SlideShare a Scribd company logo
Corporate Income
Taxation
CREATE LAW
Republic Act (RA) No. 11534, otherwise known as the Corporate
Recovery and Tax Incentives for Enterprises (CREATE) Act was created
by the Philippine Congress in response to the COVID-19 pandemic as a
fiscal relief to domestic and foreign corporations doing business in the
Philippines.
It seeks to amend several provisions in the old Tax Code, with a central
focus on lowering corporate income tax rates and rationalizing fiscal
incentives to better attract local and foreign investments in the
Philippines.
CREATE LAW
Before the COVID-19 pandemic, CREATE Act was initially known as TRABAHO bill (or Tax Reform
for Attracting Better and Higher-quality Opportunities).
When the bill failed to pass Congress, it was renamed to CITIRA (or Corporate Income Tax and
Incentives Reform Act), which also failed to pass Congress because it was deemed as a non-
priority and non-urgent bill during the outbreak of COVID-19.
The addition of COVID-19 related provisions propelled the passage of the bill into law.
CREATE LAW
CREATE LAW
Classification of Corporations
• incorporated under the laws of the Philippines.
Domestic Corporation
• One formed, organized, or existing under any laws
other than those of the Philippines
Foreign Corporation
Types of Foreign Corporation
Resident Foreign
Corporation
•Those engaged in
trade or business
within the
Philippines.
Non – Resident
Foreign Corporation
•Those not engaged
in trade or business
within the
Philippines.
Sources of Taxable Income
Type of Corporation Sources of Taxable Income
Within the
Philippines
Outside the
Philippines
Domestic ✅ ✅
Resident Foreign ✅ ❎
Non - Resident Foreign ✅ ❎
Classification of Corporations
Corporation Tax Base
Domestic Taxable Income from all sources within and
outside the Philippines
Resident Foreign Taxable Income from sources within the
Philippines
Non - Resident
Foreign
Gross Sales/Receipts from sources within the
Philippines
Income Tax Rule on Regular Corporation
Domestic Corporation 20% or 25% Regular Corporate
Income Tax subject to the
Minimum Corporate Income Tax.
Resident Foreign
Corporation
25% Regular Corporate Income Tax
subject to the Minimum Corporate
Income Tax.
Tax Base
Tax Base for RCIT purposes is taxable
income which is the gross income less
allowable deductions.
Tax base for MCIT, is the gross income. Gross
income as contemplated in the tax code, is Net
sales or receipts (Gross Sales/Receipt less sales
returns, discounts and allowances) less any
Cost of Sales or Cost of Services.
Tax Base
• For Non – resident Foreign
Corporation, the tax base is
the Gross Sales or Receipts
which generally connotes
Sales/Receipts less discounts,
returns & allowances, or Net
Sales/Receipts.
Tax Base
Corporate Income Taxation
Regular Corporate Income Tax
• Applies to all corporations in
general.
• It covers all taxable income of
corporations that are not
subject to final tax and capital
gains tax.
Minimum Corporate Income Tax
• Applies to domestic corporation.
• MCIT does not apply to non-
resident foreign corporations.
However, resident foreign
corporations are also liable for
MCIT.
Regular Corporate Income Tax
Income Tax rate for all corporate is 30% notwithstanding if they are
domestic or foreign.
Beginning July 1, 2020, the effective rate shall be 25%, under the CREATE
Law.
A reduced rate of 20% will apply to a
domestic corporation (MSMEs) with:
Net taxable income not exceeding P5,000,000;
and
Total assets not exceeding P100,000,000.
Regular Corporate Income Tax
Regular Corporate Income Tax
Assuming the Jean Company is a
MSME
Minimum
Corporate
Income Tax
The MCIT is 2% of Gross Income.
However, under the CREATE Law, the rate shall be 1%
beginning July 1, 2020 until June 30, 2023.
A company is liable for MCIT starting the 4th year
immediately following the year in which it commenced
its operation.
MCIT is implemented on domestic and resident foreign
corporations when:
• They have zero or negative taxable income; or
• MCIT is greater than the regular corporate income tax due.
Minimum
Corporate
Income Tax
Minimum
Corporate
Income Tax
Sample
Problem
Sub-Classification of Corporate Income
Taxpayers
• Domestic Corporations
• Exempted domestic Corporation
• Government agencies & instrumentalities
• Certain GOCCs
• Special domestic Corporation
• Proprietary Educational institutions and non-profit hospital
• Subject to 10% tax on world taxable income subject to the predominance
test
• Under CREATE, effective Jul. 1, 2020 – Jun. 30, 2023 the tax rate is 1%.
Sub-Classification of Corporate Income
Taxpayers
• Foreign Corporations
• Special resident foreign corporations
• International carrier
• Offshore banking unit
• Branch profit remittances
• RAHQs and ROHQs
• Special non-resident foreign corporations
• Non-resident cinematographic film owner, lessor or distributor
• Non-resident lessor of vessels, chartered by Philippine nationals
• Non-resident owner or lessor of aircraft, machineries and other equipment
Special resident
foreign
corporations
• Under CREATE LAW, OBU
is treated as regular foreign
corporation.
Tax
Rate
Tax Base
International carrier 2.5% Gross Philippine Billings
Offshore banking unit 25% Taxable Income
Branch profit remittances 15% Total profit applied or
earmarked for remittance
RAHQs (RAH or RHQ) Exempt
ROHQs 10% Taxable Income
Special non-resident foreign corporations
Tax Rate Tax Base
Non-resident cinematographic film
owner, lessor or distributor
25% Gross income from all sources
within the Philippines
Non-resident lessor of vessels,
chartered by Philippine nationals
4.5% Gross rentals, lease or charter fees
Non-resident owner or lessor of
aircraft, machineries and other
equipment
7.5% Rentals, lease or charter fees

