INCOME TAX: CHAPTER 3 Flashcards
*WHAT ARE THE 3 CLASSIFICATIONS OF TAX PAYERS (Other than Individuals)?**
- Corporation
- General Professional Partnership
- Estates and Trusts
What are the 2 Corporations?
Domestic Corporation
Foreign Corporation
What are the 5 sub of Domestic Corporations? And 2 sub of Foreign Corporations?
Domestic Corporation
- Domestic Corporation, in general, including One Person Corporation
- Government owned and controlled Corporations
- Taxable Partnerships
- Proprietary Educational Institutions
- Non-profit hospitals
Foreign Corporations
- Resident
- Non-resident
Per Republic Act 9856 and Revenue Regulations 13-2011, REIT is a stock corporation established in accordance with the Corporation Code of the Philippines and the rules and regulations promulgated by the SEC, principally for the purpose of owning income- generating real estate assets. For tax purposes, a REIT is considered a taxpayer engaged in the real estate business. Hence, real properties owned by a REIT are considered ordinary assets.
Real Estate Investment Trust (REIT)
_____ means real property which is held for the purpose of generating a regular stream of income such as rentals, toll fees, user’s fees and the like, as may be further defined and identified by the SEC
Income-generating real estate
______ mean shares of stock issued by a REIT or derivatives thereof.
Investor securities
_____ refers to an individual citizen of the Philippines who is working abroad, including one who has retained or reacquired his Philippine citizenship under R. A. 9225
Overseas Filipino investor
______ means a stockholder who is, directly or indirectly, the beneficial owner of more than 10% of any class of investor securities of the REIT combined.
Principal stockholder
______ means a company listed with the Exchange and which, upon and after listing. have at least 1,000 public shareholders each owning at least 50 shares of any class and who, in the aggregate, own at least one-third (1/3) of the outstanding capital stock of the REIT. (Rev. Reg. 3-2020 amending Rev. Reg. 11-2019).
Public company
____ means net income earned for the taxable year, as adjusted for unrealized gains and losses/expenses and impairment losses and other items in accordance with Internationally accepted accounting standards. Distributable income excludes proceeds from the sale of the REIT’s assets that are re-invested in the REIT within 1 year from the date of the sale.
Distributable income
A REIT’s ________ means gross income less all allowable deductions (itemized or optional standard deductions) and the dividends distributed by a REIT out of its distributable income as of the end of the taxable year as: (a) dividends to owners of the common shares, and (b) dividends to owners of the preferred shares pursuant to their rights and limitations specified in the articles of incorporation of the REIT
taxable net income
A REIT shall be taxable on all income derived from sources within and without the Philippines at the applicable income tax rate of 30% as provided under Sec. 27(A) of the NIRC on its taxable net Income as defined in these Regulations. Provided, that in no case shall a REIT be subject to a minimum corporate income tax, as provided under Sec
Income Taxation of REIT
Government owned or controlled Corporations, Agencies or Instrumentalities
The following are Exempt:
- Government Service Insurance System (GSIS)
- Social Security System (SSS)
- Local Water Districts (LWD)
- Philippine Health and Insurance Corporation (PHID)
- Home Development Mutual Fund (HPMF)
Classified PAGCOR’s income into two:
- Income from gaming operations
- Income from other related services
Income from Gaming Operations Include: (4)
- Income from its casino operations
- Income from dollar pit operations
- Income from bingo operations, including all variations thereof
- Income from mobile bingo operations operated by it, with agents on commission basis.
PAGCOR’s income from other related services: (8)
- Regulatory/license fees from license private casinos
2.
Refer to any private schools (“which are non-profit; this provision has been removed, see footnote), maintained and administered by private individuals or groups, with an issued permit to operate from the Department of Education (DepEd) or the Commission on Higher Education (CHED) or the Technical Education and Skills Development Authority (TESDA), as the case may be, under existing laws and regulations.
Proprietary Educational Institutions.
Refer to any private hospitals, which are non-profit for the purpose of these Regulations, maintained and administered by private individuals or groups.
Hospitals Which Are Non-Profit.
___are those institutions mentioned in the first paragraph of Section 4(3), Article XIV of the 1987 Constitution and Section 30 (H) of the NIRC, as amended, whose revenues and assets that are used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties
Non-Stock, Non-Profit (NSNP) Educational Institutions
____ as used in the definition of NSNP Educational Institutions and Proprietary Hospitals, means that no net income or asset accrues to or benefits any member or specific person, with all the net income or assets devoted to the institution’s purposes and all its activities conducted not for profit.
