INCOME TAXATION

Taxation of Corporation
Normal Income Tax
Means that income tax rate is
30% effective since January 1,
2009.
Classification of Income Taxpayers
(Other than Individuals)
1) Corporations
a) Domestic  Those created or
organized under and by virtue of
Philippine Laws
i. Domestic Corporation, in general
ii. Government-owned and –
controlled corporations
iii. Taxable Partnerships
iv. Proprietary educational institutions
v. Non-profit hospitals
b) Foreign  Those organized in
accordance with laws of their
respective countries.
i. Resident  Those engaged
in trade or business within
the Philippines.
ii. Non-resident  Those not
engaged in trade or business
in the Philippines.
2) General Professional
Partnership
3) Estates and Trusts
Definition of Terms
1) Corporation  It includes partnerships,
no matter how created or organized, joint-
stock companies, joint accounts (cuentas
en participacion), associations, or
insurance companies, but does not include
general professional partnerships and
a joint venture or consortium formed
for the purpose of undertaking
construction projects or engaging in
petroleum, coal, geothermal and other
energy operations pursuant to an
operating or consortium agreement under
a service contract with the Government.
 Joint venture or
consortium to be NOT
taxable should be:
For the undertaking of a construction project
Should involve joining or pooling of resources
by licensed local contracts; that is, licensed as
general contractor by the Philippine Contractors
Accreditation Board (PCAB)
Local contractors are engaged in construction
business
Joint venture itself must be licensed to PCAB
and DTI
*NOTE: The member to a joint venture not taxable as
corporation shall each be responsible in reporting and
paying appropriate INCOME TAXES on their respective
share to the joint venture’s profit
2) Domestic  created or organized in
the Philippines or under its laws.
3) Foreign  a corporation which is not
domestic
4) Resident Foreign Corporation 
foreign corporation engaged in trade or
business within the Philippines
 authorized by law
5) Non-resident Foreign Corporation
 foreign corporation not engaged in
trade or business within the Philippines
 not authorized by law
Sources of Income
1) Domestic Corporations  taxable
on income from sources within and
without the Philippines.
2) Foreign Corporations  whether
resident or non-resident, are taxable
only on income from the Philippines.
Source of Income

Corporation Within Without

1) Domestic . .

2) Foreign .
 Categories of Income and Tax
rates
1) Business Income
 the table below shows the specific tax rates
on business income of corporate taxpayers.
Description Tax Rate Tax Base

DOMESTIC CORPORATIONS
1.
a. In general 30% Taxable income from all
b. Minimum Corporate Income 2% sources
Tax 10% Gross Income
c. Improperly Accumulated Improperly Accum.
Earnings Earnings
2. Proprietary Educational 10% Taxable income from all
Institutions sources
3. Non-stock, Non-profit 10% Taxable income from all
Hospital sources
4. GOCC, Agencies and (see 1a-
Instrumentalities 1c)

5. National Government (see 1a-

and LGUs 1c)

6. Taxable Partnership (see 1a-

1c)

7. Exempt corporation
a. On exempt activities 0% Taxable Income
b. On taxable activities (see 1a)

8. General Professional Exempt

Partnerships
9. Corporation covered Rate specified under
by special laws the respective special
laws
 RESIDENT FOREIGN
CORPORATION
1.
a. In general 30% Taxable income within the
b. Minimum Corporate Income 2% Phil.
Tax 10% Gross Income
c. Improperly Accumulated Improperly Accum.
Earnings 2.50 Earnings
%
2. International carriers Gross Philippine Billings
3. Regional Operating 10% Taxable income
Headquarters
4. Corporation covered by Rate specified under the
special laws respective special laws
5. Offshore Banking units 10% Gross taxable income on
Foreign Currency
30% Transaction
On taxable income other
6. Foreign Currency Deposit 10% than Foreign Currency
Units (FCDU) Transaction
30% Gross taxable income on
 2) Passive Income  subject to a separate
and final tax. Not to be included in gross
income computation
ON PASSIVE INCOME Domesti Reside
c nt
foreign
Interests

Interest from deposits and yield or any 20% 20%

other monetary benefit from deposit
substitutes and from trust funds and
similar arrangements.
Interest income from a depository bank 15% 7.50%
under the expanded foreign currency
deposit system.
Income derived by a depository bank 10% 10%
under the expanded foreign currency
deposit system from foreign currency
transactions with local commercial
Royalties 20% 20%
Dividends

