March 18 & 21

Question 1

is treated as an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

Answer 1

Corporation

Question 2

Created or organized under PH law

Answer 2

Domestic

Question 3

Classifications of Income Taxpayers

Answer 3

1. Domestic
2. Foreign Corporation
3. General Professional Partnership
4. Estates and Trusts

Question 4

Sources of Income

Answer 4

Corporation Within PH Without PH
Domestic Yes Yes
Foreign Yes No

Question 5

Categories of Income and Tax Rates

Domestic Corporation
- In general

Answer 5

25%

Question 6

Categories of Income and Tax Rates

Domestic Corporation
- Minimum Corporate Income Tax

Answer 6

1%

Question 7

Categories of Income and Tax Rates

Domestic Corporation
- Improperly Accumulated Earnings

Answer 7

10%

Question 8

Categories of Income and Tax Rates

Domestic Corporation
- Proprietary Educational Institutions

Answer 8

(1%)

Question 9

Categories of Income and Tax Rates

Foreign Corporation
- Proprietary Educational Institutions (Taxable Income)

Answer 9

10%

Question 10

Categories of Income and Tax Rates

Foreign Corporation
- Proprietary Educational Institutions (Taxable Income (effective Jan. 1, 2022)

Answer 10

15%

Question 11

Categories of Income and Tax Rates

Domestic Corporation
- Corporation covered by Special Laws

Answer 11

Rate specified under the respective special laws

Question 12

Categories of Income and Tax Rates

Domestic Corporation
- Hospitals which are Non-Profit

Answer 12

1%

Question 13

Categories of Income and Tax Rates

Domestic Corporation
- GOCC, Agencies & Instrumentalities

Answer 13

(25% & 1%)

Question 14

Categories of Income and Tax Rates

Domestic Corporation
- National Government & LGUs (1% & 25%)

Answer 14

25% & 1%

Question 15

Categories of Income and Tax Rates

Domestic Corporation
- Taxable Partnership

Answer 15

(1% & 25%)

Question 16

Categories of Income and Tax Rates

Domestic Corporation
- Exempt Corporation (On exempt activities)

Answer 16

0%

Question 17

Categories of Income and Tax Rates

Domestic Corporation
- Exempt Corporation (On taxable activities)

Answer 17

25%

Question 18

Categories of Income and Tax Rates

Domestic Corporation
- General Professional Partnerships

Answer 18

Exempt

Question 19

Categories of Income and Tax Rates

Domestic Corporation
- Corporation covered by Special Laws

Answer 19

Rate specified under the respective special laws

Question 20

Categories of Income and Tax Rates

Domestic Corporation
- Net Taxable Income not exceeding P5M and total Asset not exceeding P100M excluding the land on which the particular business entity’s office, plant and equipment are situated.

Answer 20

(20%)

Question 21

Categories of Income and Tax Rates

Foreign Corporation
- International Carriers

Answer 21

2.50%

Question 22

Categories of Income and Tax Rates

Non-Resident Foreign Corporations
- Income Tax (in general)

Answer 22

25%

Question 23

Categories of Income and Tax Rates

Non-Resident Foreign Corporations
- Reinsurance premiums

Answer 23

Exempt

Question 24

Categories of Income and Tax Rates

Non-Resident Foreign Corporations
- Interest on foreign loans

Answer 24

20%

Question 25

Categories of Income and Tax Rates Non-Resident Foreign Corporations - Rentals and charter fees payable to non-resident owners of vessels chartered by Philippine nationals

Answer 25

4.5%

Question 26

Categories of Income and Tax Rates Non-Resident Foreign Corporations - Rentals and charter fees derived by non-resident lessors of aircraft, machinery, and other equipment

Answer 26

7.5%

Question 27

Passive Income - Domestic a. Interests from deposits and Yield

Answer 27

(20%)

Question 28

Passive Income - Domestic b. Interests income from a depository bank - Before TRAIN Law - Under TRAIN Law - Under CREATE Act

Answer 28

(7.5%); (15%); (15%)

Question 29

Passive Income - Domestic Income

Answer 29

10%

Question 30

Passive Income - Domestic Royalties

Answer 30

20%

Question 31

Passive Income - Domestic a. Under Train Law - Dividends received from a domestic corp.

Answer 31

(Exempt)

Question 32

Passive Income - Domestic b. Under CREATE Act - Dividends received from a domestic corp

Answer 32

Exempt

Question 33

Passive Income - Domestic b. Under CREATE Act - Dividends received from resident foreign corporation – w/in PH

Answer 33

(Exempt)

Question 34

Passive Income - Domestic b. Under CREATE Act - Dividends received from non-resident foreign corporation – w/out PH

Answer 34

Exempt under certain conditions

Question 35

Passive Income - Domestic Capital Gains a. From sale, exchange or other disposition of shares of stock in a domestic corp. not traded in stock exchange

Answer 35

15%

Question 36

Passive Income - Domestic Capital Gains b. Presumed to have been realized from sale, exchange or other disposition of lands and/or building – capital assets

Answer 36

6%

Question 37

Allowable Deductions Start-up expenses - Interest Expense

Answer 37

20%

Question 38

Allowable Deductions Start-up expenses - Under CREATE Law

Answer 38

33%

Question 39

Allowable Deductions Special Deductions

Answer 39

50% (under CREATE Law)

Question 40

Allowable Deductions

Answer 40

1. Start-up expenses 2. Special Deductions 3. Interest Penalties 4. Royalties 5. Head office expenses

Question 41

True or False Corporate Taxpayers cannot avail themselves of the OSD computed at 40% of gross income. The OSD is in lieu of itemized operating expenses.

Answer 41

False Corporate Taxpayers can avail themselves of the OSD computed at 40% of gross income. The OSD is in lieu of itemized operating expenses.

Question 42

is the pertinent items of gross income less authorized deductions

Answer 42

Taxable Income

Question 43

is the amount or tax base upon which the tax rate is applied to arrive at the tax due.

Answer 43

Taxable Income

Question 44

Formula of Getting Tax Base

Answer 44

Sales/Revenues/Receipts/Fees Less: Cost of Sales/Services Gross Income from Operation Add: Non-operating and taxable income Total Gross Less: Deductions (OSD or Itemized) Taxable Income Multiply by: Tax Rate Tax Due

Question 45

is a means to ensure that businesses earning positive returns do not avoid paying the income tax.

Answer 45

MCIT