CORPORATION
A corporation is a legal entity that is
separate and distinct from its owners.
Corporations enjoy most of the rights and
responsibilities that individuals
possess: they can enter contracts, loan and
borrow money, sue and be sued, hire
employees, own assets and pay taxes.
Some refer to it as a "legal person."
TAX EXEMPT CORPORATION
SEC. 30. Exemptions from Tax on
Corporations. - The following organizations
shall not be taxed under this Title in respect
to income received by them as such:
(A) Labor, agricultural or horticultural
organization not organized principally for
profit;
(B) Mutual savings bank not having a
capital stock represented by shares, and
cooperative bank without capital stock
organized and operated for mutual
purposes and without profit;
(C) A beneficiary society, order or
association, operating for the exclusive
benefit of the members such as a fraternal
organization operating under the lodge
system, or mutual aid association or a
nonstock corporation organized by
employees providing for the payment of life,
sickness, accident, or other benefits
exclusively to the members of such society,
order, or association, or nonstock
corporation or their dependents;
(D) Cemetery company owned and
operated exclusively for the benefit of its
members;
(E) Nonstock corporation or association
organized and operated exclusively for
religious, charitable, scientific, athletic, or
cultural purposes, or for the rehabilitation of
veterans, no part of its net income or asset
shall belong to or inure to the benefit of any
member, organizer, officer or any specific
person;
(F) Business league chamber of
commerce, or board of trade, not organized
for profit and no part of the net income of
which inures to the benefit of any private
stock-holder, or individual;
(G) Civic league or organization not
organized for profit but operated exclusively
for the promotion of social welfare;
(H) A nonstock and nonprofit educational
institution;
(I) Government educational institution;
(J) Farmers' or other mutual typhoon or fire
insurance company, mutual ditch or
irrigation company, mutual or cooperative
telephone company, or like organization of a
purely local character, the income of which
consists solely of assessments, dues, and
fees collected from members for the sole
purpose of meeting its expenses; and
(K) Farmers', fruit growers', or like
association organized and operated as a
sales agent for the purpose of marketing the
products of its members and turning back to
them the proceeds of sales, less the
necessary selling expenses on the basis of
the quantity of produce finished by them;
Notwithstanding the provisions in the
preceding paragraphs, the income of
whatever kind and character of the
foregoing organizations from any of their
properties, real or personal, or from any of
their activities conducted for profit
regardless of the disposition made of such
income, shall be subject to tax imposed
under this Code.
TAX EXEMPT GOCC GOVERNMENT
OWNED OR CONTROLLED CORPO
Government-owned or -Controlled
Corporations, Agencies or
Instrumentalities
The provisions of existing special or general
laws to the contrary notwithstanding, all
corporations, agencies, or instrumentalities
owned or controlled by the Government,
except the Government Service Insurance
System (GSIS), the Social Security System
(SSS), the Philippine Health Insurance
Corporation (PHIC), the local water districts
(LWDs), and the Philippine Charity
Sweepstakes Office (PCSO) and the
Philippine Amusement and Gaming
Corporation (PAGCOR), shall pay such rate
of tax upon their taxable income as are
imposed by this Section upon corporations
or associations engaged in s similar
business, industry, or activity.
REVENUE REGULATIONS NO. 9-98
amended by 12 - 2007
Amends certain provisions of Revenue
Regulations No. 9-98 relative to the due
date within which to pay Minimum
Corporate Income Tax imposed on
domestic corporations and resident foreign
corporations
“(1) Imposition of the Tax. - A minimum
corporate income tax (MCIT) of two percent
(2%) of the gross income as of the end of
the taxable year (whether calendar or fiscal
year, depending on the accounting period
employed) is hereby imposed upon any
domestic corporation beginning on the
fourth (4th) taxable year immediately
following the taxable year in which such
corporation commenced its business
operations. The MCIT shall be imposed
whenever such corporation has zero or
negative taxable income or whenever the
amount of minimum corporate income tax is
greater than the normal income tax due
from such corporation
Quarterly MCIT paid on the Quarterly
Income Tax Return shall be credited against
the normal income tax at year end if in the
preparation and filing of the annual income
tax return and in the final computation of the
annual income tax due, it appears that the
normal income tax due is higher than the
computed annual MCIT. Moreover, in
addition to the quarterly MCIT paid and
quarterly normal income tax payments in
the taxable quarters of the same taxable
year, excess MCIT in the prior year/s
(subject to the prescriptive period allowed
for its creditability), expanded withholding
taxes in the current year and excess
expanded withholding taxes in the prior year
shall be allowed to be credited against the
annual income tax computed under the
normal income tax rules.
However, if in the computation of the
annual income tax due, the computed
annual MCIT due appears to be higher than
