CORPORATE INCOME TAX: REGULAR CORPORATION

 Corporate Tax Scheme on Regular Corporation

Domestic Corporation Gross Income Tax or Regular Corporate Tax subject to the Minimum
Corporate Income Tax
Resident Corporation Regular Corporate Tax subject to the Minimum Corporate Income
Tax

Requisites of applying 15% Gross Income Tax:

i. Tax effort ratio of 20% of Gross National Product
ii. Ratio of 40% of income tax collection to total tax revenue
iii. A VAT tax effort of 4% of Gross National Product
iv. A 0.9% ratio if the Consolidated Public Sector Financial Position to GNP

 15% Gross income Tax is only applicable to firms whose cost ratio does not exceed 55%
 Election of Gross Income Tax shall be irrevocable for 3 consecutive taxable years.

 Minimum Corporate Income Tax

Corporations are subject to a minimum corporate income tax of 2% of gross income; if

a. The corporation has zero or negative taxable income; or

b. MCIT is greater than the regular corporate income tax.

 Scope of Minimum Corporate Income Tax

All corporations subject to 30% regular corporate income tax including non-profit, exempt and
Special Corporation may be subject to MCIT.

 Timing of Imposition of MCIT

MCIT is imposed beginning on the fourth taxable year immediately following the year in which
such corporation commenced its operation

 What is the Gross Income for the purpose of MCIT

For Corporation Involved in: Gross Income means
1. Sale of Goods Goss sales less Sales Return, Discounts and
Allowances and Cost of Goods Sold
2. Sale of Service Gross Receipt less Sales Return, Discounts and
Allowances and Cost of Service

 Excess MCIT Carry-over

Excess of MCIT over RCIT can be claim as a tax credit against RCIT due in the immediately
succeeding three years.
 Improperly Accumulated Earnings Tax
10% of Accounting Income after Taxes

 IAET Exempt Entities

1. Publicly – held corporations
2. Finance Companies
3. Banks
4. Insurance Companies
5. Taxable Partnership
6. General Professional Partnerships
7. Taxable and Non-taxable Joint Venture
8. ECOZONE- registered entities (PEZA, BCDA, etc.)

 Branch Profit Remittance Tax

15% final tax based on total profits applied or earmarked for remittance. Remitted Income
which is subject to final tax is no longer taxed by Branch Profit Remittance Tax.

 Scope of Branch Profit Remittance Tax

It applies to all remittances of all resident Foreign Corporation including ROHQ of multinational
companies, FCDU or OBU and international carriers, except PEZA-registered entities.