Dividends received by a domestic/resident Exempt Exempt

foreign corporation from a domestic
corporation
Capital Gains

On the net capital gain from sale, exchange or

other disposition of shares of stock in a
domestic corporation not traded in the stock
exchange 5% 5%
Not over P100,000 10% 10%
Amount in excess of P100,000
On the net capital gain presumed to have been
realized on the sale, exchange or disposition
of lands and/or buildings not actually used in
the business and treated as capital assets,
the higher value between
Gross selling price, and
Fair market value as determined by the 6%
commissioner
Domestic and Foreign Corporations,
In General
Pro-forma computation of normal income
tax of domestic and resident foreign
corporation follows:

Gross Income xx
Less: Allowable deductions xx
Net income xx
Multiply by: Tax rate 30%
Tax due xx
Their income and expenses for the fiscal year
shall be deemed to have been earned and
spent equally for each month of the period.
Domestic Corporations,
In Particular
Real Estate Investment Trust (REIT)
is a stock corporation established in
accordance with the Corporation Code
of the Philippines and the rules and
regulations promulgated by the SEC,
principally for the purpose of owning
income-generating real estate assets.
Income Generating real estate 
real property which is held for the
purpose of generating a regular stream
of income as rentals and toll fees.
Investor securities  shares if stocks issued
by a REIT or derivatives thereof.
Overseas Filipino Investors  individual
citizen of the Philippines who is working
abroad.
 exempt from dividends tax for seven years
Principal stockholder  stockholder who is,
directly or indirectly, the beneficial owner of
more than 10% of any class of investor
securities of the REIT combined.
Public Company  company listed with the
Exchange which has, upon and after listing, at
least 1,000 public shareholders each owning at
least 50 shares of any class, own at least 40%
of the outstanding capital stock of the REIT at
the initial year.
Distributable Income  net
income earned for the next
taxable year.
REIT’s taxable net income 
gross income less all allowable
deductions and the dividends
distributed by REIT.

Cash or property dividends

paid by REIT shall be subject to a
Proprietary Non-profit Educational
Institutions and Hospitals
10% tax on taxable income

Note: If the gross income from

unrelated trade, business
exceeds fifty percent (50%) of the
total gross income from all
sources, tax prescribed under
Section 27(A), 30%, shall be
imposed.
Government-owned or –controlled Corporations,
Agencies or Instrumentalities (GOCCs)

The following are exempt:

1) Government Service Insurance
System (GSIS)
2) Social Security System (SSS)
3) Philippine Health and
Insurance Corporation (PHIC)
4) Local Water Districts (LWD)
 Power Sector Assets and Liabilities
Management Corporation (PSALM)
1) No income and WT are due from the sale of the
National Power Corporation (NPC) generation assets
and other real properties to winning bidders
2) The rental income of PSALM from the NPC
generation assets and other real properties, prior to
its sale to winning bidders, is subject to income tax.
3) Any income to be derived by PSALM from the
operation of generation facilities is subject to
income tax and withholding tax.
4) Other income or receipts from miscellaneous
activities, such as forfeiture of performance , bonds,
interest income from persons other than the winning
bidders, and from other activities not related to
PSALM’s mandate are subject to all applicable taxes
under the Tax Code.
Mutual Life Insurance Companies
Subjectto the regular corporate
income tax rates.
Homeowners’ Association
Gross receipts include
association dues, membership
fees and other
assessments/charges
Subject to VAT and income tax
Income payments made to them
are subject to the applicable
withholding taxes under existing
regulations.
 Dues and income derived from
rentals may be exempted if:
Homeowner’s association must be a duly
constituted “association.”
Local Government Unit having the jurisdiction of
such must issue a certification identifying the
basic services being rendered by the
homeowner’s association and its lack of resources
to render such services despite its clear mandate
under applicable laws, rules and regulation.
Such services must fall within the purview of the
term “basic community services and facilities.”
They present proof that the income and dues are
used for the cleanliness, safety, security and other
basic services needed by the members.
Recreational Clubs
Income from whatever source,
including but not limited to
membership fees, rental income
and assessment dues, of clubs
organized and operated
exclusively for pleasure,
recreation and other non-profit
purposes, are subject to income
tax.
Resident Foreign Corporations,
In Particular
1) International Air Carrier
 Gross Philippine Billings include:
carriage of persons, excess baggage,
cargo and mail originating from the
Philippines in a continuous flight.
2) International Shipping
 Gross Philippine Billings include:
gross revenue for passenger, cargo,
or mail originating from the
Philippines up to final destination.
3) Offshore Banking Units (OBUs)
 Income derived by Offshore Banking Units
authorized by the BSP, from foreign currency
transactions with local commercial banks,
including branches of foreign banks that may be
authorized by the BSP to transact business with
offshore banking units, including any interest
income derived from foreign currency loans
granted to residents, shall be subject to final
income tax at a ten percent (10%) of such
income

