Tax on Corporations Exercises

Corporations

1. Nexus Global Solutions is a domestic corporation. It had the following data during
the year:

Gross income, Philippines 30,000,000

Gross income, USA 20,000,000
Allowable Expenses, Philippines 16,000,000
Allowable Expenses, USA 11,000,000

a.Compute normal/regular corporate income tax. (5 points)

Gross income – Philippines P30,000,000.00
Less: Expenses – Philippines P16,000,000.00 P14,000,000.00

Gross income – USA P20,000,000.00

Less: Expenses – USA P11,000,000.00 9,000,000.00
Taxable income P23,000,000.00

Normal corporate income tax payable by Nexus Global Solutions

P23,000,000.00 x 30% = P6,900,000

b. Compute minimum corporate income tax. (5 points)

Gross income – Philippines P30,000,000.00
Gross income - USA P20,000,000.00
Gross income P50,000,000.00
Multiplied by MCIT rate 2%
P1,000,000.00

c. Which one between normal corporate income tax and MCIT should the company
pay? (5 points)

-The normal corporate income tax because it is higher between the two.

2. Vertin Global Solutions had the following data during the year:

Gross income, Philippines 30,000,000

Gross income, USA 20,000,000
Allowable Expenses, Philippines 16,000,000
Allowable Expenses, USA 11,000,000

Compute for its corporate income tax if it were:

a. a domestic corporation (5 points)
b. a resident foreign corporation (5 points)
c. a nonresident foreign corporation (5 points)
 Tax on Corporations Exercises

ANS:
DC RFC NRFC
Sales, PH 30,000,000 30,000,000 30,000,000
Sales, USA 20,000,000
Gross Income 50,000,000 30,000,000 30,000,000
Less: Deductions:
PH Deductions 16,000,000 16,000,000 -
US Deductions 11,000,000 - -
Total allowable itemized 27,000,000 16,000,000 -
deductions
Taxable income 23,000,000 14,000,000 30,000,000
Normal corporate tax rate 30% 30% 30%
Corporate income tax 6,900,000 4,200,000 9,000,000