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2-23. BLT 2(2018)-C (LEC) Income and Business Taxation > March 18 & 21 > Flashcards

March 18 & 21 Flashcards

1
Q

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.

A

Corporation

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2
Q

Created or organized under PH law

A

Domestic

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3
Q

Classifications of Income Taxpayers

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

Sources of Income

A

Corporation Within PH Without PH
Domestic Yes Yes
Foreign Yes No

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5
Q

Categories of Income and Tax Rates

Domestic Corporation
- In general

A

25%

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6
Q

Categories of Income and Tax Rates

Domestic Corporation
- Minimum Corporate Income Tax

A

1%

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7
Q

Categories of Income and Tax Rates

Domestic Corporation
- Improperly Accumulated Earnings

A

10%

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8
Q

Categories of Income and Tax Rates

Domestic Corporation
- Proprietary Educational Institutions

A

(1%)

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9
Q

Categories of Income and Tax Rates

Foreign Corporation
- Proprietary Educational Institutions (Taxable Income)

A

10%

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10
Q

Categories of Income and Tax Rates

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

A

15%

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11
Q

Categories of Income and Tax Rates

Domestic Corporation
- Corporation covered by Special Laws

A

Rate specified under the respective special laws

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12
Q

Categories of Income and Tax Rates

Domestic Corporation
- Hospitals which are Non-Profit

A

1%

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13
Q

Categories of Income and Tax Rates

Domestic Corporation
- GOCC, Agencies & Instrumentalities

A

(25% & 1%)

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14
Q

Categories of Income and Tax Rates

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

A

25% & 1%

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15
Q

Categories of Income and Tax Rates

Domestic Corporation
- Taxable Partnership

A

(1% & 25%)

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16
Q

Categories of Income and Tax Rates

Domestic Corporation
- Exempt Corporation (On exempt activities)

A

0%

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17
Q

Categories of Income and Tax Rates

Domestic Corporation
- Exempt Corporation (On taxable activities)

A

25%

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18
Q

Categories of Income and Tax Rates

Domestic Corporation
- General Professional Partnerships

A

Exempt

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19
Q

Categories of Income and Tax Rates

Domestic Corporation
- Corporation covered by Special Laws

A

Rate specified under the respective special laws

20
Q

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.

A

(20%)

21
Q

Categories of Income and Tax Rates

Foreign Corporation
- International Carriers

A

2.50%

22
Q

Categories of Income and Tax Rates

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

A

25%

23
Q

Categories of Income and Tax Rates

Non-Resident Foreign Corporations
- Reinsurance premiums

A

Exempt

24
Q

Categories of Income and Tax Rates

Non-Resident Foreign Corporations
- Interest on foreign loans

A

20%

25
Q

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

A

4.5%

26
Q

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

A

7.5%

27
Q

Passive Income - Domestic

a. Interests from deposits and Yield

A

(20%)

28
Q

Passive Income - Domestic

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

A

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

29
Q

Passive Income - Domestic

Income

A

10%

30
Q

Passive Income - Domestic

Royalties

A

20%

31
Q

Passive Income - Domestic

a. Under Train Law
- Dividends received from a domestic corp.

A

(Exempt)

32
Q

Passive Income - Domestic

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

A

Exempt

33
Q

Passive Income - Domestic

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

A

(Exempt)

34
Q

Passive Income - Domestic

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

A

Exempt under certain conditions

35
Q

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

A

15%

36
Q

Passive Income - Domestic

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

A

6%

37
Q

Allowable Deductions

Start-up expenses
- Interest Expense

A

20%

38
Q

Allowable Deductions

Start-up expenses
- Under CREATE Law

A

33%

39
Q

Allowable Deductions

Special Deductions

A

50% (under CREATE Law)

40
Q

Allowable Deductions

A
  1. Start-up expenses
  2. Special Deductions
  3. Interest Penalties
  4. Royalties
  5. Head office expenses
41
Q

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.

A

False

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

42
Q

is the pertinent items of gross income less authorized deductions

A

Taxable Income

43
Q

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

A

Taxable Income

44
Q

Formula of Getting Tax Base

A

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

45
Q

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

A

MCIT

2-23. BLT 2(2018)-C (LEC) Income and Business Taxation (5 decks)

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