More Related Content

What's hot

ld2-pptslide
ld2-pptslideld2-pptslide
ld2-pptslide
sekolahrepoeblijk
 
Iaasb isae 3000_ed
Iaasb isae 3000_edIaasb isae 3000_ed
Iaasb isae 3000_ed
d_boy
 
Code of Ethics in accounting
Code of Ethics in accountingCode of Ethics in accounting
Code of Ethics in accounting
HadiaZahid2
 
Is EU membership is good idea for citizens
Is EU membership is good idea for citizens Is EU membership is good idea for citizens
Is EU membership is good idea for citizens
DNS The Necesary Teacher Training College
 
Income tax intro topics.feb.2011
Income tax intro topics.feb.2011Income tax intro topics.feb.2011
Income tax intro topics.feb.2011
Phil Taxation
 
Black money
Black money Black money
Black money
PSPCL
 
Chapter 4
Chapter 4Chapter 4
Chapter 4
Vera Nataa
 
Décret sur les documents de voyage
Décret sur les documents de voyageDécret sur les documents de voyage
Décret sur les documents de voyage
Communication_HT
 
Fema an overview- a presentation by CA. Sudha G. Bhushan
Fema   an overview- a presentation by CA. Sudha G. BhushanFema   an overview- a presentation by CA. Sudha G. Bhushan
Fema an overview- a presentation by CA. Sudha G. Bhushan
TAXPERT PROFESSIONALS
 
AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua)
AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua) AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua)
AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua)
Carla
 
Analysis of "Fees for Technical Services" and its Taxability
Analysis of "Fees for Technical Services" and its TaxabilityAnalysis of "Fees for Technical Services" and its Taxability
Analysis of "Fees for Technical Services" and its Taxability
DVSResearchFoundatio
 
Remedial Law Rule 57 preliminary attachment
Remedial Law Rule 57 preliminary attachment Remedial Law Rule 57 preliminary attachment
Remedial Law Rule 57 preliminary attachment
Lawrence Villamar
 
INTERNATIONAL MONETARY FUND
INTERNATIONAL MONETARY FUNDINTERNATIONAL MONETARY FUND
INTERNATIONAL MONETARY FUND
Ayush Mishra
 
ISQC 1 (Revised) Quality Control for Firms that Perform Audits and Reviews of...
ISQC 1 (Revised) Quality Control for Firms that Perform Audits and Reviews of...ISQC 1 (Revised) Quality Control for Firms that Perform Audits and Reviews of...
ISQC 1 (Revised) Quality Control for Firms that Perform Audits and Reviews of...
Sazzad Hossain, ITP, MBA, CSCA™
 
