QuestionsQuestions (Republic Act No. 9337)
The general income tax rate is 35% on taxable income; however, effective January 1, 2009, the rate becomes 30%.
Taxable income is computed without regard to the specific dates of transactions; income and expenses for the fiscal year are deemed earned/spent equally for each month, then the corporate income tax rate is applied by multiplying the number of months covered by the new rate by the taxable income, divided by 12.
The President, upon recommendation of the Secretary of Finance, may allow the option effective January 1, 2000 if: (1) tax effort ratio is 20% of GNP; (2) ratio of income tax collection to total tax revenues is 40%; (3) VAT tax effort is 4% of GNP; and (4) CPSFP-to-GNP ratio is 0.9%—plus the firm’s cost of sales to gross sales/receipts does not exceed 55%.
Election is irrevocable for three (3) consecutive taxable years during which the corporation is qualified under the scheme.
It is equivalent to gross sales less sales returns, discounts and allowances and cost of goods sold; for services, “gross income” means gross receipts less sales returns, allowances and discounts.
A 10% tax on taxable income applies to nonprofit proprietary educational institutions and hospitals except those covered by Subsection (D). If gross income from unrelated trade/business/other activity exceeds 50% of total gross income from all sources, the rate under Section 27(A) applies to the entire taxable income.
A final tax of 20% is imposed; however, interest income derived from a depository system is subject to a final tax of 7.5%.
If net capital gains are not over ₱100,000: 5%; and any amount in excess of ₱100,000: 10%.
MCIT is 2% of gross income as of the end of the taxable year, beginning on the 4th taxable year immediately following the year the corporation commenced operations, and applies when MCIT is greater than the normal income tax for the taxable year.
Yes. Any excess of MCIT over normal income tax can be carried forward and credited against the normal income tax for the next three (3) succeeding taxable years.
(a) For trading/merchandising: gross sales less returns/discounts/allowances and cost of goods sold. (b) For service taxpayers: gross receipts less returns/allowances/discounts and cost of services.
Resident foreign corporations are taxed at 35% of taxable income; effective January 1, 2009, the rate is 30%. They may opt for 15% of gross income under the same conditions as Section 27(A) (corporate gross income option).
Dividends received by a resident foreign corporation from a domestic corporation liable to tax shall not be subject to tax under the Title (intercorporate dividend exemption).
Any profit remitted by a branch to its head office is taxed at 15% based on total profits applied/earmarked for remittance, without deduction for the tax component (except activities registered with PEZA). Collection and payment follow Sections 57 and 58 of the Code.
A final tax of 20% on interest from Philippine sources; for interest derived from a depository bank under the expanded foreign currency deposit system, the final tax rate is 7.5%.
No deduction is allowed unless the taxpayer substantiates with sufficient evidence (e.g., official receipts or adequate records) of (i) the amount of the expense and (ii) the direct connection/relation of the expense to the taxpayer’s trade/business/profession.
The initial rate is 10% for sales of goods (Sec. 106), importation of goods (Sec. 107), and sale of services/use or lease of properties (Sec. 108). The President may raise it to 12% effective January 1, 2006 after conditions are met: (i) VAT collection as % of GDP exceeds 2.4/5%; or (ii) NG deficit as % of GDP exceeds 1.5%.
Export sales generally require sale and actual shipment of goods from the Philippines to a foreign country, paid for in acceptable foreign currency and accounted for per BSP rules. It matters because sales to VAT-registered persons are subject to a 0% rate for VAT purposes.
A VAT-registered person may apply within two (2) years after the close of the taxable quarter when the sales were made.