Practice question
A resident citizen receives two Philippine-source royalty streams in 2026: passive royalties from a book and passive royalties from licensing a patent. Both fall under Section 24(B)(5); no special exemption applies. He applies the book rate to both because both are intellectual property. Which treatment follows the amended text?
- Both are necessarily exempt
- Both must be taxed at 10% because all intellectual property is literary
- The book royalties are subject to 10%, while the stipulated passive patent royalties fall under the general 20% royalty rate
- Both must be included as active shop sales regardless of the stipulated facts
- The taxpayer may elect either rate for either stream
Legal references
- NIRC Sections 22(MM) and 24(B), as amended by RA 12214, Sections 3-4: https://lawphil.net/statutes/repacts/ra2025/ra_12214_2025.html
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