Outline ( 2nd) For April 17, 2017 Business Income gross income derived from the conduct of trade

or business or the exercise of a profession.

Taxation of Resident Citizens (RC), Non Resident Citizens (NRC) 2.3. capital gains not subject to final tax
and Resident Aliens (RA) Section 24 Capital Gains from sale of real property are subject to 6% final tax
a. Taxable income according to Sections 31 and 32(A) (1) based on the gross selling price or the current fair MV, whichever is
to (11) higher.
Taxable Income gross income less deductions and/or EXCEPTION: Gains from sale of residence used to build new
personal exemptions. principal residence within 18 months of sale (can avail of exemption
Gross income All income minus exclusions (all income once every 10 years.
subject to tax)
Conwi v. Court of Tax Appeals, GR Nos. 48532 and 48533, 31
Sec 32 (A) (1-11) (STD-IRR-DAPPP)
August 1992.
1. Services
Facts: Petitioners are employees of Procter and Gamble (Philippine
2. Trade/Business Profession
Manufacturing Corporation, subsidiary of Procter & Gamble, a
3. Dealings in Property
foreign corporation).During the years 1970 and 1971, petitioners
4. Interests
were assigned to other subsidiaries of Procter & Gamble outside the
5. Rents
Philippines, for which petitioners were paid US dollars as
6. Royalties
compensation.
7. Dividends
8. Annuities
Petitioners filed their ITRs for 1970 and 1971, computing tax due by
9. Prizes and Winnings
applying the dollar-to-peso conversion based on the floating rate
10. Pensions
under BIR Ruling No. 70-027. In 1973, petitioners filed amened ITRs
11. Partners distributive share from GPP
for 1970 and 1971, this time using the par value of the peso as basis.
1. Graduated rates; final withholding tax passive This resulted in the alleged overpayments, refund and/or tax credit,
income subject to final tax; capital gains tax on for which claims for refund were filed.
capital asset subject to capital gains tax
Graduated Rates - 5-32% CTA held that the proper conversion rate for the purpose of reporting
5% if not over P10,000 and paying the Philippine income tax on the dollar earnings of
32% +125,000 if over P500,000 petitioners are the rates prescribed under Revenue Memorandum
Minimum Wage earners are exempt from tax. Circulars Nos. 7-71 and 41-71. The refund claims were denied.
Final Tax (Sec 24B)
2. Income subject to Regular rate Issues:
2.1. Compensation Income (1) Whether or not petitioners' dollar earnings are receipts derived
Compensation Income all remuneration for services performed by from foreign exchange transactions; NO.
an employee for his employer under an employee-employer
relationship. (includes cash value of all remuneration paid in other (2) Whether or not the proper rate of conversion of petitioners' dollar
mediums than cash. earnings for tax purposes in the prevailing free market rate of
Includes 1. Fees 2. Salaries 3. Wages 4. Commissions 5. Similar exchange and not the par value of the peso; YES.
items.
2.2. business income
Held: For the proper resolution of income tax cases, income may be
defined as an amount of money coming to a person or
corporation within a specified time, whether as payment for
services, interest or profit from investment. Unless otherwise
specified, it means cash or its equivalent. Income can also be though
of as flow of the fruits of one's labor.
DENIED FOR LACK OF MERIT.
GNOTES: The law applicable (old tax code) imposed a income tax
derived from all sources by a citizen, whether or not residing here or
abroad. Today residents and non-residents are taxed differently.

Petitioners are correct as to their claim that their dollar earnings are 2.4 passive income not subject final tax
not receipts derived from foreign exchange transactions. For a EXEMPTION: interest income from long-term deposit or investment
foreign exchange transaction is simply that a transaction in foreign in the form of savings, common or individual trust funds, deposit
exchange, foreign exchange being "the conversion of an amount of substitutes, investment management accounts and other
money or currency of one country into an equivalent amount of investments evidenced by certificates in such form prescribed by the
money or currency of another." When petitioners were assigned to BSP. (Sec 24B1)
the foreign subsidiaries of Procter & Gamble, they were earning in b. Certain Passive Income
their assigned nation's currency and were ALSO spending in said 1. Final tax meaning-
currency. There was no conversion, therefore, from one currency to 2. Interests, royalties, prizes and winnings
another.
