Question & AnswerQ&A (Republic Act No. 9337)
The income tax rate imposed on domestic corporations is thirty-five percent (35%), effective January 1, 2009, the rate shall be thirty percent (30%).
Corporations may choose to be taxed at fifteen percent (15%) of gross income if certain economic conditions are met, such as tax effort ratios and VAT tax effort, and if the firm's cost of sales to gross sales or receipts ratio does not exceed fifty-five percent (55%).
They shall pay a tax of ten percent (10%) on their taxable income, except if their gross income from unrelated trade, business, or other activities exceeds fifty percent (50%), in which case the higher corporate tax rate applies to the entire taxable income.
No, dividends received by a domestic corporation from another domestic corporation are not subject to tax.
Capital gains not over P100,000 are subject to a 5% final tax, while amounts in excess of P100,000 are subject to a 10% final tax.
A minimum corporate income tax of two percent (2%) of the gross income is imposed starting on the fourth taxable year following commencement of business when this minimum tax is greater than the normal income tax.
Gross income means gross sales less sales returns, discounts, allowances, and cost of goods sold or cost of services, with detailed definitions depending on the type of business (trading, manufacturing, or services).
The income tax rate is thirty-five percent (35%), effective January 1, 2009, the rate shall be thirty percent (30%).
A tax of fifteen percent (15%) is imposed on the total profits applied or earmarked for remittance as branch profits remittance tax.
Exempt transactions include sale or importation of agricultural and marine food products in original state, sale or importation of fertilizers, seedlings, certain personal and household effects of residents returning from abroad, medical and veterinary services (except those by professionals), educational services by accredited institutions, and others as specified.
A value-added tax of ten percent (10%) is levied, subject to possible increase to twelve percent (12%) based on specified economic conditions.
VAT-registered persons must issue VAT invoices for sales of goods and VAT official receipts for lease of goods or services, which must indicate the VAT status, taxpayer identification numbers, amount, date, quantity, description, and other relevant information.
Every person subject to internal revenue tax must register once with the appropriate Revenue District Officer within specified timelines and pay an annual registration fee of Five hundred pesos (P500) for each establishment or place of business, except for exempt entities.
Receipts or sales invoices must be issued for every sale or transfer of merchandise or services rendered valued at Twenty-five pesos (P25.00) or more.