4) Branch Profit Remittances

 Any profit remitted by a branch to its head office
shall be subject to a tax of fifteen percent (15%)
of total profits applied or earmarked for
remittance without deduction for the tax
component thereof.
5)Regional Operating Headquarters (ROHQs)
 Branch established in the Philippines by
multinational companies which are engaged in 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 communication
 Business development
6)Regional or Area Headquarters
(RHQs)
Branch established in the Philippines
by multinational companies and do
not earn or derive income from the
Philippines and which act as:
Supervisory
Communications and coordinating
center for their branches, affiliates
and subsidiaries in the Asia-pacific
region and other foreign markets
Shall be not subject to income tax
 Non-Resident Foreign Corporation,
In General
Gross income WITHIN the
Philippines only which includes:
interests, dividends, rents,
royalties, salaries, premiums
(except reinsurance premiums),
capital gains, annuities and
Gross Income
others. xx
Multiply by: Tax rate 30%
Tax Due xxx
Non-Resident Foreign Corporation,
In Particular
1) Non-Resident Cinematographic Film
Owner, Lessor or Distributor  taxed at
25% of Gross income
2) Non-Resident Owner or Lessor of Vessels
Chartered by Philippine Nationals  taxed
at four and a half percent (4.5%) of gross
rentals, lease or charter fees from leases or
charters to Filipino citizens or corporation, as
approved by Maritime Industry Authority.
3) Non-Resident Owner or Lessor of
Aircraft, Machinery and Other equipment
 taxed at seven and a half percent (7.5%) of
gross rentals, charter and other fees.
Passive Income of Non-Resident
Foreign Corporation
1) Interest on foreign loans on or after August
1, 1986 are taxed at 20%
 Interest arising from a loan extended by a US
corporation to a domestic corporation, which is
guaranteed by the US Eximbank, is exempt from
Philippine Income Tax
 Interest on a loan paid by a domestic corporation
to the Export-Import Bank of Korea is exempt
from Philippine Income Tax
 Interest payments arising in the Philippines and
paid to a resident of Thailand are entitled to 1
15% preferential tax rate.
 Interest payments made by a domestic
corporation to a Belgian corporation are subject
to the 10% preferential WT rate.
2) Dividend received from a domestic
corporation is subject to a final
withholding tax at 15% on the
condition that the country in which
the non-resident foreign corporation
is domiciled, shall allow a credit
against the tax due from the non-
resident foreign corporation taxes
deemed to have been paid in the
Philippines equivalent to 15%.
3) Capital gains from shares of
stock not traded in the stock
exchange.
 Final tax rates below shall be is
imposed on the net capital gains
from sale, barter, exchange or
others.

Not over P100,000 5%

On any amount in excess of P100,000 10%
4) Income derived by a bank from its
FCDUs/EFCDUs or OBUs with respect to
foreign currency transaction with non-
residents, OBSUs in the Philippines, and local
commercial banks are exempt from income
tax.
5) Royalty payments made by a PEZA-registered
enterprise to a non-resident Japanese
corporation are subject to the preferential tax
rate on the gross amount of the royalty.
a. 10% - if company is registered with the Board
of Investments (BOI)
b. 15% - if the payments are respect to the use
or right of use cinematographic films
c. 10% in all other cases, effective Jan. 1, 2009
Allowable Deductions
Items or amounts which the allows to
be deducted from the gross income
to arrive at the taxable income.

Taxable income  pertinent items of

gross income less the deductions
authorized.
 is the amount or tax base upon
which tax rate are applied to arrive
at the tax due.
 1) Net income  the amount arrived at
after deducting from the gross income
the deductions. For domestic and
resident foreign corporation, in
general, and other corporations from
gross income deductions are
Sales/Revenues/Receipts/Fees xx
allowed.
Less: Cost of sales/services xx
Gross income from operations xx
Add: Non-operating and Taxable other income xx
Total Gross income xx
Less: Deductions
Optimal Standard deduction or
Itemized deduction xx
Taxable income xx
Multiply by: Tax rate xx
Tax due xx
2) Gross Income  the entire or gross income
from business without any deductions for
either optimal standard deduction or
itemized deduction.
 For resident foreign corporations and
domestic subject to the MCIT; and non-
resident corporations not subject to the
normal income tax rate

