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A domestic corporation is subject to tax on its worldwide income. On the other hand, a foreign
corporation is subject to tax only on income from Philippine sources.
Domestic corporations
The following corporate income tax (CIT) rates apply to domestic corporations:
Income CIT rate (%)
Minimum corporate income tax (MCIT) on gross income, beginning in the fourth
taxable year following the year of commencement of business operations. MCIT 2
is imposed where the CIT at 30% is less than 2% MCIT on gross income.
Certain passive income from domestic sources is subject to final tax rather than ordinary income
tax.
Interest income from foreign currency loans granted to residents other than
10
offshore business units (OBUs) or local commercial banks
Income of OBUs and foreign currency deposit units (FCDUs) of depository banks
from foreign currency transactions with non-residents, other OBUs or FCDUs,
and local commercial banks (including branches of foreign banks) authorized by Exempt
the Bangko Sentral ng Pilipinas (BSP; central bank) to transact business with
OBUs and FCDUs
The following corporate tax rates apply to non-resident foreign corporations with respect to
gross income derived from sources within the Philippines:
Lower rates or exemption on the above income may be available under an applicable tax treaty.