Chapter 4 Taxation of Corporations

 Definition of Corporation
For income tax purposes, the term “corporation”
1. shall include:
 partnerships, no matter how created or organized
 joint stock companies
 joint accounts (cuentas en participacion)
 associations, or insurance companies
 mutual fund companies, regional operating headquarters of multinational
corporations
2. does not include:
 general professional partnerships
 joint venture or consortium formed for the purpose of undertaking
construction projects
 joint venture or consortium for engaging in petroleum, coal, geothermal and
other energy operations pursuant to an operating or consortium agreement
under a service contract with the Government. (Sec. 22 B, NIRC)

 Classification of Corporations
1. Domestic Corporation. A corporation created or organized in the Philippines or under
its laws.

2. Foreign Corporation. A corporation which is not domestic.

 Resident Foreign Corporation. A corporation engaged in trade or business

within the Philippines.

 Non-resident Foreign Corporation. A corporation not engaged in trade or

business within the Philippines. (Sec. 22 C,D,H,I, ibid.)

 Sources of Income

Within the Philippines Without the

Corporation Philippines
Domestic Corporation* Taxable Taxable
Resident Foreign Corporation Taxable
Non-resident Foreign Corporation Taxable
(Sec. 23, ibid.)

*Domestic Corporations are subject to any or some of the following:

1. Capital Gain Tax
2. Final Tax on passive income
3. Regular Corporate Income Tax (RCIT) or Normal Income Tax (RR 12-2007) or NCIT
4. Minimum Corporate Income Tax (MCIT)
5. Optional Gross Income Tax Repealed under Create Law
6. Improperly Accumulated Earnings Tax (IAET) Repealed under Create Law

1
Chapter 4 Taxation of Corporations

 Classification of Income and Tax Rates

Domestic Resident Non-resident
Corporation Corporation Corporation
Capital gain:
1. Capital gains from sale of shares of On the net capital On the net capital On the net capital
stock of a domestic corporation not gain: gain: gain:
listed and traded thru a local stock 15% Final Tax 15% Final Tax
exchange, held as capital asset. 15% Final Tax (CREATE Law) (CREATE Law)
2. Capital gains from sale of land Note: If land is SP-Cost=Gain SP-Cost=Gain
and/or building held as capital asset outside of PH
in PH. subject to NIT
Gain

On the gross selling price or FMV 6% Final Tax RCIT RCIT

prevailing at the time of sale,
zonal value, whichever is higher

Passive income:
1. From sources within the Philippines,
on passive income of:
Interest under the expanded foreign (CREATE Law)
currency deposit system (EFCDS) 15% Final Tax 15% Final Tax Exempt

2. From sources within the Philippines,

on passive income of:
Interest on any currency bank
deposit, yield or other monetary
benefit from deposit substitute, trust 20% Final Tax 20% Final Tax RCIT
fund and similar arrangement, royalty

3. Dividend from domestic corporation Div. from RFC***

(Inter-company dividend) Exempt Exempt 25%; 15%*

4. Dividends from NRFC Exempt from income Without (Not Without (Not
tax subject to below
Taxable) Taxable)
conditions:
i. reinvestment in the
domestic corporation
ii.20% or more
ownership; and
iii. 2 years or more
holding period.
(CREATE Law)
5. Interest on foreign loans 20% Final tax

Business income / other income: Taxable Income Taxable Income Gross Income
within & without Within within
30% 30% 30% Final Tax
Normal Income Tax 25% (Starting July 25% (Starting July 25% (Starting
1, 2020) 1, 2020) January 01,2021)
But, beginning on the fourth year from Or 20% subject
start of operations; whichever is higher to conditions** 2% Gross Income
of: Normal Income Tax or 2% Gross Income 1% Gross Income
Minimum Corporate Income Tax (MCIT) 1% Gross Income July 1, 2020 – June
July 1, 2020 – 30, 2023 (Create
June 30, 2023 Law)
(Create Law)