Interests -20%
The dollar earnings of petitioners are the fruits of their labors in Royalties (except books and other literary works and
the foreign subsidiaries of Procter & Gamble. It was a definite compositions) 20%
amount of money which came to them within a specified period Royalties on books and other literary works and
of time of two years as payment for their services. compositions 10%
Prizes more than P10,000 20%
And in the implementation for the proper enforcement of the National 2.1. Interest income generated, earned
Internal Revenue Code, Section 338 thereof empowers the from any currency deposit, yield or any
Secretary of Finance to "promulgate all needful rules and monetary benefit from deposit substitutes
regulations" to effectively enforce its provisions pursuant to this and from trust funds and similar
authority, Revenue Memorandum Circular Nos. 7-71 and 41-71 were arrangements derived from sources within
issued to prescribed a uniform rate of exchange from US dollars to the Phils.
Philippine pesos for INTERNAL REVENUE TAX PURPOSES for the 2.1.1 Tax rates RC ,NRC, RA,
years 1970 and 1971, respectively. Said revenue circulars were a NRA-ETB -20%;
valid exercise of the authority given to the Secretary of Finance by NRA_NETB
the Legislature which enacted the Internal Revenue Code. And these 2.2. Interest income from a depository bank
are presumed to be a valid interpretation of said code until revoked under the expanded foreign
by the Secretary of Finance himself. currency deposit system 7.5%
2.2.1. RC, RA ; NRC.
Petitioners are citizens of the Philippines, and their income, 2.2.2. RR14-2012
within or without, and in these cases wholly without, are subject 2.2.3. Meaning of Foreign currency
to income tax. Sec. 21, NIRC, as amended, does not brook any deposit system
exemption. RR No. 10-98
 2.3. Interest income from Long term deposit * The 19-Lender Rule RR. 2012-4 ,
(LTD) or investment in the Section 8
form of :
a. savings Lending company shall refer to a corporation engaged in granting
b. common or individual trust funds loans from its own capital funds or from funds sourced from not more
c. deposit substitutes than nineteen (19) persons. It shall not be deemed to include
d. investment management banking institutions, investment houses, savings and loan
accounts and others. associations, financing companies, pawnshops, insurance
2.3.Final tax rate companies, cooperatives and other credit institutions already
RC, NRC, RA, NRA-ETB ( held for 5 regulated by law. The term lending company shall be synonymous
years or more) Exempt with lending investor.
In case of pre termination
a. 4 years to less than 5 years 5%
b. 3 years to less than 4 years
Banco de Oro v Republic GR No. 198756,
12%
January 13, 2015
c. less than 3 years 20%
CIR v. Solidbank Corporation, GR No. 148191, 25 November 2003.
Facts:
2.4 Deposit Substitute Section 22 (Y)
Solidbank filed its Quarterly Percentage Tax Returns reflecting gross
(Y) The term 'deposit substitutes' shall mean an alternative from of
receipts amounting to P1,474,693.44. It alleged that the total
obtaining funds from the public (the term 'public' means included P350,807,875.15 representing gross receipts from
borrowing from twenty (20) or more individual or corporate passive income which was already subjected to 20%final
lenders at any one time) other than deposits, through the
withholding tax (FWT).
issuance, endorsement, or acceptance of debt instruments for
the borrowers own account, for the purpose of relending or
The Court of Tax Appeals (CTA) held in Asian Ban Corp. v
purchasing of receivables and other obligations, or financing
Commissioner, that the 20% FWT should not form part of its taxable
their own needs or the needs of their agent or dealer. These
gross receipts for purposes of computing the tax.