Gross Incomexx
Multiply by: Tax rate xx
Tax Due xx
 Corporations exempt from
Income Tax
1) Labor, agricultural or horticultural organization
not organized principally for profits;
2) Mutual savings bank not having a capital stock
presented 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
4) Cemetery company owned and operated
exclusively for the benefit of the members.
5) Non-stock corporation or association organized
and operated exclusively for religious,
charitable, scientific, cultural purposes; or for
the rehabilitation of veterans, no part of its net
income or assets shall belong to or to inure to
Non-stock corporation are also liable for the
following final withholding taxes
On PASSIVE INCOME:
Interests  Interest income from
foreign currency deposits and yield or
any other monetary benefit from deposit
substitute instruments and from trust
funds and similar arrangements. 20%
 Interest income from a depositary
bank under the expanded foreign
currency deposit system15%
Royalties 20%
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 individual
7) Civil league or organization not organized for profit but
operated exclusively for educational purposes
8) A non-stock and non-profit educational institutions.
Exempt, also, from final withholding tax (FWT)
9) Government educational institutions
10) Farmers’ or other mutual typhoon or fire insurance
company, mutual ditch or irrigation company, mutual or
cooperative telephone company provided that the sole
purpose of such is meeting its expenses.
11) Farmers’, fruit growers’, or like organization 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 sale, less the necessary
selling expenses on the basis of the quantity finished
by them
12) The Philippine National Red Cross
Taxation for Cooperatives
Cooperatives refers to an autonomous
and duly-registered association of
persons, with a common bond of interest,
who have voluntarily joined together – to
achieve their social, economic and cultural
needs and aspirations by making
equitable contributions to the capital
required, patronizing their products and
services and accepting a fair share of the
risks and benefits, of the undertaking in
accordance with universally accepted
cooperatives principles.
 Definition of Terms
1) Accumulated Reserves  accumulated amount of
money annually deducted from the net surplus,
which shall be fifty percent (50%) for the first five
years of operation after registration and at least 10
percent (10%) of the net surplus thereafter,
intended not for the allocation or distribution to the
members but for the protection and stability of the
cooperative, commonly referred to as the Reserve
Fund.
2) Business Transaction  any business activity or
livelihood engaged in by the cooperative where such
cooperative generates savings.
3) Capital Assets  property held by the taxpayer
(whether or not connected with trade or business),
but does not include stock in trade of the taxpayer
or property of a kind which would properly be
included in inventory of taxpayer if on hand at the
close of the taxable year, or property held by the
4) Certificate of Good Standing  certificate issued annually
by the CDA to cooperatives which comply to the requirements.
One of the requirements for the grant of the Certificate of Tax
Exemption/Ruling.
5) Certificate of Tax Exemption/Ruling  issued by BIR
granting exemption to a cooperative, valid for five years from
the date of issue.
6) Cooperative Development Authority (CDA)  government
agency created to register, regulate and develop cooperatives.
7) Interest on Share Capital  interest earned by the
members’ paid-up to the capitalization of the cooperative. It is
based on the average share capital contribution of members
computed on a per month basis against the pre-set amount
earmarked by the board of directors for interest on share
capital.
8) Patronage Refund  refund or return to the members of net
savings generated from the operations of the cooperatives.
9) Registration  operative act granting juridical personality to
a proposed cooperative as evidenced by a Certificate of
Registration issued by CDA.
10)Related operations/transactions  transaction of
cooperatives which are part of the objectives and purposes.
11) Transaction with members cooperative
activity that provides goods and services to
members where the cooperatives generate
net savings/surplus.
12) Transaction with non-members
cooperative activity that provides goods and
services to non-members where the
cooperatives generate net savings/surplus.
13) Undivided net surplus/Undivided net
savings  net amounts arising from the
operations of the cooperative after deducting
the operating expenses from the revenue
generated, not construed as profits, but as
excess of payments made by its members for
the loans borrowed or the goods and services
bought from the cooperative including other
inflow of assets resulting from other operating
activities and which shall been to have been
Classification of cooperatives
according to the Extent of the
Tax Exemptions Granted
a) Those duly-registered cooperatives which
transact business with members only; and
b) Those duly-registered cooperatives which
transact business with both members and
non-members are further sub-classified
according to the ff.:
1. Cooperatives with accumulated reserves
and undivided net savings of not more than
ten million pesos (P10,000,000); and
2. Cooperatives with accumulated reserves
and undivided net savings of more than ten
million pesos (P10,000,000)
Tax exemptions of Duly Registered
cooperatives which transact
business with members only
 Shall be exempt from taxes and fees,
including but not limited to:
1) Income tax imposed by Title II of the NIRC, as
amended;
2) VAT imposed under Title IV of the NIRC, as
amended;
3) Percentage Tax imposed under Title V of the
NIRC, as amended;
4) Donor’s Tax imposed under Title III of the
NIRC, as amended, on donations to duly
accredited charitable research and
educational institutions and reinvestment to
socio-economic projects within the area of
operation of the cooperatives;
6) Documentary Stamp Tax imposed under Title VII
of the NIRC, as amended, provided, however,
that the other party to the taxable
document/transaction who is not exempt shall
be the one liable for the tax;
7) Annual registration fee of P500 under Section
236(B) of the NIRC, as amended;
8) All taxes on transactions with insurance
companies and banks, including but not limited
to 20% final tax on interest deposits and 7.5%
final income tax on interest income derived from
a depositary bank under the expanded foreign
currency deposit system; and
9) Electric cooperatives duly registered with the
authority shall be exempt from VAT on revenues
on system loss and VAT on revenues on
distribution, supply, metering, and lifeline
subsidy of electricity to their members.
Tax exemptions of Duly Registered
cooperatives which transact business
with members and non-members
 Cooperatives with accumulated reserves and
undivided net savings of not more than ten
