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FORMULA:
Resident Foreign Corporations – Ordinary Corporations
The income taxes applicable to ordinary domestic corporations upon generation of income are the same with resident foreign
corporations, except:
a) The general principles as to source of taxable income must be considered; and
b) Sale of land and/ or buildings is not subject to capital gains tax BUT basic income tax.
c) RESIDENT FOREIGN CORPORATIONS EXEMPT FROM MCIT:
i. International carrier
ii. Offshore banking units
iii. Regional or area headquarters
iv. Regional operating headquarters
v. Firms that are taxed under special tax regime (e.g. Covered by PEZA law & Bases Conversion Development Act)
NOTE:
1) Tickets revalidated, exchanged and/or indorsed to another international airline form part of the GPB if a
passenger boards a plane in a port or point in the Philippines.
2) Flight which originates from the Philippines, but transshipment of passenger takes place at any port outside
the Philippines on another airline, only the aliquot portion of the cost of the ticket corresponding to the leg
flown from the Philippines to the point of transshipment shall form part of the GPB.
b) International Shipping – means gross revenue whether for passenger, cargo or mail originating from the
Philippines up to final destination, regardless of the place of sale or payments of the passage or freight
documents.
NOTE: • If OBU’s earn income other than from foreign currency transactions, it will be subject to basic income tax
(RCIT vs. MCIT, whichever is higher). • Any Income derived by nonresidents (individuals or corporations) from
transactions with OBUs shall not be subject to income tax.
REGIONAL OR AREA HEADQUARTERS
Regional or area headquarters shall not be subject to income tax.