8 il sistema pensionistico in italia
8  il sistema pensionistico in italia8  il sistema pensionistico in italia
8 il sistema pensionistico in italiadanielaramaglioni
 
IFRS- 15 with illustrative examples
IFRS- 15 with illustrative examples IFRS- 15 with illustrative examples
IFRS- 15 with illustrative examples
Masum Gazi
 
Chapter 5
Chapter 5Chapter 5
Chapter 5
Vera Nataa
 
Chapter 7
Chapter 7Chapter 7
Chapter 7
Vera Nataa
 
Chapter 1
Chapter 1Chapter 1
Chapter 1
Vera Nataa
 
Cos'E' un'Impresa
Cos'E' un'ImpresaCos'E' un'Impresa
Cos'E' un'Impresa
Steven Ghezzo
 

What's hot (20)

ld2-pptslide
ld2-pptslideld2-pptslide
ld2-pptslide
 
Iaasb isae 3000_ed
Iaasb isae 3000_edIaasb isae 3000_ed
Iaasb isae 3000_ed
 
Code of Ethics in accounting
Code of Ethics in accountingCode of Ethics in accounting
Code of Ethics in accounting
 
Is EU membership is good idea for citizens
Is EU membership is good idea for citizens Is EU membership is good idea for citizens
Is EU membership is good idea for citizens
 
Income tax intro topics.feb.2011
Income tax intro topics.feb.2011Income tax intro topics.feb.2011
Income tax intro topics.feb.2011
 
Black money
Black money Black money
Black money
 
Chapter 4
Chapter 4Chapter 4
Chapter 4
 
Décret sur les documents de voyage
Décret sur les documents de voyageDécret sur les documents de voyage
Décret sur les documents de voyage
 
Fema an overview- a presentation by CA. Sudha G. Bhushan
Fema   an overview- a presentation by CA. Sudha G. BhushanFema   an overview- a presentation by CA. Sudha G. Bhushan
Fema an overview- a presentation by CA. Sudha G. Bhushan
 
AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua)
AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua) AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua)
AC102 PPT8 - Partnership Liquidation Lump Sum (PPT from Sir Leandro Fua)
 
Analysis of "Fees for Technical Services" and its Taxability
Analysis of "Fees for Technical Services" and its TaxabilityAnalysis of "Fees for Technical Services" and its Taxability
Analysis of "Fees for Technical Services" and its Taxability
 
Remedial Law Rule 57 preliminary attachment
Remedial Law Rule 57 preliminary attachment Remedial Law Rule 57 preliminary attachment
Remedial Law Rule 57 preliminary attachment
 
INTERNATIONAL MONETARY FUND
INTERNATIONAL MONETARY FUNDINTERNATIONAL MONETARY FUND
INTERNATIONAL MONETARY FUND
 
ISQC 1 (Revised) Quality Control for Firms that Perform Audits and Reviews of...
ISQC 1 (Revised) Quality Control for Firms that Perform Audits and Reviews of...ISQC 1 (Revised) Quality Control for Firms that Perform Audits and Reviews of...
ISQC 1 (Revised) Quality Control for Firms that Perform Audits and Reviews of...
 
8 il sistema pensionistico in italia
8  il sistema pensionistico in italia8  il sistema pensionistico in italia
8 il sistema pensionistico in italia
 
IFRS- 15 with illustrative examples
IFRS- 15 with illustrative examples IFRS- 15 with illustrative examples
IFRS- 15 with illustrative examples
 
Chapter 5
Chapter 5Chapter 5
Chapter 5
 
Chapter 7
Chapter 7Chapter 7
Chapter 7
 
Chapter 1
Chapter 1Chapter 1
Chapter 1
 
Cos'E' un'Impresa
Cos'E' un'ImpresaCos'E' un'Impresa
Cos'E' un'Impresa
 

Similar to ACC311_Corporate Income Taxation in the Philippines

Corporate Tax Planning: Bangladesh Perspective
Corporate Tax Planning: Bangladesh PerspectiveCorporate Tax Planning: Bangladesh Perspective
Corporate Tax Planning: Bangladesh Perspective
M.K.Jahid Shuvo
 