instruments may include, but need not be limited to bankers'
acceptances, promissory notes, repurchase agreements, including
Solidbank, relying on the strength of this decision, filed with the BIR a
reverse repurchase agreements entered into by and between the
letter-request for the refund or tax credit. It also filed a petition for
Bangko Sentral ng Pilipinas (BSP) and any authorized agent bank,
review with the CTA where the it ordered the refund.
certificates of assignment or participation and similar instruments
with recourse: Provided, however, That debt instruments issued for The CA ruling, however, stated that the 20% FWT did not form part
interbank call loans with maturity of not more than five (5) days to
of the taxable gross receipts because the FWT was not actually
cover deficiency in reserves against deposit liabilities, including those
received by the bank but was directly remitted to the government.
between or among banks and quasi-banks, shall not be considered
as deposit substitute debt instruments. The Commissioner claims that although the FWT was not actually
received by Solidbank, the fact that the amount redounded to the
*Public borrowing borrowing from banks benefit makes it part of the taxable gross receipts in
20 or more individual or computing the Gross Receipts Tax. Solidbank says the CA ruling is
corporate lenders at any one time correct.

Issue:
Whether or not the FWT forms part of the gross receipts tax.
Held:
Yes. In a withholding tax system, the payee is the taxpayer, the
person on whom the tax is imposed. The payor, a separate entity,
acts as no more than an agent of the government for the collection of
tax in order to ensure its payment. This amount that is used to settle
the tax liability is sourced from the proceeds constitutive of the tax
base.
These proceeds are either actual or constructive. Both parties agree
that there is no actual receipt by the bank. What needs to be
determined is if there is constructive receipt. Since the payee is
the real taxpayer, the rule on constructive receipt can be
rationalized.
The Court applied provisions of the Civil Code on actual and
constructive possession. Article 531 of the Civil Code clearly
provides that the acquisition of the right of possession is through the
proper acts and legal formalities established. The withholding
process is one such act. There may not be actual receipt of the
income withheld; however, as provided for in Article 532, possession
by any person without any power shall be considered as acquired
when ratified by the person in whose name the act of possession is
executed.
In our withholding tax system, possession is acquired by the payor
as the withholding agent of the government, because the taxpayer
ratifies the very act of possession for the government. There is thus
constructive receipt.
The processes of bookkeeping and accounting for interest on
deposits and yield on deposit substitutes that are subjected to FWT
are tantamount to delivery, receipt or remittance. Besides, Solidbank
admits that its income is subjected to a tax burden immediately upon
receipt, although it claims that it derives no pecuniary benefit or
advantage through the withholding process.
There being constructive receipt, part of which is withheld, that
income is included as part of the tax base on which the gross
receipts tax is imposed.
GNOTES: Percentage Tax national tax measured by a certain
percentage of the gross selling price or gross value in money of
goods sld, bartered or imported or gross receipts or earnings derived
by a person engaged in the sale of services. It is not subject to
withholding. A gross receipts tax is the privilege of engaging in the
business of banking.
Income tax national tax imposed on the net or gross income
realized in a taxable year. It is subject to withholding. The subject
matter of a FWT is the passive income.
CIR v. Baier-Nickel, GR No. 153793, 29 August 2006.
Facts:
CIR appeals the CA decision, which granted the tax refund of
respondent and reversed that of the CTA. Juliane Baier-Nickel, a
non-resident German, is the president of Jubanitex, a domestic
corporation engaged in the manufacturing, marketing and selling of
embroidered textile products. Through Jubanitexs general manager,
Marina Guzman, the company appointed respondent as commission
agent with 10% sales commission on all sales actually concluded
and collected through her efforts.
In 1995, respondent received P1, 707, 772. 64 as sales commission
from w/c Jubanitex deducted the 10% withholding tax of P170,
777.26 and remitted to BIR. Respondent filed her income tax return
but then claimed a refund from BIR for the P170K, alleging this was
mistakenly withheld by Jubanitex and that her sales commission
income was compensation for services rendered in Germany not
Philippines and thus not taxable here.
