TAXATION I

TAXPAYER TAX BASE TAX RATE Provision applicable Remarks

Domestic Corporation
Taxable income (from all
Regular corporate income tax sources within and without 30% Sec. 27 (A)
the PH)
Conditions:
(1) A tax effort ratio of twenty
percent (20%) of gross
national product;
(2) A ratio of forty percent
(40%) of income tax
collection to total tax
Optional corporate income tax Gross income 15% Sec. 27 (A)
revenues;
(3) A VAT tax effort of four
percent (4%) of GNP;
(4) A 0.9 percent (0.9%) ratio
of the Consolidated Public
Sector Financial Position
(CPSFP) to GNP.
Taxable income 10%
Proprietary Educational From unrelated trade, business or
Sec. 27 (B)
Institutions and Hospitals Gross income 30% other activity exceeds fifty percent
(50%) of the total gross income
Government-owned or –
Controlled Corporations, Taxable income 30% Sec. 27 (C)
Agencies or Instrumentalities
Interest from Deposits and Amount of interest on
Yield or any Monetary Benefit currency bank deposit and
from Deposit Substitutes and yield or any other monetary 20% Sec. 27 (D)(1)
Trust Funds and Similar benefit from deposit
Arrangements, and Royalties substitutes
Capital Gains from the Sale of
Shares of Stock not Traded in Net capital gains 15% Sec. 27 (D)(2)
the Stock Exchange
Income derived by a
depositary bank under the
Exempt
expanded foreign currency
Tax on income derived under
deposit system
the Expanded Currency Deposit Sec. 27 (D)(3)
Specified by the Secretary of Finance,
System
Net income 30% upon the recommendation by the
Monetary Board
Interest income 10%`
Dividends received by a domestic
Intercorporate Dividends Not subject to tax Sec. 27 (D)(4) corporation from another domestic
corporation)
Capital gains realized from the Gross selling price or fair
sale, exchange or disposition of market value (whichever is 6% Sec. 27 (D)(5)
lands and/or buildings higher)
Minimum Corporate Income
Tax Gross income 2% Sec. 27 (E)(1)
(Corporation)
Resident Foreign Corporation
Taxable income (from all
Regular corporate income tax sources within the 30% Sec. 28 (A)(1)
Philippines)
Sec. 28 (A)(1) in re
Optional corporate income tax Gross income 15%
Sec. 27 (A)
Sec. 28 (A)(2) in re
Minimum corporate income tax Gross income 2%
Sec. 27 (A)
International carrier Gross Philippine billings 2 ½% Sec. 28 (A)(3)
Income derived by offshore
Exempt
banking units
Net Income 30%
Derived from foreign currency loans
Offshore banking units Sec. 28 (A)(4)
granted to residents, other than
Interest Income 10% offshore banking units or local
commercial banks, including local
branches of foreign banks
Applied or earmarked for remittance
Tax on branch profits
Total profits 15% Sec. 28 (A)(5) without any deduction for the tax
remittances
component thereof
Regional or area headquarters Regional or area headquarters as
Exempt
and regional operating defined in Sec. 22 (DD)
Sec. 28 (A)(6)
headquarters of multinational Regional operating headquarters as
Taxable income 10%
companies defined in Sec. 22(EE)
Interest from deposits and From sources within the
20%
yield or any other monetary Philippines
benefit from deposit
Derived from a depositary bank
substitutes, trust funds and
Interest Income 7 ½% under the expanded foreign currency
similar arrangements and
deposit system
royalties
Income Exempt Derived by a depository bank
From currency loans granted to
Income derived under the Interest income 10%
residents other than depository banks
expanded foreign currency Sec. 28 (A)(7)(b)
Whether individuals or corporations,
deposit system
Income of non-residents Exempt from transactions with depository
banks under the expanded system
Not over P100,000 –
5%
Capital gains from sale of
shares of stock not traded in Net capital gains Sec. 28 (A)(7)(c)
On any amount in
the stock exchange
excess of P100,000 –
10%
Dividends received by a resident
Intercorporate dividends Not subject to tax Sec. 28 (A)(7)(d)
foreign corporation from another

MARIO JOSSHUA MENIL

TAXATION I
domestic corporation
Nonresident Foreign Corporation
Regular corporate income tax Gross income 30% Sec. 28 (B)(1)
Nonresident Cinematographic From all sources within the
Film Owner, Lessor or Gross income 25% Sec. 28 (B)(2) Philippines
Distributor
Nonresident owner or lessor of
Gross rentals, lease or From leases or charters to Filipino
vessels chartered by Philippine 4 ½% Sec. 28 (B)(3)
charter fees citizens or corporations
nationals
Nonresident owner or lessor of
aircraft, machineries and other Gross rentals or fees 7 ½% Sec. 28 (B)(4)
equipment
On foreign loans contracted on or
Interest on foreign loans Amount of interest 20% Sec. 28 (B)(5)(a)
after August 1, 1986
Dividends received from a domestic
Cash or property dividends 15%
Intercorporate Dividends Sec. 28 (B)(5)(b) corporation
Tax Credit 20%
Not over P100,000 –
Capital Gains from sale of 5%
shares of stock not traded in Net capital gains On any amount in Sec. 28 (B)(5)(c)
the stock exchange excess of P100,000 –
10%
Improperly accumulated Improperly accumulated tax
10% Sec. 29 (A)
earnings tax income

MARIO JOSSHUA MENIL