Apply
Not all profit outflows from a Philippine branch trigger BPRT. The tax applies to profits earmarked for remittance abroad. Profits reinvested in the Philippine branch’s operations are not subject to BPRT at that point — though they will become subject to it if later remitted. PEZA-registered branches operating within economic zones may be eligible for exemption or reduced rates as part of their registered incentive package.
BPRT vs Dividend WHT: The Structural Trade-Off
The choice between a branch and a subsidiary has direct tax consequences on profit repatriation:
| Structure | Repatriation tax | Notes |
|---|---|---|
| Branch | 15% BPRT | Applies to profits earmarked for remittance |
| Subsidiary | 25% FWT on dividends | Reducible to 15% under tax sparing or treaty |
At first glance, the branch structure appears favourable on repatriation. But the subsidiary gives more flexibility: dividends can be timed, and the 15% tax sparing rate is available even without a treaty if the foreign parent’s country grants a credit for taxes paid. Branches also face unlimited liability and cannot issue equity — factors that often outweigh the BPRT differential for most foreign investors.
Treaty Relief on BPRT
If your head office is in a country with a Philippine Double Taxation Agreement, the treaty may cap the BPRT at a reduced rate. Claiming it requires BIR documentation — see Philippine tax treaties for how the treaty relief process works.
How Chamberlain Helps
Chamberlain advises on the branch vs subsidiary decision as part of initial business registration, including modeling the after-tax cost of repatriating profits under both structures with and without treaty relief. For branches already in operation, we manage BPRT filings, treaty relief documentation, and coordination with the head office finance team.
Book a consultation to model your specific repatriation position, or see our pricing. For context on CREATE-era incentive rates that can affect the BPRT base, see CREATE MORE tax incentives.
Frequently asked questions
What is the branch profit remittance tax rate in the Philippines?
The standard branch profit remittance tax (BPRT) rate is 15%, applied on the total profits applied or earmarked for remittance to the foreign head office, without deduction for the tax component. This rate may be reduced under applicable tax treaties.
How is BPRT different from dividend withholding tax?
BPRT applies when a foreign branch remits after-tax profits to its head office — at 15%. By contrast, a Philippine subsidiary paying dividends to a non-resident foreign parent faces a 25% final withholding tax (reducible to 15% under the tax sparing rule or a treaty). The BPRT rate is often lower, but the branch structure has its own trade-offs.
Can a tax treaty reduce the branch profit remittance tax?
Yes. Several Philippine DTAs provide for a lower BPRT rate — some as low as 10%. The treaty with Germany, for example, provides a reduced rate. Claiming the reduced rate requires following the BIR's treaty relief process under RMO 14-2021.