million pesos (P10,000,000)  – Exempt
from all national internal revenue taxes for
which these cooperatives are liable
 Cooperatives with accumulated reserves and
undivided net savings of more than ten
million pesos (P10,000,000) 
1) Business transactions with members –
Exempt from all national internal revenue
taxes for which these cooperatives are liable.
Business transactions with non-members –
A. Pay the following taxes at the full rate.
i. Income Tax  on the amount allocated for interest on
capitals; provided that the same tax is not
consequently imposed on interest individually received
by the members. The tax base for all cooperative shall
be the net surplus arising from the business
transactions with non-members after deducting the
amounts for the statutory reserve funds.
ii. Value Added Tax (VAT)  On transactions with non-
members: Provided, however, that cooperatives shall
be exempt from the imposition of VAT, namely the
following:
a) Sales by agricultural cooperatives duly registered
and in good standing with the CDA to their
members, as well as sale of their produce, whether
in its original state or processed form, to non-
members, their importation of direct farm inputs,
machineries and equipment, including spare parts
thereof, to be used directly and exclusively in the
production and/or processing of their produce;
 c) Sales by non-agricultural, non-electric and
non-credit cooperatives duly registered
with the CDA; Provided, that the share
capital contribution of each member does
not exceed P15,000 and regardless of the
aggregate capital and net surplus ratably
distributed among members of the NIRC,
as amended; or
d) Transactions of cooperatives as may be
deemed VAT exempt under the NIRC.
iii. Percentage Tax  all sales of goods and/or
services rendered for non-members shall be
subject to the applicable percentage taxes
imposed by the Title V of the
NIRC, as amended, except sales made by
producers, marketing or service
cooperatives;
B. Be entitled to limited or full deductibility of
donations to duly accredited charitable,
research and educational institutions and
reinvestment to socio-economic projects within
the area of operation of such cooperative.
C. Pursuant to Article 61(3) be entitled to an
exemption on taxes on transactions with
insurance companies and banks, including but
not limited to 20% final tax on interest deposits
and 7.5% final income tax on interest income
derived from a depository bank under the
expanded foreign currency deposit system.
Taxability of Unrelated Income of
Cooperative
Shall be subject to all the
appropriate taxes under the NIRC,
as amended.
Applicable to all types of
cooperatives whether dealing
purely with members or both
members and non-members.
Taxability of Cooperatives to
other Internal Revenue Taxes
1) Capital gains tax from sale of shares of stock or
sale, exchange or other disposition of real property
classified as capital assets;
2) Documentary stamp taxes on transactions of
cooperatives dealing with non-members, except
transactions with banks and insurance companies,
Provided that whenever one party to the taxable
document enjoys the exemption from DST, the
other party who is not exempt shall be the one
directly liable for the tax;
3) VAT billed on purchases of goods and services,
except the VAT on the importation by agricultural
cooperatives of direct farm inputs, machineries
and equipment, including spare parts thereof, to
be used directly and exclusively in the production
and/or processing of their produce. All tax free
importations shall not be transferred to any person
4) Withholding tax on
compensation/wages, except in the
case where an employee is minimum
wage earner; and creditable and final
withholding taxes, if applicable. All
cooperatives are considered as
withholding agents on all income
payments subject to withholding.
5) All other taxes for which cooperatives
are directly liable and not otherwise
expressly exempted by any law.
Taxability of Members/
Shareholders of Cooperatives
All members of cooperatives shall be liable
to pay all the necessary internal revenue
taxes, except for the following:
1. Any tax and fee, including but not limited
to final tax on member’s deposits or fixed
deposits with cooperatives, and
documentary tax on transactions of
members with the cooperative; and
2. Patronage Refund which includes all
refunds, returns or rebates of the net
savings generated from the operation of
the cooperative.
PAL and other Franchise Grantees
similarly situated
The Franchise of Philippine
Airlines (PAL) provides that it
shall pay the government the
lower of the basic corporate
income tax or franchise tax in
lieu of all other taxes, duties,
royalties, regulations, license,
and other fees, charges, except
only real property tax.
Enterprises Registered under the Bases
Conversion & Development Act of 1992
& the Special Economic Zone Act of
1995 (R.A. 7916)
Enterprises that are registered with the Subic
Bay Metropolitan Authority (SBMA), the Clark
Development Authority (CDA) or the Philippine
Economic Zone Area (PEZA) engage in
registered as well as unregistered activities.
Registered Activities  income derived by
such enterprises from registered activities
shall be subject to such tax treatment as may
be specified in the terms of registration, i.e.;
5% preferential tax rate
Income tax holiday (ITH)
Regular income tax rate
(Continued)
Except for real property taxes on land owned
by developers, no taxes, local and national,
shall be imposed on business establishments
operating within the ecozone. In lieu thereof,
five percent of the gross income earned (GIE)
by all business enterprises within the ecozone
shall be paid and remitted as follows:
1. Three percent to the National Government;
2. Two percent which shall be directly
remitted by the business establishments
to the treasurer’s office of the municipality
or city where the enterprise is located.
(Continued)
 For PEZA-registered export enterprises, free trade
enterprises and domestic market enterprises, the
regulations state that “(for) purposes of computing
the total five percent tax rate imposed, the following
direct costs are included in the allowable deductions
to arrive at gross income earned:
1. Direct salaries, wages or labor expenses
2. Production supervision salaries
3. Raw materials used in the manufacture of products
4. Decrease in goods in process account (intermediate
goods)
5. Decrease in finished goods account
6. Supplies and fuels used in production
7. Depreciation of Machinery and equipment used in
production, and of that portion of the building
owned or constructed that is used exclusively in the
production
8. Rent and utility charges associated with building,
(Continued)
Unregistered Activities
Interests
Interest income from Philippine currency bank deposits,
yield or any other monetary benefit from deposit
substitutes, from trust funds and similar arrangements.
20% (Final Income Tax)
Interest income from foreign currency deposit.  15%
(Final Income Tax)

