CHAPTER 5 Flashcards
T/F
The term corporation shall include one person corporations.
True
The term corporation shall include one person corporations, partnership, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), associations, or insurance companies, but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal energy and other energy operations pursuant to an operating consortium agreement under a service contract with the Government.
T/F
The term “domestic”, when applied to a corporation, means corporations created or organized under the laws of the Philippines.
True
*Domestic corporations are corporations created o incorporated in the Philippines or under its laws.
*A domestic corporation is a corporation that is created or organised under Philippine laws. A foreign corporation that is duly licensed to engage in trade or business within the Philippines is referred to as a ‘resident foreign corporation’.
T/F
A corporation which is not domestic may be a resident (engaged in business in the Philippines) or non-resident corporation (not engaged in business in the Philippines)
True
A foreign corporation is a corporation organized or incorporated by a foreign law. A foreign corporation may be a resident (engaged in business in the Philippines) or nonresident (not engaged in business in the Philippines).
A resident foreign corporation is not created or incorporated under Philippine laws. It only secures from the Securities and Exchange Commission (SEC) a license to operate in the Philippines.
T/F
Resident foreign corporations are subject to income tax based on net income from sources within the Philippines only.
True
*Domestic corporations are taxable on their income derived within and without the Philippines, while foreign corporations (resident and non-resident) are taxable only on their income derived from the Philippine sources.
*Domestic Corporations and resident foreign corporation are taxable base on net income
*nonresident foreign corporations are based on gross income
T/F
Associations and mutual fund companies, for income tax purposes, are excluded in the definitions of corporations.
False
The term corporation shall include one person corporations, partnership, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), associations, or insurance companies, but does not include general professional partnerships and a joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal energy and other energy operations pursuant to an operating consortium agreement under a service contract with the Government.
T/F
A minimum corporate income tax (MICT) based on gross income is imposed upon any domestic and resident corporation beginning on the 4th taxable year immediately following the taxable year in which such corporation commenced its business operations.
True
A minimum corporate income tax (MCIT) of 2% of gross income as of the end of the taxable year is imposed upon any domestic corporation beginning the 4th taxable year immediately following the taxable year in which such corporation commenced its business operations.
T/F
MICT shall be imposed whenever such corporation has zero or negative taxable income, or when the amount of MICT is greater than normal income tax due from such corporation.
True
MICT shall be imposed whenever such corporation has zero or negative taxable income, or whenever the amount of MICT is greater than normal income tax due from such corporation. Hence, MICT is always computed and compared to RCIT starting on the fourth year of opeartions.
T/F
The computation and the payment of MICT shall likewise apply at the time of filing the quarterly corporate income tax.
True
The computation and the payment of MICT shall likewise apply at the time of filing the quarterly corporate income tax as prescribed under Section 75 and Section 77 of the Tax Code, as amended.
Thus, in the computation of the tax due for the taxable quarter, if the computed quarterly MCIT is higher than the quarterly regular income tax, the tax due to be paid for such taxable quarter at the time of filing the quarterly corporate income tax return shall be the MICT based on the gross income as of the end of the taxable quarter.
T/F
Minimum corporate income tax is not applicable to nonresident foreign corporation, special corporations and other types of corporations subject to other tax regime.
True
*Sec. 27 (E) (1) and Sec 28 (2) of the Tax Code, for domestic and resident foreign corporations, respectively as amended by CREATE ACT provide Minimum Corporate Income Tax (MCIT).
*Corporations exempt from MCIT includes: Special Corporations, Domestic corporations engaged in depository banks under the expanded foreign currency deposit unit (FCDUs), and Corporations subject to other Income Tax regime
T/F
Temporary labor dispute is a valid ground for the suspension of MICT.
False
*Under relief from MCIT, the Secretary of Finance is authorized to suspend the imposition of MCIT on any corporation due to:
1. Losses on account of prolonged labor disputes
2. Force Majeure
3. Legitimate business reverses.
* it should be prolonged not temporary
T/F
Corporations exempt from income tax are not subject to income tax on incomes received which are incidental or necessarily connected with the purposes for which they were organized and operating.
True
T/F
Corporations except from income tax are subject to income tax on income of whenever kind and character from any of their properties (real or personal) or from any other activity conducted for profit, regardless of the disposition of such income.
True
T/F
Joint ventures, regardless of the purposes by which they were created, are generally exempt from corporate income tax.
False
Joint ventures are generally taxable as corporation unless it is formed for the purpose of undertaking construction activities.
T/F
The share of a co-venture corporation in the net income of tax-exempt joint venture or consortium is subject to corporate income tax.
True
T/F
The share of a co-venture corporation in the net income of a taxable joint venture or consortium is subject to corporate income tax.
False
the respective share of the joint venture profits is considered as dividend income, and this income is tax exempt.