2
Chapter 4 Taxation of Corporations

*Tax Sparing Credit. Dividends from domestic corporations if the country in which the foreign corporation is
domiciled does not impose income tax on such dividends, or allows a tax deemed paid credit of 15%. (10%
beginning 1 July 2020 or the difference between the CIT and 15% tax on dividends). (CREATE Law starting July 1, 2020).
**i. Net Taxable Income of not more than ₱5M; and
ii. Total assets of not more than ₱100M (excluding land on which the business entity’s office, plant and
equipment are situated)
***Domestic Corporation receive dividends from a RFC, and fifty (50) percent or more of the said RFCs gross
income for the past three (3) years prior to the dividend declaration is derived from sources within the
Philippines, it may be considered as tax-exempt income by the domestic corporation. Otherwise, the
domestic corporation would have to prove through the required sworn affidavits and certifications that it has
utilized the said dividend income.

 Tax Formula
Domestic and Resident Foreign Corporation

Gross Sales/Revenues/Receipts/Fees ₱ xx
Less: Sales returns, allowances & discounts ( xx )
Cost of sales/services ( xx )
Gross income xx
Less : Allowable deductions for expenses or OSD ( xx )
Taxable income subject to normal income tax xx
X Tax rate %
Income tax due xx
Less : Tax credit / payment / withheld ( xx )
Income tax payable xx

Illustration 1
J&J Corporation had the following data for the current year its first year of operation:

Gross income, Philippines……………..………………….. ₱750,000

Gross income, Singapore..………………………………… 625,000
Expenses, Philippines……………………………………… 375,000
Expenses, Singapore………………………………………. 375,000
Interest on Peso bank deposit with BDO, net of tax…….. 26,250

Compute the income tax due on business income and the final tax if J&J Corporation is a:
1. Domestic Corporation
2. Resident Foreign Corporation
3. Non-resident Foreign Corporation

1. Domestic Corporation
Gross income, Philippines…………………………… 750,000
Gross income, Singapore……………………………. 625,000
Total…………………………………………………….. 1,375,000
Less: Deductions
Expenses, Philippines…………. 375,000
Expenses, Singapore…………. 375,000 750,000
Taxable income……………………………………… 625,000
Tax rate………………………………………………… 30%
Income tax due…..…………………………………. 187,500

Interest on Peso bank deposit (26,250/80%)………. 32,812.50

Tax rate……………………...................................... 20%
Final tax………………………………………………. 6,563

3
Chapter 4 Taxation of Corporations

2. Resident Foreign Corporation

Gross income, Philippines…………………………. 750,000
Less: Deductions
Expenses, Philippines………………………. 375,000
Taxable income……………………………………. 375,000
Tax rate………………………………………………. 30%
Income tax due…...……………………………….. 112,500

Interest on Peso bank deposit (26,250/80%)………. 32,812.50

Tax rate………………………………………………. 20%
Final tax……………………………………………… 6,563

3. Non-resident Foreign Corporation

Gross income, Philippines…………………………. 750,000
Interest on Peso bank deposit (26,250/70%)…….. 37,500
Total gross income………………………………… 787,500
Tax rate……………………………………………….. 30%
Income tax due......………………………………… 236,250

 Minimum Corporate Income Tax

The following are the important points to be considered in the imposition of minimum corporate
income tax:
1. The tax applies only to domestic and resident foreign corporation
2. The tax rate is 2% of gross income
3. The effectivity shall commence on the 4th taxable year from start of operations
4. The tax shall be imposed whenever the corporation has zero or negative taxable
income or whenever the MCIT is greater than the normal income tax due from such
corporation
5. The computation and the payment shall apply at the time of filing the quarterly
corporation income tax (RR 12-2007)
Note: Commencement of Business Operation: Upon Issuance of BIR Certificate of
Registration
Gross Income (for purposes of applying MCIT)
In the case of trading and manufacturing business:

