Section 22 (A,B) - NIRC
29 - NIRC
SEC. 22. Definitions. - When used in this Title:
(A) The term 'person' means an individual, a trust, estate or corporation.
(B) The term 'corporation' shall include partnerships, no matter how created or organized,
joint-stock companies, joint accounts (cuentas en participacion), association, or insurance
companies, but does not include general professional partnerships and a joint venture or
consortium formed for the purpose of undertaking construction projects or engaging in
petroleum, coal, geothermal and other energy operations pursuant to an operating
consortium agreement under a service contract with the Government. 'General
professional partnerships' are partnerships formed by persons for the sole purpose of
exercising their common profession, no part of the income of which is derived from
engaging in any trade or business.
Section 22 (C) - NIRC
SEC. 22. Definitions. - When used in this Title:
(C) The term 'domestic', when applied to a corporation, means created or organized in
the Philippines or under its laws.
Section 22 (D) - NIRC
SEC. 22. Definitions. - When used in this Title:
(D) The term 'foreign', when applied to a corporation, means a corporation which is not
domestic
Section 22 (H) - NIRC
SEC. 22. Definitions. - When used in this Title:
(H) The term 'resident foreign corporation' applies to a foreign corporation engaged in
trade or business within the Philippines.
Section 22 (I) - NIRC
SEC. 22. Definitions. - When used in this Title:
(I) The term 'nonresident foreign corporation' applies to a foreign corporation not
engaged in trade or business within the Philippines.
Art. 484 Civil Code
Art. 484. There is co-ownership whenever the ownership of an undivided thing or right
belongs to different persons.
In default of contracts, or of special provisions, co-ownership shall be governed by the
provisions of this Title. (392)
Sec. 27(E) - NIRC
SEC. 27. Rates of Income tax on Domestic Corporations.
(E) Minimum Corporate Income Tax on Domestic Corporations. -
(1) Imposition of Tax. - A minimum corporate income tax of two percent (2%) of the
gross income as of the end of the taxable year, as defined herein, is hereby imposed on a
corporation taxable under this Title, beginning on the fourth taxable year immediately
following the year in which such corporation commenced its business operations, when
the minimum income tax is greater than the tax computed under Subsection (A) of this
Section for the taxable year.
(2) Carry Froward of Excess Minimum Tax. - Any excess of the minimum corporate
income tax over the normal income tax as computed under Subsection (A) of this Section
shall be carried forward and credited against the normal income tax for the three (3)
immediately succeeding taxable years.
(3) Relief from the Minimum Corporate Income Tax Under Certain Conditions. - The
Secretary of Finance is hereby authorized to suspend the imposition of the minimum
corporate income tax on any corporation which suffers losses on account of prolonged
labor dispute, or because of force majeure, or because of legitimate business reverses.
The Secretary of Finance is hereby authorized to promulgate, upon recommendation of
the Commissioner, the necessary rules and regulation that shall define the terms
and conditions under which he may suspend the imposition of the minimum
corporate income tax in a meritorious case.
(4) Gross Income Defined. - For purposes of applying the minimum corporate income
tax provided under Subsection (E) hereof, the term 'gross income' shall mean gross sales
less sales returns, discounts and allowances and cost of goods sold. 'Cost of goods sold'
shall include all business expenses directly incurred to produce the merchandise to bring
them to their present location and use.
For a trading or merchandising concern, 'cost of goods sold' shall include the invoice
cost of the goods sold, plus import duties, freight in transporting the goods to the place
where the goods are actually sold including insurance while the goods are in transit.
For a manufacturing concern, 'cost of goods manufactured and sold' shall include all
costs of production of finished goods, such as raw materials used, direct labor and
manufacturing overhead, freight cost, insurance premiums and other costs incurred to
bring the raw materials to the factory or warehouse.
In the case of taxpayers engaged in the sale of service, 'gross income' means gross
receipts less sales returns, allowances, discounts and cost of services. 'Cost of services'
shall mean all direct costs and expenses necessarily incurred to provide the services
required by the customers and clients including (A) salaries and employee benefits of
personnel, consultants and specialists directly rendering the service and (B) cost of
facilities directly utilized in providing the service such as depreciation or rental of
equipment used and cost of supplies: Provided, however, That in the case of banks, 'cost
of services' shall include interest expense.
Sec.
SEC. 29. Imposition of Improperly Accumulated Earnings Tax. -
(A) In General. - In addition to other taxes imposed by this Title, there is hereby imposed
for each taxable year on the improperly accumulated taxable income of each corporation
described in Subsection B hereof, an improperly accumulated earnings tax equal to ten
percent (10%) of the improperly accumulated taxable income.
(B) Tax on Corporations Subject to Improperly Accumulated Earnings Tax. -
(1) In General. - The improperly accumulated earnings tax imposed in the preceding
Section shall apply to every corporation formed or availed for the purpose of avoiding the
income tax with respect to its shareholders or the shareholders of any other corporation,
by permitting earnings and profits to accumulate instead of being divided or distributed.
(2) Exceptions. - The improperly accumulated earnings tax as provided for under this
Section shall not apply to:
(a) Publicly-held corporations;
(b) Banks and other nonbank financial intermediaries; and
(c) Insurance companies.
(C) Evidence of Purpose to Avoid Income Tax. -
(1) Prima Facie Evidence. - the fact that any corporation is a mere holding company or
investment company shall be prima facie evidence of a purpose to avoid the tax upon its
shareholders or members.
(2) Evidence Determinative of Purpose. - The fact that the earnings or profits of a
corporation are permitted to accumulate beyond the reasonable needs of the business
shall be determinative of the purpose to avoid the tax upon its shareholders or members
unless the corporation, by the clear preponderance of evidence, shall prove to the
contrary.
(D) Improperly Accumulated Taxable Income. - For purposes of this Section, the term
'improperly accumulated taxable income' means taxable income adjusted by:
(a) Income exempt from tax;
(b) Income excluded from gross income;
(c) Income subject to final tax; and
(d) The amount of net operating loss carry-over deducted;
And reduced by the sum of:
(a) Dividends actually or constructively paid; and
(b) Income tax paid for the taxable year.
Provided, however, That for corporations using the calendar year basis, the accumulated
earnings tax shall not apply on improperly accumulated income as of December 31, 1997.
In the case of corporations adopting the fiscal year accounting period, the improperly
accumulated income not subject to this tax, shall be reckoned, as of the end of the month
comprising the twelve (12)-month period of fiscal year 1997-1998.
(E) Reasonable Needs of the Business. - For purposes of this Section, the term
'reasonable needs of the business' includes the reasonably anticipated needs of the
business.
Art. 1767-1769 Civil Code
Art. 1767. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of dividing the
profits among themselves.
Two or more persons may also form a partnership for the exercise of a profession. (1665a)
Art. 1768. The partnership has a judicial personality separate and distinct from that of
each of the partners, even in case of failure to comply with the requirements of Article
1772, first paragraph. (n)
Art. 1769. In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners as to each other
are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a partnership, whether
such-co-owners or co-possessors do or do not share any profits made by the use of
the property;
(3) The sharing of gross returns does not of itself establish a partnership, whether or
not the persons sharing them have a joint or common right or interest in any property
from which the returns are derived;
(4) The receipt by a person of a share of the profits of a business is prima facie
evidence that he is a partner in the business, but no such inference shall be drawn if
such profits were received in payment:
(a) As a debt by installments or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits
of the business;
(e) As the consideration for the sale of a goodwill of a business or other
property by installments or otherwise. (n)