Sale of Shares of Stocks

Not traded in stock exchange
Not over 100,000 5%
More than 100,000 10% Capital Gains Tax
Traded in Stock Exchange 0.60% Stock transaction tax
(Continued)
Income payments made by a registered
enterprise to an entity in the Customs
territory shall not be subject to the
preferential tax rates or tax exemption
enjoyed by the registered enterprise.
They shall be subject to the appropriate
tax rate imposable on the recipient of
such income. The following are examples:
1. Dividends paid to shareholders
2. Interest payments to creditors
3. Other similar payments
Declaration of Quarterly
Corporate Income Tax
Every corporation shall file in duplicate a quarterly
summary declaration of its gross income and
deductions on a cumulative basis for the
preceding quarter or quarters upon which the
income tax shall be levied, collected and paid.
Income Tax computed decreased by the amount of
tax previously paid or assessed during the
preceding quarters shall be paid and the return
filed not later than sixty days from the close of
each of the first three quarters of the taxable
year, whether calendar or fiscal.
Every taxable corporation is likewise required to
file a final adjustment return covering the
taxable income of the corporation for the
preceding year, required to be filed and paid on
(Continued)
Ifthe sum of the quarterly tax
payments made during the said
taxable year is not equal to the total
tax due on the entire taxable income
of that year, the corporation shall
either;
1. Pay the balance of the tax still due;
2. Carry over the excess credit
3. Be credited or refunded with the
excess amount paid
THE END!! 