She filed a petition for review with CTA for alleged non-action by BIR.
CTA denied her claim but decision was reversed by CA on appeal,
holding that the commission was received as sales agent not as
President and that the source of income arose from marketing
activities in Germany.
Issue: W/N respondent is entitled to refund place where the contract for service is entered into, or the place of
payment, but the place where the services were actually rendered.
Held:
No. Pursuant to Sec 25 of NIRC, non-resident aliens, whether or not China Banking Corporation v. CIR, GR Nos. 146749, 10 June 2003.
engaged in trade or business, are subject to the Philippine income Same issue as solidbank
taxation on their income received from all sources in the Philippines. GNOTES: Ownership is essential in determining whether interest
In determining the meaning of source, the Court resorted to origin income forms part of taxable gross receipts. Here, the amount
of Act 2833 (the first Philippine income tax law), the US Revenue constituting 20% FWT, being originally owned by Chinbank as part of
Law of 1916, as amended in 1917. its interest income should form part of its taxable gross receipts
US SC has said that income may be derived from three possible subject to gross receipts tax.
sources only: (1) capital and/or (2) labor; and/or (3) the sale of capital 2.5. The above rule on interest income only
assets. If the income is from labor, the place where the labor is done applies if the interest income is derived from banks.
should be decisive; if it is done in this country, the income should be If the interest income is derived from a source other
from sources within the United States. If the income is from capital, than a bank the graduated rates of 5% -32% shall
the place where the capital is employed should be decisive; if it is apply
employed in this country, the income should be from sources within 2.6. Interest income must be derived from a
the United States. If the income is from the sale of capital assets, bank located within the Philippines to be
the place where the sale is made should be likewise decisive. considered as passive income subject to final tax.
Source is not a place, it is an activity or property. As such, it has a 2.7. If the bank from which the interest is
situs or location, and if that situs or location is within the United derived is located outside the
States the resulting income is taxable to nonresident aliens and Philippines, the interest income is: RC
foreign corporations. subject to graduated rates of 5%-32%; NRC,
RA, NRA-ETB, - Exempt
The source of an income is the property, activity or service that 2.8. Interest Income derived from any other
produced the income. For the source of income to be debt instruments not within the
considered as coming from the Philippines, it is sufficient that coverage of "deposit substitutes" shall be
the income is derived from activity within the Philippines. subjected to creditable withholding tax of
20% (RR 14-2012)
The settled rule is that tax refunds are in the nature of tax 3. Prizes and Winnings
exemptions and are to be construed strictissimi juris against the 3.1. Final Tax rates
taxpayer. To those therefore, who claim a refund rest the burden of RC, NRC, RA, - Prizes (except 10K
proving that the transaction subjected to tax is actually exempt from or less; subject to
taxation. graduated rates) and
In the instant case, respondent failed to give substantial evidence winnings (regardless of amount) 20%
to prove that she performed the incoming producing service in 4. Cash and/or Property Dividends
Germany, which would have entitled her to a tax exemption for 4.1. Dividend- meaning . (section 73 (A)
income from sources outside the Philippines. Petition granted. (B))
Dividend any distribution made by a corporation to its shareholders
GNOTES: The important factor which determines the source of
out of its earnings or profits and payable to its shareholders, whether
income of personal services is no the residence of the payor, or the
in money or property. (73A)
 4.2. Kinds of Dividend Income
4.2.1. Cash
4.2.2. Stock
A stock dividend representing the transfer of surplus to capital
account shall not be subject to tax. However, if a corporation cancels
or redeems stock issued as a dividend at such time and in such
manner as to make the distribution and cancellation or redemption, in
whole or in part, essentially equivalent to the distribution of a taxable
dividend, the amount so distributed in redemption or cancellation of
the stock shall be considered as taxable income to the extent that it
represents a distribution of earnings or profits. (73B)
FACTS: The Bernabe spouses as sellers and the Torcuator spouses
as buyers entered into a contract to sell over a lot in Ayala Alabang.
