INCOME TAX - CORPORATIONS

DOMESTIC CORPORATIONS RESIDENT FOREIGN CORPORATIONS NON-RESIDENT FOREIGN CORPORATIONS

(DC) (RFC) (NRFC)

CLASSIFICATIONS
Corporation created or organized under Corporation created or organized under
Corporation created or organized in the
Defined as: the laws of a foreign country and engaged the laws of a foreign country but not
Philippines or under its laws.
in business in the Philippines. engaged in business in the Philippines.
TAX RATE AND TAX BASE
NIRC, TRAIN
30% 30% 30% FWT
In General (Regular Corporate Inc. Tax)
Taxable Income - World Taxable Income – Within Philippines Gross Income incl. Passive Income -Within
2% 2%
Minimum Corporate Income Tax (MCIT) NA
Gross Income - World Gross Income – Within Philippines
10%
Improperly Accumulated Earnings (IAET) NA NA
Improperly Accumulated Taxable Income
15% 15%
Gross Income Tax NA
Gross Income - World Gross Income - Within
PASSIVE INCOME
INTEREST FROM ANY CURRENCY BANK DEPOSITS, DEPOSIT SUBSTITUTE, TRUST FUND, OR OTHER SIMILAR ARRANGEMENTS
NIRC, TRAIN 20% 20% 30% FWT
INTEREST FROM A DEPOSITARY BANK UNDER THE EXPANDED FOREIGN CURRENCY DEPOSIT SYSTEM
NIRC 7.50% 7.50% EXEMPT
TRAIN 15% 7.50% EXEMPT
ALL ROYALTIES REGARDLESS OF CLASSIFICATION
NIRC, TRAIN 20% 20% 30% FWT
DIVIDENDS RECEIVED FROM A DOMESTIC1 CORPORATION
30% FWT (without tax sparing)
NIRC, TRAIN EXEMPT EXEMPT
15% FWT (with tax sparing)

1
Dividends received by a DC from a FOREIGN CORPORATION is subject to regular tax. Dividends received by RFC, NRFC from a FOREIGN CORPORATION is NOT TAXABLE.
INCOME TAX - CORPORATIONS

DOMESTIC CORPORATIONS RESIDENT FOREIGN CORPORATIONS NON-RESIDENT FOREIGN CORPORATIONS

(DC) (RFC) (NRFC)

CAPITAL GAINS TAX (CGT) ON GAIN ON SALE OF SHARES OF A DOMESTIC CORPORATION NOT THROUGH THE LOCAL STOCK EXCHANGE (SOLD DIRECTLY TO A BUYER)

1St P100,000 5% 5% 5%
NIRC
In excess of P100,000 10% 10% 10%

TRAIN 15% SAME AS NIRC SAME AS NIRC

CAPITAL GAINS TAX (CGT) ON SALE OF REAL PROPERTY CLASSIFIED AS CAPITAL ASSET AND LOCATED IN THE PHILIPPINES REGARDLESS OF WHETHER GAIN OR LOSS
NIRC, TRAIN
6% FWT of GSP/FMV/ZV
CAPITAL ASSET NA NA
WHICHEVER IS HIGHEST
ORDINARY ASSET 6% CWT of GSP NA NA
INCOME TAX - CORPORATIONS

DOMESTIC CORPORATIONS RESIDENT FOREIGN CORPORATIONS NON-RESIDENT FOREIGN CORPORATIONS

(DC) (RFC)1 (NRFC)1

FORMAT OF COMPUTATION OF TAXABLE INCOME – CORPORATION – REGULAR CORPORATE INCOME TAX (RCIT)

Gross Sales/Revenues/Receipts/Fees XX Gross Sales/Revenues/Receipts/Fees XX

Less: Less:
Sales Returns and Allowances (XX) Sales Returns and Allowances (XX)
Sales Discounts (XX) (XX) Sales Discounts (XX) (XX)
Net Sales/Revenues/Receipts/Fees XX Net Sales/Revenues/Receipts/Fees XX
Less: Less:
Cost of Goods Sold / Sales / Services (XX) Cost of Goods Sold / Sales / Services (XX)
Gross Income from Operations XX Gross Income from Operations XX
Add: Add:
Other Income XX Other Income XX
Total Gross Income XX Total Gross Income XX
Less: Multiply by Tax Rate 30%
Allowable Deductions (Itemized or OSD) (XX) Tax Due (RCIT) XX
Taxable Net Income XX
Multiply by Tax Rate 30%
Tax Due (RCIT)2 XX