Non-Profit
Means any trade, business, or other activity, the conduct of which is not substantially related to the exercise or performance by such educational institution or hospital of its primary purpose or function.
Unrelated Trade, Business or Other Activity
is no longer exempt from income tax under TRAIN.
Philippine Charity Sweepstakes Office (PCSO)
_____ is the online and/or remote or off-site wagering/betting on live cockfighting matches, events, and/or activities streamed or broadcasted live from cockpit arena/s licensed or authorized by the Local Government Units having jurisdiction thereof. The e-Sabong fights are being streamed live online and bettors can place their bet through different agents that use different platforms. The bettor must be a member of a certain platform under an agent in order to watch and place bets.
Electronic Sabong or e-Sabong
These companies are now subject to the regular corporate income tax rates.
Mutual Life Insurance Companies
Association or condominium dues, membership fees and other assessments or charges, which are held in trust by the condominium corporation to be used solely for administrative expenses, are excluded from the condominium corporation’s gross income, hence, not subject to income and withholding tax (Officemetro Philippines, Inc. vs. Commissioner of Internal Revenue, Court of Tax Appeals (Third Division) Case 8382, June 3, 2014
Homeowners’ Association
____ clarifies the taxability of clubs organized and operated exclusively for pleasure, recreation, and other non-profit purposes. Income from whatever source, including but not limited to membership fees, assessment dues, rental income and service fees, of clubs organized and operated exclusively for pleasure, recreation, and other non-profit purposes, are subject to income tax.
Recreational Clubs
Republic Act 11590, signed into law on Sept. 22, 2021 by Pres. Rodrigo R. Duterte, is an act taxing _____ amending for the purpose Sections 22, 25, 27, 28, 106, 108 and adding new sections 125-A and 288(G) of the National Internal Revenue Code (NIRC) of 1997, as amended, and for other purposes. Revenue Regulations 20-2021, issued Nov. 26, 2021, implements R.A. 11590.
Philippine Offshore Gaming Operations (POGO)
____ refers to any natural person regardless of citizenship or residence, or juridical person regardless of place of organization, which provides ancillary services to an Offshore Gaming Licensee (OGL) or any other offshore gaming operator with license acquired from other jurisdictions. Such ancillary service may include, but shall not be limited to customer and technical relations and support, information technology, gaming software, data provision, payment solutions, and live studio and streaming services.
Accredited Service Provider
___ means gross wagers less payouts.
Gross Gaming Revenue or Receipts (GGR)
________ refers to the amount that is derived after dividing the minimum monthly fee or its equivalent, as imposed by a Philippine Offshore Gaming Operation (POGO) Licensing Authority, by the rate of prescribed regulatory fee.
Agreed Pre-Determined Minimum Monthly Revenue from Gaming Operations
____ refer to the total amount of money that offshore gaming customers wager.
Gross Wagers
refers to income or earnings realized or derived from operating online games of chance or sporting events via the internet using a network and software or program
Income from Gaming Operations
____ refers to any other income or earnings realized or derived within the Philippines by Foreign-based OGLs, and all other income or earnings realized or derived by Philippine-based OGLs that are not classified as income from gaming operations.
Income from Non-Gaming Operations
refers to an offshore gaming operator, whether organized in the Philippines (Philippine-based) or abroad (Offshore or Foreign-based), duly licensed and authorized through a gaming license issued by a POGO Licensing Authority to conduct offshore gaming operations, including the acceptance of bets from offshore customers
Offshore Gaming Licensee (OGL)
refers to a representative in the Philippines of a Foreign-based OGL who shall act as a resident agent for the mere purpose of receiving summons, notices and other legal processes for the OGL and to comply with the disclosure requirements of the Securities and Exchange Commission (SEC)
OGL-Gaming Agent
refer to the total amount paid out to offshore gaming customers for winning.
Payouts
refers to the operation by an OGL of online games of chance or sporting events via the internet using a network and software or program, exclusively for offshore customers/players who are non-Filipinos.
Philippine Offshore Gaming Operation (POGO)
___ refers to Philippine Amusement and Gaming Corporation (PAGCOR) or any special economic zone authority, tourism zone authority or freeport authority authorized by their respective charters to issue gaming licenses and accreditation to POGO entities
POGO Licensing Authority
____ refers to a consultant or entity engaged by a POGO Licensing Authority to determine the GGR of OGLs. The _____ should be independent, reputable. internationally known, and duly accredited as such by an accrediting or similar agency recognized by industry experts.
Third-Party Auditor