The agreement imposed upon the Torcuator spouses to fully pay the
purchase price. They also intended that a residential house be
constructed as a suspensive condition. There was neither actual or
constructive delivery to the Torcuators.
ISSUE: Should capital gains tax be paid? No.
HELD: CGT are imposed on gains presumed to have been realized.
Having declared the contract to be aborted by the Torcuators for
failure to comply with the suspensive conditions, the obligation to pay
taxes never arose.

4.2.3.Property Taxation of Non Resident Aliens

4.2.4. Liquidating Section 25
Where a corporation distributes all of its assets in complete a. Non-resident alien engaged in trade of business within the
liquidation or dissolution, the gain realized or loss sustained by the Philippines (NRA-ETB)
stockholder, whether individual or corporate, is a taxable income or a a.a. For regular income is taxed like RC and RA on
deductible loss, as the case may be. income received from sources within the
Phils.
b.b. Cash and/or property dividends -20%
c. Capital Gains from Sale of shares of Stock not traded in Final tax on royalties on books and musical compositions 10%
the Stock Exchange Cinematographic films 25%
5% if not over P100,000 Long Term deposit exempt
10% if over P100,000 If pre-terminate
th th
5% - 4 -5 year
d. Capital Gains from Sale of Real Property - 6% rd th
12% - 3 -4 year
rd
20% - less than 3 year
Chua v. Court of Appeals, GR No. 119255, 9 April 2003.
c.c. Passive income
FACTS: Valdes-Choy as the seller and Chua as the buyer entered
into a contract to sell over a San Lorenzo Village, Makati property.
d.d. Capital gains from sale of shares of stock and
Ownership was retained by Valdes-Choy until full payment of the
real properties
purchase price.
ISSUE: Who should pay capital gains tax? Stocks
HELD: Seller. Although it is the buyer who has an interest in paying 5% if not over P100,000
the tax as it is a prerequisite t the issuance of a new Torrens title, it 10% if over P100,000
remains a liability of the seller since it is a tax on the sellers gain.
Payment of the capital gains tax however is not a pre-requisite to the Real prop 6%
transfer of ownership to the buyer.
b. Non resident alien not engaged in trade or business within
the Philippines (NRA-NETB)
Torcuator v. Bernabe, GR No. 134219, 8 June 2005.
 a.a. all income from sources within the Philippines
25%
Stocks
5% if not over P100,000
10% if over P100,000
Real prop 6%
c. Alien individual employed by Regional or Area
Headquarters and Regional Operating Headquarters of Multinational
companies- 15%
The same tax treatment shall apply to Filipinos employed and
occupying the same position as those of aliens employed by these
multinational companies.
Multinational company' means a foreign firm or entity engaged in
international trade with affiliates or subsidiaries or branch offices in
the Asia-Pacific Region and other foreign markets.
Any income earned from all other sources in the Philippines shall be
subject to pertinent income tax.
d. Alien individual employed by Offshore Banking units
15%
The same tax treatment shall apply to Filipinos employed and
occupying the same position as those of aliens employed by these
offshore banking units.
Any income earned from all other sources in the Philippines shall be
subject to pertinent income tax.
e. Alien individual employed by Petroleum Service contractor
and subcontractor 15%
The same tax treatment shall apply to Filipinos employed and
occupying the same position as an alien employed by petroleum
service contractor or subcontractor.
Any income earned from all other sources in the Philippines shall be
subject to pertinent income tax.