Gross Sales ₱ xx
Less: Sales returns, allowances & discounts ( xx )
Cost of sales/Cost of goods manufactured & sold ( xx )
Gross income subject to MCIT xx

In the case of service business:

Gross Revenues/Receipts/Fees ₱ xx
Less: Sales returns, allowances & discounts ( xx )
Less: Direct costs of services ( xx )
Gross income subject to MCIT xx

Rationale: This is designed to prevent corporations from escaping being taxed by including
frivolous expenses in their statement of income (Ex. Over statement of depreciation expense)

4
Chapter 4 Taxation of Corporations

Illustration 2
Excellence Inc. is a domestic corporation engaged in service activity. In its fourth year of
operations, it had:

Gross revenues………………………………….. ₱1,350,000

Discounts and allowances ……………………… 75,000
Cost of services...………………………………… 573,000
Selling expenses ………………………………… 88,000
Administrative expenses ………………………… 136,000
The income tax due is computed as follows:
Gross revenues………..………………………….. 1,350,000
Less: Discounts and allowances………………… (75,000)
Net revenues……………………………………… 1,275,000
Less: Cost of services…………………………….. (573,000)
Gross income……………………………………… 702,000
Less: Operating expenses
Selling…………………………. 88,000
Administrative expenses……. 136,000 224,000
Taxable income……………..…………………… 478,000
Tax rate…………………………………………….. 30%
Normal income tax………………………….…… 143,400
MCIT (702,000 x 2%)……………………………… 14,040

Income tax due………………………………….. 143,400

 Quarterly Tax on Corporations

The corporate quarterly income tax return (BIR Form 1702Q) shall be filed with or without
payment within sixty (60) days following the close of each of the first three (3) quarters of the
taxable year whether calendar or fiscal year (Sec. 77 B, NIRC). The normal income tax and the
minimum corporate income tax are computed on the quarterly and final returns and whichever
is higher is paid. The tax computed on the quarterly or year-end taxable income is decreased
by the amount of tax paid for the preceding quarter or quarters. There may be an income tax
payable (but not refundable) in a quarterly return.

Passive income with final tax and capital gains with capital gain tax are not included in the
quarterly and year-end computations.

If the sum of the quarterly tax payments made during the year is not equal to the total tax due
on the final return, the corporation may: a) pay the balance of the tax still due or b) carry-over
the excess tax credit or c) be credited or refunded with the excess payment.

Illustration 3
Angeles Electric Corporation a domestic corporation in its fifth year of operations had the
following non-cumulative balances at the end of each quarter for the current year:
Tax Identification Number: 000-088-802-000
Address: 1903 Robinsons-Equitable Tower, ADB Ave. cor. Poveda St., Pasig City
Telephone number: (02) 636-6483

Prior year 1st Q 2nd Q 3rd Q 4th Q

Gross income…………….… 500,000 475,000 262,500 262,500
Business expenses………… 475,000 275,000 137,500 987,500
Excess of MCIT…………… 12,000

5
Chapter 4 Taxation of Corporations

The quarterly and annual income taxes due are computed as follow:

1st Q 2nd Q 3rd Q Final

Gross income…………… 500,000 975,000 1,237,500 1,500,000
Less: Business expenses 475,000 750,000 887,500 1,875,000
Taxable income………… 25,000 225,000 350,000 (375,000)

Normal income tax……. 7,500 67,500 105,000 ---

MCIT…………………… 10,000 19,500 24,750 30,000

Income tax due (higher 10,000 67,500 105,000 30,000

NIT/MCIT)
Less: Income tax paid
1st Q……………… (10,000) (10,000) (10,000)
2nd Q…………….. (45,500) (45,500)
3rd Q……………… (37,500)
Excess MCIT prior year (12,000) (12,000)

Income tax payable…..... 10,000 45,500 37,500 (63,000)

