1.

What measures would the Corporation take in order to lessen its income tax
payments?

I will advice that they establish their corporation inside an Export Processing Zones
(such as in the Baguio City Economic Zone). Furthermore, TSF corporation must
registered with the Philippine Economic Zone Authority (PEZA) so as to enjoy the tax
incentives of a PEZA locator. As a PEZA locator (PEZA registered company), the
corporation will enjoy some tax incentive, such as Income Tax Holiday (ITH) or 5%
Gross Income Taxation (GIT). However, with the passage of the CREATE Law, the said
tax incentives (other than the qualified duty-free importations) may not be applicable to
PEZA locators in the future.

In addition, to lessen its income tax, TSF corporation must track and claim all possible
deductions, fund a retirement plan, donate to charities and institutions, and write off bad
debts, among others. TSF corporation may likewise avail of the optional standard
deduction (OSD) computed at 40% of gross income; Provided, That the said usage of
the OSD is more beneficial to the corporation than the itemized deductions.

2. What measures would the Corporation take in order to lessen its value-added tax
payments?

Same with number 1, I will advice that they establish their corporation inside an Export
Processing Zones (such as in the Baguio City Economic Zone). Furthermore, TSF
corporation must registered with the Philippine Economic Zone Authority (PEZA) so as
to enjoy the tax incentives of a PEZA locator. Under the PEZA law, purchases by PEZA
locators (PEZA registered company) were expressly provided as VAT zero-rated.
However, President Duterte vetoed a similar provision in the TRAIN Law that expressly
recognized PEZA locators as VAT zero-rated. Hence, the 0% VAT enjoyed by PEZA
locators may likewise be lost. Nevertheless, the VAT on PEZA locator’s purchases upon
the full implementation of the TRAIN Law may be claimed as VAT refund.

If TSF corporation proceed with its export plan, the export sales will be subject to 0%
VAT rate.