the annual normal income tax due, what
may be credited against the annual MCIT
due shall only be the quarterly MCIT
payments of the current taxable quarters,
the quarterly normal income tax payments
in the quarters of the current taxable year,
the expanded withholding taxes in the
current year and excess expanded
withholding taxes in the prior year. Excess
MCIT from the previous taxable year/s shall
not be allowed to be credited there from as
the same can only be applied against
normal income tax.
The taxpayer shall pay the MCIT whenever
it is greater than the regular or normal
corporate income tax which is imposed
under Sec. 27(A) and Sec. 28(A)(1) of the
Code. The final comparison between the
normal income tax payable by the
corporation and the MCIT shall be made at
the end of the taxable year and the payable
or excess payment in the Annual Income
Tax Return shall be computed taking into
consideration corporate income tax
payment made at the time of filing of
quarterly corporate income tax returns
whether this be MCIT or normal income tax.
 “Gross income” – gross sales less
sales returns, discounts, and allowances
and cost of goods sold, in case of sale of
goods, or gross revenue less sales returns,
discounts, allowances and cost of
services/direct cost, in case of sale of
services.
Gross sales- shall include only
sales contributory to income taxable under
Sec. 27(A) of the Code.” “Cost of goods
sold” shall include all business expenses
directly incurred to produce the
merchandise to bring them to their present
location and use.
Gross Revenue- shall include
income from sale of services, likewise,
taxable under Sec. 27(A). Cost of Services
or Direct Cost of Services shall include
business expenses directly incurred or
related to the gross revenue from rendition
of services.
Passive incomes - subject to final
tax at source shall not form part of gross
income for purposes of minimum corporate
income tax.
Manner of filing and payment —
The minimum corporate income tax (MCIT)
shall be paid in the same manner
prescribed for the payment of the normal
corporate income tax which is on a quarterly
and on a yearly basis. It shall be covered by
a tax return designed for the purpose which
will be submitted together with the
corporation's annual final adjustment
income tax return.
RA 10963 CHAIN LAW
Republic Act № 10963 or Tax Reform for
Acceleration and Inclusion (TRAIN) law is
enacted by the Senate and House of
Representatives in Congress (i.e.
legislative), and is signed by the
President[1] for compliance of all residents
in the Philippines.
TRAIN is the first package of the
Comprehensive Tax Reform Program (CTRP)
aimed to redesign our tax system to be
simpler, fairer, and more efficient for all, while
also raising the resources needed to invest in
infrastructure and Filipino people. Overall, the
government sees a lesser tax burden of the
poor and the middle class. Through TRAIN,
every Filipino contributes in funding more
infrastructure and social services to eradicate
extreme poverty and reduce inequality towards
prosperity for all.
FINAL TAX OF PASSIVE INCOME
Passive income taxes (on interests, dividends,
capital gains on sales of shares of stocks or
not traded through the local stock exchange)
For resident and non-resident aliens
engaged in trade or business in the
Philippines, the maximum rate on income
subject to final tax (usually passive
investment income) is 20%. For non-
resident aliens not engaged in trade or
business in the Philippines, the rate is a flat
25%.
CAPITAL GAIN TAX
Subsequent sale of non-listed shares in a
domestic corporation by individuals and
domestic corporations are now subject to
15% capital gains tax under the TRAIN Law.
Sale of shares listed in the local stock
exchange are subject to 0.60% stock
transaction tax based on the gross selling
price.
Capital Gains of Non traded
stocks
RA 10963 increases the 5%- 10% tax rates
to a 15% single tax rate on net capital
realized by an individual and domestic
corporation from sale, barter, exchange or
other disposition of shares of stock in a
domestic corporation that are not traded in
the local stock exchange. The law, however,
retains the 5%-10% capital gains tax of a
resident foreign corporation and nonresident corporation, by permitting its earnings or
foreign corporation. profits to accumulate, instead of being
divided or distributed.

Based on Section 6 of Revenue Regulations

IMPROPERLY ACCUMULATED
EARNINGS TAX (IAET)
This tax applies to every corporation which
is formed or availed of for the purpose of
avoiding the imposition of income tax on the
income received by shareholders of the
(RR) 2-2001, the dividends must be
declared and paid or issued not later than
one year following the close of the taxable
year, otherwise, the IAET, if any, should be
paid within 15 days thereafter.

GRADUATED INCOME TAX

I. For Individual Citizens and Resident Aliens Earning Purely Compensation Income and
Individuals Engaged in Business and Practice of Profession
A. Graduated Income Tax Rates under Section 24(A)(2) of the Tax Code of 1997,
as amended by Republic Act No. 10963

Amount of Net Taxable Income Rate

Over But Not Over
- P250,000 0%
P250,000 P400,000 20% of the excess over P250,000
P400,000 P800,000 P30,000 + 25% of the excess over P400,000
P800,000 P2,000,000 P130,000 + 30% of the excess over P800,000
P2,000,000 P8,000,000 P490,000 + 32% of the excess over
P2,000,000
P8,000,000 P2,410,000 + 35% of the excess over
P8,000,000