Note: The excess MCIT in prior year can only be credited against normal corporate
income tax. (RR 12-2007)

 Excess MCIT Carry-Forward

Any excess of the minimum corporate income tax over the normal tax of a year will be carried
forward and credited against the normal tax for the three (3) immediately succeeding taxable
years. In the year to which carried forward, the normal tax should be higher than the minimum
corporate income tax. (Sec. 27 E2, NIRC)

Illustration 4
A domestic corporation had the following data on computations of the normal income tax (NIT)
and minimum corporate income tax (MCIT) for five years:

Year 4 Year 5 Year 6 Year 7 Year 8

NIT ₱25,000 ₱37,500 ₱50,000 ₱25,000 ₱87,500
MCIT 100,000 62,500 37,500 50,000 43,750

Income tax due 50,000 87,500

Less: Excess MCIT
Carry-forward
From Year 4: 75,000 (50,000)
From Year 5: 25,000 (25,000)
From Year 7: 25,000 (25,000)

Income tax payable 100,000 62,500 --- 50,000 37,500

6
Chapter 4 Taxation of Corporations

Journal entries:
Date Account titles and explanation Debit Credit
Year 4 (1) Provision for income tax 25,000
Income tax payable 25,000
To record income tax liability using the normal tax rate

(2) Deferred Charges - MCIT 75,000

Income Tax Payable 75,000
To record excess MCIT (100,000 - 25,000)

(3) Income Tax Payable 100,000

Cash in bank 100,000
To record payment of income tax due for year 4

Year 5 (1) Provision for income tax 37,500

Income tax payable 37,500
To record income tax liability using the normal tax rate

(2) Deferred Charges - MCIT 25,000

Income Tax Payable 25,000
To record excess MCIT (62,500 - 37,500)

(3) Income Tax Payable 62,500

Cash in bank 62,500
To record payment of income tax due for year 5

Year 6 (1) Provision for income tax 50,000

Income tax payable 50,000
To record income tax liability using the normal tax rate

(2) Income Tax Payable 50,000

Deferred Charges - MCIT 50,000
To record application of excess MCIT against normal tax liability

Note: In case an excess MCIT expires. Its non-application is closed to RE. Dr. RE; Cr. Deferred
Charges-MCIT

 Relief from MCIT

The Secretary of Finance is authorized to suspend the imposition of the minimum corporate
income tax on any corporation, which suffers losses on account of:

1. Prolonged labor dispute means losses arising from a strike staged by employees which
lasted for more than six (6) months within a taxable period and which has caused the
temporary shutdown of business operations.

2. Force majeure means a cause due to an irresistible force as by "Act of God" like
lightning, earthquake, storm, flood and other natural calamities. This term would also
include armed conflicts like war or insurgency.

3. Legitimate business reverses shall include substantial losses due to fire, robbery, theft
or embezzlement, or for other economic reason as determined by the Secretary of
Finance. (Sec. 27 E3, ibid.)