Individual Taxpayers Exempt from Income tax
a. Minimum Wage Earners
Taxation of Domestic Corporations Section 27.
a. Regular Income taxation 30%
b. Tax on Certain passive Income
Interest 20%
Foreign Currency Deposit System 7.5%
Stocks
5% if not over P100,000
10% if over P100,000
Real prop 6%
c. Taxation of Proprietary Educational Institutions and
Hospitals 10% provided gross income from unrelated trade,
business or activity does not exceed 50% of the gross income
derived by such institutions from all sources.
d. Taxation of Government owned and or controlled
corporations, agencies or instrumentalities
GOCCs pay same rate as corporations or associations in the same
business, industry or activity
EXCEPT
1. SSS 2. GSIS 3.PHIC 4. Local Water Districts. 5. PCSO
CIR v. Philippine Airlines, Inc., GR No. 160528, 9 October 2006.
FACTS: PHILIPPINE AIRLINES, INC. had zero taxable income for
2000 but would have been liable for Minimum Corporate Income Tax
based on its gross income. However, PHILIPPINE AIRLINES, INC.
did not pay the Minimum Corporate Income Tax using as basis its
franchise which exempts it from all other taxes upon payment of
whichever is lower of either (a) the basic corporate income tax based
on the net taxable income or (b) a franchise tax of 2%.
ISSUE: Is PAL liable for Minimum Corporate Income Tax?
HELD:NO. PHILIPPINE AIRLINES, INC.s franchise clearly refers to
"basic corporate income tax" which refers to the general rate of 35%
(now 30%). In addition, there is an apparent distinction under the Tax
Code between taxable income, which is the basis for basic corporate
income tax under Sec. 27 (A) and gross income, which is the basis
for the Minimum Corporate Income Tax under Section 27 (E). The
two terms have their respective technical meanings and cannot be
used interchangeably. Not being covered by the Charter which
makes PAL liable only for basic corporate income tax, then Minimum
Corporate Income Tax is included in "all other taxes" from which
PHILIPPINE AIRLINES, INC. is exempted.
The CIR also can not point to the Substitution Theory which states
that Respondent may not invoke the in lieu of all other taxes
provision if it did not pay anything at all as basic corporate income
tax or franchise tax. The Court ruled that it is not the fact tax payment
that exempts Respondent but the exercise of its option. The Court
even pointed out the fallacy of the argument in that a measly sum of
one peso would suffice to exempt PAL from other taxes while a zero
liability would not and said that there is really no substantial
distinction between a zero tax and a one-peso tax liability. Lastly, the
Revenue Memorandum Circular stating the applicability of the MCIT
to PAL does more than just clarify a previous regulation and goes
beyond mere internal administration and thus cannot be given effect
without previous notice or publication to those who will be affected
thereby.
GNOTES: Issue: W/N gross income included passive income? Yes.
The definition of gross income is broad enough to include all passive
incomes. However, since these passive incomes are subject to
different rates and taxed finally at source, they are no longer
included in the computation of gross income, that determines taxable
income
Compagnie Financiere Sucres et Denrees v. CIR, GR No. 133834,28
August 2006.
FACTS: Petitioner was a Non-resident foreign corporation which sold
its shareholdings in Makati Shang to Kerry Holdings. Petitioner
alleged that the transfer of deposits on stock subscriptions was not a
sale/assignment subject to DST and CGT.
ISSUE: W/N transfer is subject to DST and CGT? Yes.
HELD: Based on the Capital Gains Tax Return that Petitioner filed
with the BIR, petitioner has a net gain of P1M. A tax n the profit of
sale on the net capital gain is the essence of the net capital gains tax
law. Otherwise, the government is deprived and unduly sets free
persons who profited from the transactions.
Manila International Airport Authority v. City of Pasay, GR No.
163072, 2 April 2009..
FACTS: Pasay assessed MIAA for real estate taxes for the NAIA
properties.
ISSUE: W/N MIAA properties were exempt? Yes.
