4.

Corporate Taxpayer
TAX ON CORPORATIONS
Itemized
Income Taxpayer Tax Rates Exemptions OSD Inter-Corporate Dividend MCIT IAET BPRT
Deductions
Personal Additional
50K 25K
1. Normal Corporate Income Tax (NCIT) = 30% on the taxable income

GEN RULE: 10%

1. Domestic Corporations (DC)
-W/N and W/O
2. MCIT = 2% Gross Income
Exp: IAET shall NOT apply to:
EXCEPT: income exempt from income tax and income subject to Final Withholding Tax (FWT)
1. Publicly-held Corporations
2. Banks and other non bank financial
3. 15% of Gross Income if the following conditions are met: (as of 2018 NOT YET IMPLEMENTED)
intermediaries (leasing, factoring, and
a) tax effort ratio of 20% of Gross National Product (GNP) YES if taxed
b) ratio of 40% of Income Tax collection to total tax revenues
YES if taxed venture capital companies, pension funds,
under NCIT. insurance companies, and mutual funds)
c) VAT tax effort of 4% of GNP; and NOT APPLICABLE TO under NCIT. 2% of Gross Income
d) 0.9% ratio of the Consolidated Public Sector Financial Position to GNP (this last one has yet to be implemented)
Otherwise, EXEMPT 3. Insurance Companies N/A
CORPORATE TAXPAYERS Otherwise, (p94 Ingles) 4. Taxable Partnerships
NOTE: Option to be taxed based on Gross Income shall be available only to firms whose ratio of cost of sales to gross sales or receipts from all sources does not exceed NO
55%.
NO 5. General Professional Partnerships
[p191] Dividends received 6. Non Taxable Joint Ventures
7. Enterprises registered with Philippine
4. Capital Gains Tax by a DC or RFC from
Economic Zone Authority (PEZA), Bases
another DC are Conversion and Development Authority
5. Final Tax on Passive Income (same rules as that of Individuals)
EXEMPT since the (BCDA), or other special economic zones.

6. IAET - 10% on Improperly Accumulated Taxable Income (in addition to other taxes) law assumes that
the dividends
1. Normal Corporate Income Tax (NCIT) = 30% on the taxable income received will be
injected to the
2. MCIT = 2% Gross Income
EXCEPT: income exempt from income tax and income subject to Final Withholding Tax (FWT)
CAPITAL which will 15% based on the
eventually be taxed total profits applied
3. 15% of Gross Income if the following conditions are met: (as of 2018 NOT YET IMPLEMENTED) when the or earmarked for
a) tax effort ratio of 20% of Gross National Product (GNP)
b) ratio of 40% of Income Tax collection to total tax revenues
YES if taxed YES if taxed corporation gets 2% of Gross Income remittance without
2. Resident Foreign Corporation
c) VAT tax effort of 4% of GNP; and NOT APPLICABLE TO under NCIT. under NCIT. income from the (p95 Ingles for list any deduction for
(RFC) p96 N/A
d) 0.9% ratio of the Consolidated Public Sector Financial Position to GNP (this last one has yet to be implemented) CORPORATE TAXPAYERS Otherwise, Otherwise, use of such capital. of RFCs that are the tax component
- W/N only NOTE: Option to be taxed based on Gross Income shall be available only to firms whose ratio of cost of sales to gross sales or receipts from all sources does not exceed
55%.
NO NO EXEMPT from MCIT) thereof [except
those registered
4. Capital Gains Tax with PEZA](P103
5. Final Tax on Passive Income (same rules as that of Individuals)
Ingles)

6. Branch Profit Remitance Tax (BPRT): 15% of total profit applied or earmarked for remittance without any deduction for tax component thereof

1. 30% Final Tax on Gross Income

3. Non-Resident Foreign 15% - With Tax
NOT APPLICABLE TO
Corporation (NRFC) p 105 2. Capital Gains Tax on Sale or Disposition of Shares of Stock N/A N/A Sparing; 30% - N/A N/A N/A
Except CGT on Sale or Disposition of Real Property CORPORATE TAXPAYERS
- W/N only Without Tax Sparing
(NRFC Cannot acquire Real Property)

IAET: The provision discouraged tax avoidance through corporate surplus accumulation. When corporations do not declare dividends, income taxes are not paid on the undeclared
dividends received by the shareholders. The tax on improper accumulation of surplus is essentially a penalty tax designed to compel corporations to distribute earnings so that the said
earnings by shareholders could, in turn, be taxed. p113