7
Chapter 4 Taxation of Corporations

 Special Corporations
Special Corporations Tax Base Rate
Domestic Corporation
Proprietary Educational Institution and Non-profit Hospital Taxable Income 10%
from all sources
 If gross income from unrelated trade, business or other 1%
activity exceeds fifty percent (50%) of the total gross income (July 1, 2020
derived from all sources, it will be taxed as an ordinary – June 30,
corporation (predominance test). 2023)
Create Law
Government-Owned or Controlled Corporation (GOCC)
All corporations, agencies, or instrumentalities owned or
controlled by the govt., shall pay same tax rate upon their
taxable income in a similar business, industry, or activity.
Except the following: (Sec. 27 C, ibid.)
 Social Security System (SSS)
 Government Service Insurance System (GSIS)
 Home Development Mutual Fund (HDMF) Create Law 4/11/21 Exempt
 Philippine Health Insurance Corporation (PHIC)
 Local Water Districts (LWD) (RA 10026)
Resident Foreign Corporation
International Carrier Gross Philippine 2 ½%
(International Air Carrier / International Shipping) Billings
Offshore Banking Units Interest income 10%
On interest income derived from foreign currency loans derived from (Subject to
granted to residents other than offshore banking units or local foreign currency 25% RCIT
commercial banks, local branches of foreign banks loans granted to and other
authorized by BSP to transact business with OBUs. residents taxes)
Taxable as
RFC
Create Law
Branch Profit Remittances 15%
Any profit remitted by a branch to its head office, which shall
be based on the total profits applied or earmarked for
remittance without any deduction for the tax component
thereof, except those activities which are registered with the
Philippine Economic Zone Authority.
Regional or Area Headquarters Exempt
Regional Operating Headquarters (ROHQs) of Multinational Philippine 10%
Corporation Taxable Income 25% RCIT
(Starting
January 1,
2022 Create
Law) Taxable
as RFC
Non-resident Foreign Corporation
Cinematographic Film Owner, Lessor or Distributor Gross Income 25%
from the
Philippines
Owner or Lessor of Vessels Chartered by Philippine Nationals Gross rentals, 4 ½%
lease or charter
fees from the
Philippines
Owner or Lessor of Aircraft, Machineries and Other Equipment Gross rentals or 7 ½%
fees from
Philippines
Note: There is no minimum corporate income tax for special corporations.

8
Chapter 4 Taxation of Corporations

Proprietary educational institution is any private school maintained and administered by

private individuals or groups with an issued permit to operate from the Department of Education
(DEPED), or the Commission on Higher Education (CHED), or the Technical Education and
Skills Development Authority (TESDA), as the case may be, in accordance with existing laws
and regulations. (Sec. 27 B, NIRC)

International Air Carrier - Gross Philippine Billings refers to the amount of gross revenue derived
from carriage of persons, excess baggage, cargo and mail originating from the Philippines in a
continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of
payment of the ticket or passage document.

International Shipping - Gross Philippine Billings means gross revenue whether for passenger,
cargo or mail originating from the Philippines up to final destination, regardless of the place of
sale or payments of the passage or freight documents. (Sec. 28 A3, ibid.)

Regional or area headquarters shall mean a branch established in the Philippines by

multinational companies and which headquarters do not earn or derive income from the
Philippines and which act as supervisory, communications and coordinating center for their
affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets. (Sec.
22 DD, ibid.)

Regional operating headquarters shall mean a branch established in the Philippines by

multinational companies which are engaged in any of the following services: general
administration and planning; business planning and coordination; sourcing and procurement of
raw materials and components; corporate finance advisory services; marketing control and
sales promotion; training and personnel management; logistic services; research and
development services and product development; technical support and maintenance; data
processing and communications; and business development. (Sec. 22 EE, ibid.)

Illustration 5
Fast Earning University is a private educational institution. During the year it had the following
data:
Tuition fees……………..……..……………………..….. ₱ 9,000,000
Miscellaneous fees……………………………………… 1,350,000
Rent income from a building which is being leased to
commercial establishments……………..……………… 108,000
Dividend from domestic corporation…………………. 45,000
Allowable deductions…………………………………… 4,050,000
The income tax due from Fast Earning University is computed as follows:
1. Predominance test:
Related Unrelated
Tuition fees……………..……..……………………. 9,000,000
Miscellaneous fees………………………………... 1,350,000
Rent income ………..……………………………… 108,000
Dividend from domestic corporation…………….. 45,000
Totals……………………………………………….. 10,350,000 153,000

Percent of unrelated activity to 153,000 = 1.46%

total gross income 10,503,000

Applicable income tax rate………………………… 10%

9
Chapter 4 Taxation of Corporations

2. Computation of income tax due:

Tuition fees……………..……..…………………… 9,000,000
Miscellaneous fees………………………………. 1,350,000
Rent income.……………………………………… 108,000
Gross income……………………………………. 10,458,000
Less: Allowable deductions…………………….. (4,050,000)
Taxable income…………………………………. 6,408,000
Tax rate……………………………………………. 10%
Income tax due………………………………….. 640,800

 Optional Standard Deduction

In lieu of itemized deductions, a domestic and resident foreign corporation may elect a standard
deduction in an amount not exceeding forty percent (40%) of it gross income.

