Question & AnswerQ&A (BIR REVENUE REGULATIONS NO. 12-2007)
It amends Revenue Regulations No. 9-98 to align the time of payment of the Minimum Corporate Income Tax (MCIT) on domestic and resident foreign corporations with the mandatory quarterly filing of normal corporate income tax returns, pursuant to Sections 27(E), 28(A)(2), 75, and 77 of the 1997 Philippine Tax Code as amended.
MCIT of 2% of gross income is imposed beginning on the fourth taxable year immediately following the taxable year a corporation commenced its business operations, especially when the corporation has zero or negative taxable income or when the MCIT is greater than the normal corporate income tax due.
MCIT shall be computed and paid at the time of filing quarterly corporate income tax returns. The higher amount between the quarterly MCIT (2% of gross income) and the normal income tax shall be the tax due for that quarter.
No. Excess MCIT from previous taxable years cannot be credited against the current quarterly MCIT payments but may be credited against normal income tax in the annual tax return subject to the prescriptive period for creditability.
Allowed credits include expanded withholding taxes, quarterly payments of normal corporate income tax, and MCIT paid in previous taxable quarters of the current year.
At year-end, the normal income tax and MCIT are compared. If the normal income tax payable is higher, credits from previous MCIT payments, credits, and withholding taxes can be applied. If MCIT is higher, credits exclude excess MCIT from prior years and include current year payments only.
'Gross income' means gross sales less sales returns, discounts, allowances, and cost of goods sold for sales of goods, or gross revenue less sales returns, discounts, allowances, and cost of services for sale of services. It also includes all gross income items under Section 32(A) of the Tax Code except income exempt from income tax and income subject to final withholding tax.
A domestic corporation becomes subject to MCIT starting from its fourth taxable year after it commenced business operations.
MCIT shall be paid quarterly in the same manner prescribed for normal corporate income tax payments. It should be filed together with the quarterly corporate income tax returns and reconciled in the annual final adjustment income tax return.
For quarterly returns due after the regulation's effectivity, MCIT must be computed on a cumulative basis covering the current quarter and all previous quarters of the same taxable year. The higher amount between cumulative MCIT and normal income tax shall be the payable amount.