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5.6. Qualification of Specific Income Categories for Tax Purposes

Dividend Income

Dividends received by a local company from another local company are subject to income tax at the rate of 20%. Where the gross dividends received by resident companies have been subject to the standard withholding of 20%, 90% of such dividends are excluded from the tax base.

Royalty Income

Royalty includes any consideration paid for the use, or for the concession, of a copyright on artworks, scientific works, film works, brands, charts, any design or formula, or any secret process or formulae, as well as for the use of industrial, commercial, or scientific equipment and for intellectual property (IP) in any industrial, commercial, or scientific field.

Capital Gains

Capital gains are taxable as ordinary income. However, unrealized gains are exempt from tax.