CORPORATE INCOME TAX RATE

Domestic Resident Foreign Non-resident

Corporation Corporation Foreign Corporation
1. Regular Corporate
Income Tax (RCIT) 30% 30% 30%
RATE:
Net income Net income Gross Income
Tax base:
(within and without) (within only) (within only)
2. Minimum Corporate
Income Tax MCIT 2% 2% Not applicable
RATE:
Gross Income Gross Income
Tax base: Not applicable
(within and without) (within only)
3. Gross Income Tax
(GIT) OPTIONAL 15% 15% Not applicable
RATE:
Gross Income Gross Income
Tax base: Not applicable
(within and without) (within only)

Note: if there’s a loss in last year’s operation – deduct such loss from the current taxable income.

PASSIVE INCOME SUBJECT TO FINAL TAXES

DC RFC NRFC
1. Interest in any currency bank deposit 20 20 30
2. Yield/monetary benefit from deposit
20 20 30
substitute
3. Yield/monetary benefit from trust fund and
20 20 30
other similar arrangement
4. Royalties 20 20 30
5. Interest Income derived from depository bank
15 7.5 Exempt
under FOREIGN CURRENCY DEPOSIT SYSTEM
6. Inter-corporate dividends received from
exempt exempt 15/30
domestic corporation

CAPITAL GAINS SUBJECT TO CAPITAL GAINS TAX

DC Foreign Corporation: RFC NRFC
1. Sale of share of stock not traded in
First 100,000 5 5
the local stock exchange
15
Amount in excess of
10 10
TAX BASE: NET CAPITAL GAIN 100,000
3. Sale or exchange or disposition of
Land or buildings.
6 NOT APPLICABLE
TAX BASE: SELLING PRICE OR FAIR
VALUE WHICHEVER IS HIGHER
TAX TREATMENT OF CO-VENTURER’S SHARE IN THE NET INCOME OF A JOINT VENTURE
Joint Venture By a Corporate Co-Venturer By an Individual Co-Venturer
Net Income: dividend income
(Inter-corporate Dividend)
1. Taxable Joint Venture TAX EXEMPT FWT

Note: income is not distributed Note: Income is NOT

The respective share in the
joint venture profit shall be
included in the computation of
2. Tax-exempt Joint the corporate co-venturer’s
Venture taxable income of 30%
distributed to individual
The respective share in the
joint venture profit shall be
subject to basic tax (graduated
tax).

Note: income is distributed to Note: income is distributed to

co-venturer co-venturer

INCOME TAX RATES OF SPECIAL CORPORATIONS

1. DOMESTIC CORPORATIONS: (BASIS: NET INCOME) Rate
 Proprietary educational institutions (PEI)
10
Note: GI<UNRELATED INCOME = 30%
 Non-profit hospitals 10
2. RESIDENT FOREIGN CORPORATION (BASIS: NET INCOME)
 International Carrier 2.5
 Regional Operating headquarters (ROHQ) of
10
multinational corporation
3. NON-RESIDENT FOREGN CORPORATION
(BASIS: GROSS INCOME)
 Non-resident owner or lessor of vessel 4.5
 Non-resident cinematography film owner, lessor
25
or distribution
 Non-resident lessor of aircraft, machinery 7.5
APPLICABLE INCOME TAX OF EDUC ATION INSTTUTIONS IN THE PHILIPPINES
Passive
Educational Institution Ordinary Income Capital Gains
Income
Proprietary Educational Generally, 10% of net income
FWT CWT
Institution (PEI) 30% - unrelated income>related income
 Philippine Constitution, Art. XIV, Sec.
4(3) – all REVENUES and ASSETS of
non-s tock, non-profit educational
Non-stock non-profit institutes used actually, directly,
educational institutions exclusively for educational purposes.
(NSEIs) = TAX EXEMPT
 Section 30, NIRC = TAX EXEMPT
(h) = A non-stock non-profit FWT CGT
educational institution
Government Educational Section 30, NIRC – the following shall not be
Institutions (GEIs) taxes:
(i) Government educational institution FWT CGT
and
 As provided in the law or charter
creating the GEI

APPLICABLE INCOME TAX OF COMMON CARRIERS (SUMMARY)

Common Carrier Ordinary Passive Income Capital Gains

Domestic Common Carriers (Higher): 30%

FWT CGT
(Local companies) RCIT or 2% MCIT

GR: 2.5% GPB; or

Preferential % or
International Carriers (RFCs) FWT CGT
exempt on the
basis of a treaty
of reciprocity