What are subject to Normal Corporate Income Tax? -> Sec.

22 (B)

 Domestic corporations
Meaning of :Normal Income Tax” - the income tax rates prescribed under Sec. 27(A), and Sec. 28(A)(1)
of the NIRC, which is 30%
- What are joint-stock corporations?
Classified as a partnership possessing some of the characteristics of a corporation
- Are general professional partnerships subjected to corporate income tax?
No. A GPP is not treated as a corporation and is not a taxable entity, but the partners are taxable in their
individual capacity with respect to their share in the income of the partnership
- Are joint ventures included?
Generally yes. Joint ventures are included however, there are exemptions to this. if the joint venture is for
the purpose of undertaking construction projects or if it engages in petroleum, coal, geothermal, and other
energy options.
- What are examples of joint ventures not exempted from income tax?

 Joint Emergency Operation (TAXABLE) – operates the business affairs of the two companies as
though they constitute a single entity obtaining substantial economy and profit in operation
- How are corporations taxed?

 A domestic corporation is subject to tax on its worldwide income. On the other hand, a
foreign corporation is subject to tax only on income from Philippine sources.

- Resident foreign corporation. Where is this taxed?

Source of Income: Within the Philippines
Tax Base: Taxable Income (Gross Income – Allowable Deduction = Taxable Income)
Tax Rate: 25% effective July 1, 2020 (R.A 11534 or CREATE Law)
- What is normal corporate income tax?
Meaning of :Normal Income Tax” - the income tax rates prescribed under Sec. 27(A), and Sec. 28(A)(1)
of the NIRC, which is 30%
- Define Capital Gains Tax
- What asset do we speak of when we talk about Capital Gains Tax?

 Property held by the taxpayer, whether or not connected with his trade or business which is not an
ordinary asset. (BIR RR 7-2003)
 The term ‘capital assets’ means property held by the taxpayer (whether or not connected with his
trade or business), but does not include stock in trade of the taxpayer or other property of a kind
which would properly be included in the inventory of the taxpayer if on hand at the close of the
 taxable year or property held by the taxpayer primarily for sale to customers in the ordinary
course of his trade or business, or property used in the trade or business, of a character which is
subject to the allowance for depreciation provided in Subsection (F) of Section 34; or real
property used in trade or business of the taxpayer. (Sec. 39(A)(1), NIRC)
- What is NCIT
Meaning of :Normal Income Tax” - the income tax rates prescribed under Sec. 27(A), and Sec. 28(A)(1)
of the NIRC, which is 30%

- What is Capital Gains Tax

- Capital assets vs ordinary assets

 Capital Assets: - Property held by the taxpayer, whether or not connected with his trade or
business which is not an ordinary asset. (BIR RR 7-2003)

 Ordinary Assets:
1. Stock in trade of the taxpayer/other property of a kind which properly be included in the inventory of
the taxpayer if on hand at the close of the taxable year.
2. Property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or
business.
3. Property used in the trade or business of a character which is subject to the allowance for depreciation;
or
4. Real property used in the trade or business of the taxpayer, including property held for rent. (BIR RR
7- 2003
- What is Gross Income Tax?

 The total income of a taxpayer subject to tax. It includes the gains, profits, and income derived
from whatever source, whether legal or illegal.
(1) Compensation for services in whatever form paid, including, but not limited to fees, salaries, wages,
commissions, and similar items:
(2) Gross income derived from the conduct of trade or business or the exercise of a profession;
(3) Gains derived from dealings in property;
(4) Interests;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
(9) Prizes and winnings;
(10) Pensions; and
(11) Partner’s distributive share from the net income of the general professional partnership. (Sec. 32 (A),
NIRC)
 QUESTIONS RECIT NOVEMBER 18, 2023 TAX
What are corporations subject to income tax?
- Domestic corporations
- Resident foreign corporations
- Foreign corporations
From what sources mo makukuha ang tax from foreign corporations?
- Within the ph
- If domestic corporation, within and without the ph
Are one person corporation subject to income tax?
- Yes. They are considered as corporation hence they are subject to income tax.
How about partnership?
- If it is general professional partnership, it is not subject to income tax but only on the individual
capacity of the partners.
What is gross income tax?
What is capital gains stock?

Income derived from illegal doings like gambling are still taxable.
Engaged in money laundering, taxable parin.
Unregistered partnership, taxable parin.
If for specific purpose ang joint venture, hindi sila subject to income tax.

Capital gains tax – 6%

ordinary income tax kapag ordinary assets
capital gains tax kapag capital assets 6%
corporate income tax – 25-30% tax