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For income tax purposes the term corporation includes not only corporations but also: partnerships,
joint stock companies, joint accounts and associations or insurance companies.
Types of Corporation
Classification of Corporations
Taxability of Corporations
Passive Income
15% final tax rate on interest income from depository bank under the expanded foreign currency
deposit system.
The following are the important points to be considered in the imposition of MCIT.
Note: Any excess of the MCIT over the normal income tax shall be carried forward and credited against
the normal income tax for three (3) immediately succeeding taxable years.
In the filing of quarterly income tax return for the taxable quarter, the computation of the MCIT shall be
done on a cumulative basis covering not only the current taxable quarter but also the previous taxable
quarters of the same taxable years. The computed MCIT shall be compared with the cumulative normal
income tax, whereupon the higher amount between the two shall be the basis of the quarterly income
tax payment to be made for the said taxable quarter.
In the payment of the said quarterly MCIT, excess MCIT from the previous taxable year/s shall not be
allowed to be credited. Expanded withholding tax, quarterly corporate income tax payments under the
normal income tax, and the MCIT paid in the previous taxable quarter/s are allowed to be applied
against the quarterly MCIT.
The Secretary of Finance is authorized to suspend the imposition of MCIT on any corporation which
suffer losses on the account of:
EXCEPTIONS TO MCIT
I Domestic Corporation
In lieu of the itemized standard deductions that may be claimed by the domestic and resident foreign
corporation, such corporation may elect a standard deduction equivalent to 40% of their gross income.
Except those:
SPECIAL CORPORATIONS
A) Domestic Corporations
1) Proprietary Educational institutions and Non Profit Hospitals
A proprietary educational institution is any private school maintained and operated by private
individual or groups with an issued permit from DECS, CHED AND TESDA as the case maybe in
accordance with existing laws and regulations.
It shall pay a tax of 10% of their taxable income, however if the gross unrelated income exceeds
50% of the total income derived by the educational institution and hospitals then the regular
rate imposed on corporations will be applied.
GOCCs shall pay such tax rate upon their taxable income similar to association/corporation
engaged in similar business except SSS, GSIS, Phil Health and Local Water Districts.
1) International Carrier
An international carrier doing business in the Philippines will be taxed 2.5% on its Gross
Philippine Billing.
Gross Philippine Billings refers to the amount of gross revenue derived from carriage of persons,
excess baggage and cargo and mail originating from the Philippines in a continuous and
uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the
ticket or passage document. Exemption may be a vailed of an international carrier if there is an
applicable tax treaty or an international agreement to which the Philippines is a signatory, or on
the basis of reciprocity.
3) 15% final withholding tax of any profit remitted by the Philippine branch of a foreign
corporation to its head office based on total profit applied or earmarked except those
registered with PEZA, SBMA, CDA and other companies within the special economic zones.
4) Regional or area headquarters not subject to tax.
5) Regional operating headquarters shall pay a tax of 10% of their taxable income.
Subject to a tax of 25% of gross income from all sources within the Philippines.
Subject to a tax of 4.5% of gross rentals, lease or charter fees from leases or charters to Filipino
citizens or corporation, as approved by the Maritime Industry Authority.
1) A final tax of 15% shall be imposed on net capital gains from the sale, barter exchange or
disposition of shares of stocks in a domestic corporation. This is applicable only to shares of
stock not traded in the stock exchanged.
2) A final withholding tax of 20 % on interest on foreign loans contracted on before August 1,
1986.
A tax equivalent to 10% on improperly accumulated taxable income shall be imposed every year
to every corporation by permitting earnings and profit to accumulate instead of being divided or
distributed. IAET and is imposed on domestic corporations and which are classified as closely held
corporations except: