VII.

MINIMUM CORPORATE INCOME TAX

Nota Bene:
 This tax is imposed on two types of corporations: the domestic
corporation and the resident foreign corporation.
 To discourage these corporations from claiming too many
deduction to avoid payment of tax, the MCIT of 2% on the
gross income is imposed in lieu of the net income tax of 35%

A. IMPOSITION OF THE TAX

 The 2% MCIT cannot be imposed simultaneously with the net income
tax of 35%. Impose whichever is higher!
 The MCIT can be imposed only at the beginning of 4 th taxable year
immediately following the year in which the corporation commenced
its operations.

B. CARRY FORWARD IF EXCESS MINIMUM TAX

 This is the 2nd carry over tax under the NIRC. The first is the NOLCO.
 Any excess of the MCIT over the net income tax shall be carried
forward and credited against the net income tax over the net income
tax shall be carried forwards and credited against the net income tax
for the 3 immediately succeeding taxable years.
 Unlike the NOLCO, the MCIT can be carried over for the 3
immediately succeeding years.

C. RELIEF FROM THE MCIT

 The Secretary of Finance is authorized to suspend the MCIT on any
corporation who suffers losses on account of:
o Prolonged labor dispute
o Force majeure
o Legitimate business reverses