Unless the corporation signifies in its return its intention to elect the optional standard deduction,
it shall be considered as having availed itself of the itemized deductions. Such election when
made in the return shall be irrevocable for the taxable year for which the return is made

However, a corporation who availed and claimed this deduction is still required to submit its
financial statements when it files its annual tax return and to keep such records pertaining to its
gross income.

If you already checked the itemized deduction scheme during the first quarter, you have to use
itemized deductions for the succeeding three quarters as well.

Illustration 6
Galaxy Corporation had the following data:

Gross sales…………………………………… ₱12,000,000

Sales returns…………………………………. 24,000
Cost of sales…………………………………. 7,200,000
Expenses……………………………………. 3,000,000

The income tax due from Galaxy assuming it availed the optional standard deduction is
computed as follows: TB Ampongan
Itemized Optional
Gross sales…………..………………………………. 12,000,000 12,000,000
Less: Sales returns……….………………………… (24,000) (24,000)
Cost of sales……….…………………………. (7,200,000) (7,200,000)
Gross income...……………………………………… 4,776,000 4,776,000
Less: Expenses / OSD 40%................................... (3,000,000) (1,910,400)
Taxable income…………………………………….. 1,776,000 2,865,600
Tax rate………………………………………………. 30% 30%
Income tax due …………………………………….. 532,800 859,680

10
Chapter 4 Taxation of Corporations

 Tax Credit
Tax Credit is a right of an income taxpayer to deduct from income tax payable the foreign income
tax he has paid to any foreign country subject to limitation.

Income taxes paid in a foreign country can either be claimed as:

1. Deduction
2. Tax credit
Tax credit Deduction
Paid beforehand and is deducted Included in the gross income
from the tax liability of the taxpayer but later deducted

Who can Claim?

1. Resident Citizen
2. Domestic Corporation

Substantiation Requirements – The tax credit shall be allowed only if the taxpayer establishes
to the satisfaction of the Commissioner the following:
1. The total amount of the income derived from sources without the Philippines;
2. The amount of income derived from each country, the tax paid or incurred to which is
claimed as a credit under said paragraph, such amount to be determined under rules
and regulations prescribed by the Secretary of Finance; and
3. All other information necessary for the verification and computation of such credits.
(Sec. 34, C NIRC)

What amount may be taken as tax credit?

The amount of tax credit allowed is equivalent to the tax paid or incurred to a foreign country
during the taxable year but not to exceed the following limits:

Formulas for income tax credit (Sec. 86(E), NIRC)

One foreign country only

Taxable income, foreign country Philippine

Tax credit = Taxable income, world X income tax
Or
Actual income tax paid to the foreign country, whichever is lower

Two or more foreign countries

Limitation A (per country): See above formula

Limitation B (by total):

Taxable income, all foreign country Philippine
Tax credit = Taxable income, world X income tax
Or
Actual income tax paid to all foreign country, whichever is lower

http://www.scribd.com/doc/16884100/Taxation-Reviewer

11
Chapter 4 Taxation of Corporations

Illustration 7

Actual Foreign PH Quarterly

Particulars Net Income Tax Paid in PHP Income Tax
Country A ₱ 75,000 ₱ 3,000
Country B 60,000 1,300
Phillipines 165,000 ₱ 4,000
Total Net Income 300,000

Answer:
Net income, Country A……………………………. 75,000
Net income, Country B……………………………. 60,000
Net income, Philippines…………………………… 165,000
Net income, world…………………………………. 300,000

