Corporation

Corporation. Definition:
A form of business operation that
declares the business as a separate, legal
entity guided by a group of officers known
as the board of directors.
A corporate structure is perhaps the most
advantageous way to start
a businessbecause the corporation exists
as a separate entity.
Difference between Corporation and Company

Suitability: Company is a suitable form

of business organization or legal
structure for smaller businesses or
entities; while corporate is more
suitable for larger businesses or
entities. Owners: The owners of
a company are its members; while the
owners of a corporation are its
shareholders.
Classification of Income Taxpayers
other than Individual

1. Corporations
A. Domestic- Those created or
organized under and by virtue
of Philippine laws.
1. Domestic Corporation, in
General.
2.Government-owned and controlled
corporations
The following are exempt from the
payment of tax:
a. Government Service and Insurance
System
b. Social Security Systems
c. Philippine Health and Insurance
Corporation
Taxable Partnership
3. Proprietary
educational institutions
4. Non-profit hospitals
B. Foreign Corporations- Those
organized in accordance with laws of
their respective countries.
1.Resident- Those engaged in trade or
business within the Philippines.
2. Non-Resident – Those not engaged in
trade or business within the Philippines.
3. General Professional
Partnership(chapter 6)
4. Estates and Trusts
( Chapter 5)
 Sources of Income
1. Domestic Corporation- are
taxable on income from sources
within and without the
Philippines
2. Foreign Corporation-whether
resident or non-resident, are
taxable only on income from the
Philippine sources.
Non- Resident Foreign Corporation , in General
( pro-forma computation of Income Tax)

Gross Income XXX

Multiply by : Tax rate 30%
Tax due XXXX
Pro-forma computation for Domestic
and RFC under Itemized
deductions/Optional Standard
Sales/Revenues/Receipts/Fees XXX
Less: Cost of Sales/Services XXX
Gross income from operation
XXX
Add: Non-operating &Taxable other income XXX
Total Gross income XXX
Less : Deductions
Optional Standard or Itemized deductions
XXX Taxable Income XXX
Multiply by: Tax Rate __ %__
TAX Due XXXX
Corporations availing of Optional
Standard Deductions
Gross Sales XXXX
Less: Cost of Sales XXXX
Gross Income XXXX
Less: OSD ( 40% of Gross Income) XXXX
Taxable Income XXXX
Multiply by the Tax rate 30%
Tax Due XXX
Example: The Results of operations of ABC
Corporation for the year 2018 are presented
below:
Gross sales P6,000,000
Cost of sales 4,000,000
Operating expenses 1,000,000
Non-operating expenses 200,000
Compute for the Net Taxable income and Tax due
under:
a. Itemized deductions
b. Optional Standard deductions
Declaration of Quarterly Corporate
Income Tax
The Result of operations
of XL Corporation for
2018 whose taxable year
is on a calendar year
basis, is as follows:
 Gross Income Deduction Net Income
Ist quarter P500,000 P300,000 P200,000
( Jan. 1 t0 3/31
2nd quarter 600,000 350,000 250,000
(April 1 to
June 1)
3rd quarter 700,000 400,000 300,000
(July 1 to Sept.
30)
4th quarter 800,000 450,000 350,000
(Oct. 1 to Dec.
31)
Tax credit for overpaid income tax for the preceding
year is P50,000.
The return to be filed for the 1st quarter follows:
Gross income this quarter P500,000
Less: Deductions 300,000
Taxable income P200,000
Income Tax Due(P200K x 30%) P60,000
Less: Tax Credit 50,000__
Balance of Tax to be paid this quarter P 10,000___
The return for the second quarter to be filed follows:
Gross income this quarter P600,000
Add: Gross income for 1st quarter 500,000
Gross income for 1 st & 2 nd quarters P 1,100,000
Less: deductions:
1st quarter P300,000
2nd quarter 350,000 650,000
Taxable Income P450,000
Income Tax Due P135,000
Less: Tax due for previous 1st qtr. 60,000
Income Tax Due this Qtr, P70,000.
 IncomeTax Return to be filed for the 3 rd
quarter
Gross Income this quarter P 700,000
Add: Gross income for the previous Qtrs :

1st Quarter P 500,000

2nd Quarter 600,000 1,100,000
Gross income for 1st, 2nd and 3rd qtr. P1,800,000
Less: Deductions :
1st qtr. P 300,000
2nd qtr. 350,000
3rd qtr. 400,000 1,050,000
Taxable IncomeP 750,000
Income Tax Due P 225,000
Less: Income Tax Due for previous Qtrs.
1st quarter P 60,000
2nd quarter 130,000
70,000
Income Tax Due This Quarter P 95,000
 The Final Adjusted Return- April
15, 2019 (deadline)
Gross Income, 4th Quarter P 800,000
Add: Gross income for previous Qtrs.
1st Quarter P 500,000
2nd Qtr, 600,000
3rd Qtr. 700,000 1,800,000
Gross income for the year P 2,600,000
Less: Deductions :
1st qtr. P 300,000
2nd qtr. 350,000
3rd qtr. 400,000
4th qtr. 450,000 1,500,000
Taxable Income P1,100,000
Taxable Income P 1,100,000
Tax Due P330,000
Less: Income Tax paid :
1st qtr. P 60,000
2nd qtr, 70,000
3rd qtr. 95,000 225,000
Income Tax Due , 4th Qtr. P 105,000