Tax on Corporations

Question 1

What are the Income tax Liabilities of a Corporation?

Answer 1

Normal or Basic Tax
Minimum Corporate income tax

Question 2

What are the factors that influence the amount of normal or basic income tax for a corp?

Answer 2

Tax Base
Tax Rate

Question 3

What are the tax rates of a domestic corporation?

Answer 3

30% if pre July 2020
25% if Post July 1 2020
20% if NTI <= 5m AND total assets <= 100m

Question 4

What is a minimum corporate income tax?

Answer 4

An income tax of 2 or 1% of the gross income as of the end of the taxable year imposed on both domestic and resident foreign corps

2% if pre July 2020
1% if pre July 2023
2% if post July 1 2023

(Gross income is Gross sales - COGS only, exclude allowable deductions) (Remember to add other sources of income) x 2%

Question 5

What are the rules in the applicability of MCIT

Answer 5

1. Applicable starting the fourth year of business operation
2. Applicable even if corporation incurs loss
3. Only applicable to ordinary domestic and RF corporations
4. Compute the tax liability based on gross income
5. Starting after the 4th year, the corporate income liability shall be based on RCIT or MCIT whichever is higher
6. Excess of MCIT over NCIT is creditable (Tax Credit for 3 years)