1
RFC and NRFC are taxable only on income derived within the Philippines.
2
Tax Due is RCIT vs MCIT, whichever is higher.
INCOME TAX - CORPORATIONS

DOMESTIC CORPORATIONS RESIDENT FOREIGN CORPORATIONS NON-RESIDENT FOREIGN CORPORATIONS

(DC) (RFC)1 (NRFC)

FORMAT OF COMPUTATION OF TAXABLE INCOME – CORPORATION – MINIMUM CORPORATE INCOME TAX (MCIT)

Gross Sales/Revenues/Receipts/Fees XX
Less:
Sales Returns and Allowances (XX)
Sales Discounts (XX) (XX) NA
Net Sales/Revenues/Receipts/Fees XX
Less:
Cost of Goods Sold / Sales / Services (XX)
Total Gross Income XX
Multiply by Tax Rate 2%
Tax Due (MCIT)2 XX

ADDITIONAL NOTES - MCIT

MCIT is imposed beginning on the FOURTH TAXABLE year immediately following the year in which such corporation commenced its business operation It shall
Imposition
be imposed whenever: the corporation has zero or negative taxable income; or when MCIT is higher than RCIT.

1. Computation and payment of MCIT shall likewise apply at the time of filing of quarterly corporate income tax.
2. In payment of quarterly MCIT, excess MCIT from previous taxable years shall not be allowed to be credited.
Quarterly MCIT
3. Expanded Withholding Tax, Quarterly Corporate Income Tax, payments under the normal income and the MCIT paid in the previous taxable QUARTER/S
are allowed to be applied against the quarterly MCIT due.

Excess MCIT as
Any excess of the MCIT over the RCIT shall be carried forward and credited against the normal income tax for the 3 succeeding taxable years.
carryforward
Suspension of The Secretary of Finance is authorized to suspend imposition of MCIT on any corporation, which suffers losses on account of prolonged labor disputes, or
MCIT because of force majeure, or because of legitimate business reverses.

1
RFC and NRFC are taxable only on income derived within the Philippines.
2
Tax Due is RCIT vs MCIT, whichever is higher.
INCOME TAX - CORPORATIONS

RESIDENT FOREIGN NON-RESIDENT FOREIGN

DOMESTIC CORPORATIONS
CORPORATIONS CORPORATIONS
(DC)
(RFC) (NRFC)
FORMAT OF COMPUTATION OF TAXABLE INCOME – CORPORATION – IMPROPERLY ACCUMULATED EARNINGS TAX (IAET)

Taxable Income for the year XX

Add:
Income Exempt from Tax XX
Income Excluded from Gross Income XX
Income Subject to Final Taxes XX
Net Operating Loss Carry Over (NOLCO) XX XX
Total XX
Less:
Dividends (Actually or Constructively Paid) (XX) NA
Income Tax Paid (XX)
Final Taxes Paid (XX) (XX)
Total XX
Add:
Retained Earnings from Prior Years XX
Total Accumulated Earnings, End of the Year XX
Less:
Amount That May Be Retained (Restricted RE) (XX)
Improperly Accumulated Taxable Income XX
IAET Rate 10%
IAET XX

ADDITIONAL NOTES - IAET

Applicable to Domestic Corporations which are classified as closely-held corporations.