HELD: MIAA is not a GOCC (stock or a non-stock corp), but a GI
vested with corporate powers.
e. Capital gains tax on sale of shares , real properties
Vive Eagle Land, Inc. v. Court of Appeals, GR No. 150308, 26
November 2004
FACTS: Flores Spouses sold 2 parcels of land in Quezon City to
Tatic. Tatic sold the properties to VELI. VELI sold one of the parcels
to Genuino Ice Co (GICI). GICI demanded that VELI pay the capital
gains tax. VELI rejected the demand. GICI filed a complaint v. VELI
for specific performance and damages. VELI argues it is the Flores
Spouses who are liable.
ISSUE: Who should pay the capital gains tax?
HELD: In the old Tax Code, only individual taxpayers were required
to pay CGT, as such VELI was not obliged to pay. However, VELI as
seller, should have included in its ordinary ITR whatever gains or
losses it incurred.
f.Minimum Corporate Income Tax
(Chamber of Real Estate and Builders Associations, Inc. v. Romulo,
GR No. 160756, 9 March 2010.]
FACTS: Petitioner is an association of real estate developers and
builders from throughout the Philippines. It assailed the validity of the
imposition of Minimum Corporate Income Tax (MCIT) on
corporations and creditable withholding tax (CWT) on sales of real
properties classified as assets. On the topic of MCIT, petitioners
alleges that the MCIT on ran counter to the due process clause
because such was being levied although there were no realized
gains. It contends that it was a tax on capital.
ISSUE: W/N MCIT is valid? Yes.
f. Tax on Certain Income received by a resident
Foreign Corporation
CIR v. Burroughs Limited, GR No. L-66653, 19 June 1986. Marubeni
Corporation v. CIR, GR No. 76573, 14 September 1989.]
Bank of America NT & SA v. Court of Appeals, GR Nos. 103092 and
103106, 21 July 1994.

HELD: The purpose of levying the MCIT was to curb the practice of
corporations in declaring minimal or negative net income despite
having large turnovers. Such a practice of under-declaring net
income while over- deduction of expenses is a tax shelter, and the
MCIT was instituted to put a cap on such.
On petitioners contention that the MCIT was levied on capital, the
Court saw that such was exacted on gross income, which is arrived
at by deducting the capital spend by a corporation in the sale of
goods. As such, it was clearly a tax on income.
2. Tax on Non Resident Foreign Corporation
a. Regular Tax 30% from all sources
b. Tax on certain incomes received by a non
resident foreign corporation
State Investment House, Inc. v. Citibank, N.A., GR Nos. 79926-27,
17 October 1991.
Improperly Accumulated Earnings Tax - Section 29
Basilan Estates, Inc. v. CIR, GR No. L-22492, 5 September 1967.]

In addition, the Court also ruled that the MCIT is not an additional tax Manila Wine Merchants, Inc. v. CIR, GR No. L-26145, 20 February
imposition, as it is actually imposed in lieu of normal income tax, and 1984.] Cyanamid Philippines, Inc. v. Court of Appeals, GR No.
only if the normal income tax is suspiciously low. The MCIT merely
approximates the amount of net income tax due from a corporation, 108067, 20 January 2000.]
pegging the rate at a very much reduced 2% and uses as the base
the corporations gross income.
Exempt Corporations - Section 30
RMO 20-2013 - Requirements for application to be exempt
Taxation of Foreign Corporations Section 28 under Section 30 and validity
1. Tax on Resident Foreign Corporation 30% [CIR v. Court of Appeals, GR No. 124043, 14 October 1998.]
a. MCIT 2%
b. International Carrier (AIR/Shipping) 2.5% on its
gross Philippine Billings Tax Liability of General Professional Partnership - Section 26.
c. Offshore Banking Units exempt Tan v. del Rosario, GR Nos. 109289 and 109446, 3 October 1994.
d. Tax on Branch Profit Remittances 15%
e. Regional or area Headquarters and Regional
Operating Headquarters of
Multinational Companies exempt for regional
headquarters
10% for regional operating
headquarters