Income Tax On Corporations Flashcards
Corporation Code is under BP Blg.?
68
For the income tax purposes, “Corporation” shall include:
- Partnerships, no matter how created or organized
- Joint Stock Companies
- Joint Accounts
- Associations
- Insurance Companies
- One Person Corporations (Create Law)
Except:
GPP
Joint Venture or Consortium formed as:
a. Purpose of undrtaking construction projects
b. Engaging in petroleum, coal, geothermal and other energy operations PURSUANT to an operating or consortium agreement underba service contracts with government
Classification of Corporations
- Domestic Corporation - created and organized under the law of PH
- Foreign Corporations - created and organized under foreign laws:
a. Resident - with Permanent establishment/branch in PH acquiring residency for tax purposes
b. Non resident- no permanent establishment in the PH, not regularly engaged in trade or business in the PH (earnings thru passive income)
Please provide the tax base for the ff Corpos:
Domestic Corpo
Resident Foreign Corpo
Non Resident Foreign Corpo
Domestic Corpo - Taxable Income from sources within and outside
Resident Foreign Corpo - Taxable Income from sources Within only
Non Resident Foreign Corpo - GROSS SALES/RECEIPTS from sources Within only
Regular Corporate Income Tax (RCIT) Rate?
Income Tax Rate, RCIT or Normal CorporatE Income Tax is 25% beginning JULY 1 2020 UNDER THE CREATE LAW. FOR DOMETIC OR FOREIGN
20% Will apply to a DOMESTIC corporation with:
a. Net Taxable Income not exceeding 5M; AND,
b. Total Assets (excluding land) not exceeding 100M
Corpo Tax
Format in the ITR
Must remember
Net Sales/Revenues/Receipts
Less:COGS/COS
=GI from Operation
Add: Other Taxable Income
=Total GI (MCIT 1%)
Less: Itemized Deductions / OSD
=Taxable Income (RCIT 25%)
*Due which ever is higher
*But REMEMBER that MCIT is only applicable for entities 4th year of operations
Corpo Tax
What is MCIT and Rate?
Minimum Corporate Income Tax (MCIT) - 1%
*Applicable only after 4 years of operation
*Does not apply to non-resident foreign Corpo
*If applicable, still which ever is higher between RCIT
*Also, there were corpos that are not subject to MCIT:
1. Educational Institutions
2. Non profit hospitals
3. Depository Banks under FCDUs
4. Offshore banking units
5. International Carriers
6. And others
Prize received by Domestic Corpo amounting to 100k is subject to?
RCIT
CHALLENGE LANG DITO SA CORPO MGA FWT RATES
So better proceed to Pinnacle GSheets
Oks
Excess MCIT Carry Over
Explain and its entry
*Any excess of MCIT ober RCIT shall be carried forward and credited against RCIT for the 3 IMMEDIATELY SUCCEEDING TAXABLE YEARS. Hence, expired pag lagpas.
*In the period it is to be credited, the RCIT should be higher than the MCIT.
*Accounting Entry for excess MCIT carry over (MCIT>RCIT):
Dr. Income Tax Expense (RCIT)
Dr. Deffered Charge - MCIT Carry over (difference- Asset!)
Cr. Income Tax Payable/Cash
*Differed Charge ay creditable against RCIT sa next 3 years pag mataas RCIT
Proprietary educational institutions and hospitals that are non-profit, on net income if gross income from unrelated trade, business, and other activities does not exceed 50% of the total gross income from all sources
Tax Rate?
10 (1% from 1 July 2020 to 30 June 2023)
RCIT - if income from unrelated business exceeds 50%
Non-stock, non-profit educational institutions (all assets and revenues used actually, directly, and exclusively for educational purposes) and other non-profit organisations
Tax Rate?
Exempt
Propreitary Educational Institution means?
Private School
Corpo
Si NRFC usually ang na eearn nya ay?
Passive Incomes
So ang Diskarte lang sa Corpo ay:
- Identify type of Corpo
- If DC, compute if allowed sa 20%
- Always compute MCIT! Lalo if silent. Implied na yan
