taxed at the rate of 20%. Royalties, except on books, literary works and musical compositions, are taxed at the rate of 10%. Prizes and winnings from Philippine Charity Sweepstakes Office (PCSO) Lotto in excess of P10,000 (upon which individual prizes and winnings P10,000 or below are taxed on the basis of the income tax schedule for individuals) are taxed at the rate of 20%. Interest income from a depository bank under the expanded foreign currency deposit system is taxed at the rate of 15%. Income from long-term deposits and investments, when pre-terminated in less than three years after making such deposit or investment, is taxed at the rate of 20%; less than four years, 12%; and, less than five years, 5%. Dividends Cash and property dividends are taxed at the rate of 10%. Capital gains Capital gains from the sale of shares of stock not traded in stock exchange are taxed at the rate of 15%. Capital gains from the sale of real property are taxed at the rate of 6%, except when such proceeds would be used to construct a new principal residence within eighteen months after the sale of a previous principal residence had occurred. Income tax for corporations In general, the income tax rate for corporations is 30%. However, for-profit educational institutions and hospitals enjoy a much lower rate of 10%. Estate tax The transfer of the net estate is taxed at a flat rate of 6%. There is a standard deduction amounting to P5,000,000. Donor's tax The total value of gifts made in a calendar year shall be taxed at a flat rate of 6%. There is a standard deduction amounting to P250,000. Value-added tax The value-added tax (VAT) rate since 2006 is 12%. The new VAT threshold was changed from Php 1,919,500 to Php 3,000,000 as a result of the passage of the Tax Reform for Inclusion and Acceleration (TRAIN) Law. Exempt transactions The following goods, services and transactions are exempted from the VAT: agricultural and marine food products in their original state; fertilizers, seeds, seedlings, fingerlings, and feeds and feed ingredients; importation of personal and household effects of persons resettling in the Philippines; importation of professional instruments, wearing apparel, and domestic animals; services subject to percentage tax; agricultural contract growers and millers; health care services; educational services; agricultural cooperatives, and cooperatives that are non-agricultural and non-electric in nature; residential lots worth at most P1,500,000,