Income tax due ……………………….…………… 10,000

Less: Tax credit (schedule 1)……………………. (3,800)
PH quarterly income tax paid……………… (4,000)
Income tax still due………………………….. 2,200

Schedule 1 – Tax credit

Limitation A: Lower
Country A, Actual foreign tax paid…………… 3,000
Formula: (75,000/300,000 x ₱10,000)………. 2,500 2,500

Country B, Actual foreign tax paid…………… 1,300

Formula: (60,000/300,000 x ₱10,000)……… 2,000 1,300
Total……………………………………………………………….. 3,800

Limitation B:
All foreign income tax paid………………………….. 4,300
Formula: (135,000/300,000 x ₱10,000)……….. 4,500 4,300

Allowed………………………………………………………………….. 3,800

 Exemptions from Tax on Corporations

The following organizations shall not be taxed in respect to income received by them as such:
1. Labor, agricultural or horticultural organization not organized principally for profit;
2. Mutual savings bank not having a capital stock represented by shares, and cooperative
bank without capital stock organized and operated for mutual purposes and without
profit;
3. A beneficiary society, order or association, operating for the exclusive benefit of the
members such as a fraternal organization operating under the lodge system, or mutual
aid association or a non-stock corporation organized by employees providing for the
payment of life, sickness, accident, or other benefits exclusively to the members of such
society, order, or association, or non-stock corporation or their dependents;
4. Cemetery company owned and operated exclusively for the benefit of its members;

12
Chapter 4 Taxation of Corporations

5. Non-stock corporation or association organized and operated exclusively for religious,

charitable, scientific, athletic, or cultural purposes, or for the rehabilitation of veterans,
no part of its net income or asset shall belong to or inures to the benefit of any member,
organizer, officer or any specific person;
6. Business league chamber of commerce, or board of trade, not organized for profit and
no part of the net income of which inures to the benefit of any private stock-holder, or
individual;
7. Civic league or organization not organized for profit but operated exclusively for the
promotion of social welfare;
8. A non-stock and nonprofit educational institution;
9. Government educational institution;
10. Farmers' or other mutual typhoon or fire insurance company, mutual ditch or irrigation
company, mutual or cooperative telephone company, or like organization of a purely
local character, the income of which consists solely of assessments, dues, and fees
collected from members for the sole purpose of meeting its expenses; and
11. Farmers', fruit growers', or like association organized and operated as a sales agent for
the purpose of marketing the products of its members and turning back to them the
proceeds of sales, less the necessary selling expenses on the basis of the quantity of
produce finished by them;

Notwithstanding the provisions in the preceding paragraphs, the income of whatever kind and
character of the foregoing organizations from any of their properties, real or personal, or from
any of their activities conducted for profit regardless of the disposition made of such income,
shall be subject to tax imposed under NIRC. (Sec. 30, NIRC)

 Corporate Income Tax Returns

1. Quarterly Income Tax Return (See discussion on Quarterly Tax on Corporations)
 Place of filing (Same rules as Annual ITR)

2. Annual Income Tax Return (BIR Form 1702)

 Place of filing
a) Any Authorized Agent Bank (AAB) located within the territorial jurisdiction of
the Revenue District Office (RDO) where the taxpayer’s principal office is
registered.
b) In places where there are no AABs, the return shall be filed and the tax shall
be paid with the concerned Revenue Collection Officer (RCO) under the
jurisdiction of the RDO.
c) In case of “NO PAYMENT RETURNS” the same shall be filed with the RDO
where the taxpayer’s principal office is registered or with the concerned RCO
under the same RDO.
d) For Electronic Filing and Payment System (eFPS) taxpayer, the return shall
be e-filed and the tax shall be e-paid using the eFPS facilities thru the BIR
website http//www.bir.gov.ph.
 Time of filing
a) On or before the 15th day of the fourth month following the close of the
taxpayer's taxable year. (Sec. 77 B, ibid.)

13