Marcy’s Corporation Income Taxation Synthesis

Marcy’s Corporation is a privately owned company, more specifically a close corporation. The shares are
held by a select few individuals, particularly, the 5 incorporators are family members. Because of that, they don’t face
compensation issues. The company is taxed as a C corporation, thus their income is subject to double taxation. In the
interview conducted to the owners’, they stated that the company pays their taxes promptly and at the right amount
since most of their customers, and the bulk of their operations, are centered on local government units at Bukidnon.
In such circumstances, they cannot and would not try diminish their sales and income since their transactions with the
government are recorded thoroughly. The company outsources their bookkeeping and files their tax through eFiling
and Payment System (eFPS). They also pay their taxes quarterly, and the remaining at the end of calendar year. They
have an estimated total asset of ₱20 million and a total liability of ₱5 million.
When the owners were interviewed on their opinion on the recent tax reform, particularly the TRAIN Act,
they said that although they pay more taxes now, they appreciate the new Act since it gave more business opportunities
for them. It is also worthy to note that all of the construction projects they handle are initiated and funded by the local
government units. Although the company is not licensed themselves to handle construction projects, through a
contract, they use the name of M. Montesclaros Enterprises, Inc. to enable them to handle such projects, which is
allowed by law. They only needed to pay a royalty of 5 percent to use MM Enterprises’ name. Marcy’s Corporation
benefited from the Act by the increase in construction projects they handle, since the new Act gave rise to more
building and road construction projects in Bukidnon and other nearby provinces. They also stated that the TRAIN Act
was a more reasonable tax scheme compared to the previous National Internal Revenue Code (NIRC) since the new
brackets for taxable income benefited those that are in the lower brackets.
The company has minimum wage and output-based employees, the latter comprises the majority of their
workers. They also have regular employees, and gave them benefits such as Social Security System, PhilHealth, Pag-
IBIG, Christmas bonus, 13th month pay and even an annual trip overseas to their managers and key employees. They
have also provided retirement benefits to more than 50 people along the years. Although Marcy’s is known for their
custom made shirts, uniforms and other type of clothes, it only comprises 20 percent of their income, the vast majority
is on construction projects and the sliver remaining is on retail. They also sell electronics and other order-based items.
The last part of the interview was about whether Marcy’s Corporation has ever had an issue regarding tax
compliance, and they said “No, since even if we want to try doing something shady, we really aren’t able to. Most of
our income is already withheld at source by the government”. They stated that they pay an annual tax of approximately
₱1.2 million, and since they pay such a huge amount considering their operations, they are labelled tax responsible by
the government. Engr. Jose V. Calderon, Jr. even stated that tax authorities sometimes visit the company to investigate
in rare occasions, but it always result to a “clean” and proper tax compliance. Lastly, when asked if they were one of
the largest tax payers in Valencia, they hurriedly denied such claim and stated that MM Corporation is by far the
biggest tax contributor in Valencia and their tax due is huge compared to Marcy’s Corporation.

Kent P. Condino
Income Taxation (Tax 41)
Synthesis
December 3, 2018