Applicability
Banks and other non-bank financial intermediaries, insurance companies, publicly-held corporations, taxable partnerships, GPP, non-taxable joint ventures,
enterprise registered with: PEZA, Bases Conversion and Development Act of 1992, Special Economic Zones, BOI registered entities; are exempt from IEAT.
INCOME TAX - CORPORATIONS

NON-RESIDENT FOREIGN
DOMESTIC CORPORATIONS RESIDENT FOREIGN CORPORATIONS
CORPORATIONS
(DC) (RFC)1
(NRFC)
FORMAT OF COMPUTATION OF TAXABLE INCOME – CORPORATION – GROSS INCOME TAX (GIT) / OPTIONAL CORPORATE INCOME TAX
MERCHANDISING/TRADING/MANUFACTURING CONCERN SERVICE CONCERN

Gross Sales XX Gross Receipts XX

Less: Less:
Sales Returns and Allowances (XX) Sales Returns and Allowances (XX)
Sales Discounts (XX) (XX) Sales Discounts (XX) (XX) NA
Net Sales XX Net Sales considered as Gross Income XX
Less: Multiply by Tax Rate 15%
Cost of Goods Sold / Sales (XX) Tax Due (GIT) XX
Total Gross Income XX
Multiply by Tax Rate 15%
Tax Due (GIT) XX

ADDITIONAL NOTES - GIT

Option to be
Option to be taxed at 15% shall be available only to firms whose ratio of cost of sales to gross sales or receipts from all sources does not exceed 55%.
taxed at 15%

Election of
The election of the gross income option by the corporation shall be irrevocable for the 3 consecutive taxable years during which the corporation is qualified
Gross Income
under the scheme.
Irrevocable

1
RFC and NRFC are taxable only on income derived within the Philippines.
INCOME TAX - CORPORATIONS
SPECIAL CORPORATIONS
TAXPAYER
DOMESTIC CORPORATIONS
Proprietary Non-Profit Educational
Institutions and Hospitals
Government Owned or Controlled
Corporations, Agencies or
Instrumentalities (GOCCs)
RESIDENT FOREIGN CORPORATIONS
International Air Carrier /
International Shipping
Offshore Banking Units (OBUs)
Branch Profit Remittances
Regional Operating Headquarters
(ROHQs)
Regional Area Headquarters (RHQs)
TAX BASE AND TAX RATE
10% of Net Income
30% of Net Income
Approproate Tax Rate on their Taxable Income
2.50% of Gross Philippine Billings (GPB)
10% of Income from Foreign Transactions
15% of Profit Remitted by Branch to Head Office
10% of Taxable Income
NOT SUBJECT to INCOME TAX
ADDITIONAL NOTES
If gross income from unrelated trade, business or other activity DOES
NOT EXCEED 50% of total gross income derived from all sources.
If gross income from unrelated trade, business or other activity
EXCEEDS 50% of total gross income derived from all sources.
NIRC: The following are exempt: GSIS, SSS. Philippine Health and
Insurance Corporation, PCSO, Local Water Districts.
TRAIN: PCSO is not subject to corporate income tax.
GPB refers to the amount of gross revenue derived from passage of
persons, excess baggage, cargo, and mail, originating from the
Philippines in a continuous uninterrupted flight, irrespective of the
place of sale or issue and the place of payment of the passage
documents.
ROHQ shall mean a branch established in the Philippines by
multinational companies.
RHQ shall mean a branch established in the Philippines by
multinational companies and which headquarters do not earn or
derive income from the Philippines.
INCOME TAX - CORPORATIONS

Non-Resident Foreign Corporation

TAXPAYER TAX BASE AND TAX RATE ADDITIONAL NOTES
Cinematographic Film Owner, Lessor or
25% of Gross Income - Philippines
Distributor
Owner or Lessor of Vessels Chartered by
4.50% of Gross Rentals, Lease or Charter Fees - Philippines
Philippine Nationals
Owner or Lessor of Aircraft, Machinery
7.50% of Gross Rentals, Charters or Other Fees - Philippines
and Other Equipment

TAXATION FOR COOPERATIVES

Cooperative refers to an autonomous and duly registered association of persons, with a common bond of interest, who have
voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions
Meaning
to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits, of the
undertaking in accordance with universally accepted cooperative principles.

CLASSIFICATION
TAX BASE AND TAX RATE ADDITIONAL NOTES

Cooperatives which transact business

EXEMPT
with members only

IF accumulated reserves and undivided net savings is not more

EXEMPT
than P10M.
Cooperatives which transact business
with members and non-members EXEMPT – Transactions with members IF accumulated reserves and undivided net savings is more
Income Tax and VAT – Transactions with non-members than P10M.