Question & AnswerQ&A (Republic Act No. 9337)
The corporate income tax rate for domestic corporations effective January 1, 2009 is thirty percent (30%).
The President may allow corporations the option to be taxed at fifteen percent (15%) of gross income, provided conditions including a tax effort ratio of 20% of GNP, 40% income tax collection to total tax revenues, 4% VAT tax effort of GNP, and a 0.9% ratio of CPSFP to GNP are satisfied.
'Gross income' means gross sales less sales returns, discounts and allowances and cost of goods sold. Cost of goods sold includes expenses directly incurred to produce merchandise for trading or manufacturing concerns and for service providers gross receipts less sales returns, allowances and discounts.
A minimum corporate income tax of two percent (2%) of gross income is imposed on domestic corporations beginning on the fourth taxable year immediately following the commencement of business operations when the minimum tax exceeds the normal income tax.
Dividends received by a domestic corporation from another domestic corporation are not subject to tax under this Section.
A value-added tax equivalent to ten percent (10%) of the gross selling price or gross value in money of goods or properties sold is imposed starting July 1, 2005.
The VAT rate may be raised to twelve percent (12%) if the VAT collection as a percentage of GDP of the previous year exceeds 2.8% or the national government deficit as a percentage of GDP of the previous year exceeds 1.5%.
Zero percent VAT applies to export sales, foreign currency denominated sales, sales to exempt persons under special laws or international agreements, sales to international shipping or air transport, and certain other services as defined in the law.
Taxpayers must provide sufficient evidence such as official receipts or other adequate records to substantiate the amount of the expense and its direct connection or relation to the conduct of trade, business, or profession.
No, payments constituting bribes or kickbacks made to government officials, employees, or representatives of foreign governments or private entities are not deductible.
The interest income derived by a domestic corporation from depository systems under the expanded foreign currency deposit system is subject to a final income tax at the rate of seven and one-half percent (7.5%).
Any person engaged in business whose gross sales or receipts exceed P1,500,000 in the past 12 months or is reasonably expected to exceed this amount must register for VAT with the Revenue District Office having jurisdiction over their head office or branch.
International carriers operating in the Philippines shall pay a tax of two and one-half percent (2.5%) on their Gross Philippine Billings.
Exempt transactions include sale or importation of agricultural and marine products in original state, fertilizers, certain personal effects, educational services, medical services, services rendered by individuals under employer-employee relationships, and specified cooperative sales, among others.
VAT-registered persons with zero-rated or exempt sales may apply for a tax credit certificate or refund of their input VAT within two years after the taxable quarter in which sales were made, subject to documentation and BSP accounting rules for foreign currency transactions.