Overview of Direct Taxes Prevailing in India
Overview of Direct Taxes Prevailing in IndiaOverview of Direct Taxes Prevailing in India
Overview of Direct Taxes Prevailing in India
Mr. Shivam Gupta
 
Pay up the report peru 2017
Pay up   the report peru 2017Pay up   the report peru 2017
Pay up the report peru 2017
Humberto Astete
 
Colombian tax regime
Colombian tax regimeColombian tax regime
Colombian tax regime
ProColombia
 
Taxation in Brazil
Taxation in Brazil Taxation in Brazil
Taxation in Brazil
Noronha Noad
 
Israel tax system15 5 2007
Israel tax system15 5 2007Israel tax system15 5 2007
Israel tax system15 5 2007
artzihiba
 
Israel tax system15 5 2007
Israel tax system15 5 2007Israel tax system15 5 2007
Israel tax system15 5 2007
artzihiba
 
Direct Tax Code
Direct Tax CodeDirect Tax Code
Direct Tax Code
Anik Das
 
Nigretti Gianmauro: Chile 2016 - Corporate and Tax Highlights
Nigretti Gianmauro: Chile 2016 - Corporate and Tax HighlightsNigretti Gianmauro: Chile 2016 - Corporate and Tax Highlights
Nigretti Gianmauro: Chile 2016 - Corporate and Tax Highlights
Gianmauro Nigretti
 
Understanding the basics of corporate taxation Nigeria - BRC.pdf
Understanding the basics of corporate taxation Nigeria - BRC.pdfUnderstanding the basics of corporate taxation Nigeria - BRC.pdf
Understanding the basics of corporate taxation Nigeria - BRC.pdf
Maureen Omodiagbe
 
Blt 134 chapter 3
Blt 134 chapter 3Blt 134 chapter 3
Blt 134 chapter 3
Bong Retonel
 
Taxation in india
Taxation in indiaTaxation in india
Taxation in india
VIMAL SOLANKI
 
Corporate tax under 30 minutes sa consultants (1)
Corporate tax under 30 minutes sa consultants (1)Corporate tax under 30 minutes sa consultants (1)
Corporate tax under 30 minutes sa consultants (1)
SaconsultantsDubai
 
Sjms budjet-highlights-2016
Sjms budjet-highlights-2016Sjms budjet-highlights-2016
Sjms budjet-highlights-2016
wellawala
 
Corporate tax (India)
Corporate tax (India)Corporate tax (India)
Corporate tax (India)
Shouryadipta Ghosh
 
TAXATION IN INDIA
TAXATION IN INDIATAXATION IN INDIA
TAXATION IN INDIA
manuelmathew1
 
Corporate Tax - All Sessions.pptx
Corporate Tax - All Sessions.pptxCorporate Tax - All Sessions.pptx
Corporate Tax - All Sessions.pptx
priyankakapoor82
 
Basic accounting unit8
Basic accounting unit8Basic accounting unit8
Basic accounting unit8
UNBFS
 
Doing Business in Peru
Doing Business in PeruDoing Business in Peru
Doing Business in Peru
TGS
 
Chapter 4: How to pay taxes in Colombia
Chapter 4: How to pay taxes in ColombiaChapter 4: How to pay taxes in Colombia
Chapter 4: How to pay taxes in Colombia
Tatiana Behar Russy
 

Similar to ACC311_Corporate Income Taxation in the Philippines (20)

Corporate Tax Planning: Bangladesh Perspective
Corporate Tax Planning: Bangladesh PerspectiveCorporate Tax Planning: Bangladesh Perspective
Corporate Tax Planning: Bangladesh Perspective
 
Overview of Direct Taxes Prevailing in India
Overview of Direct Taxes Prevailing in IndiaOverview of Direct Taxes Prevailing in India
Overview of Direct Taxes Prevailing in India
 
Pay up the report peru 2017
Pay up   the report peru 2017Pay up   the report peru 2017
Pay up the report peru 2017
 
Colombian tax regime
Colombian tax regimeColombian tax regime
Colombian tax regime
 
Taxation in Brazil
Taxation in Brazil Taxation in Brazil
Taxation in Brazil
 
Israel tax system15 5 2007
Israel tax system15 5 2007Israel tax system15 5 2007
Israel tax system15 5 2007
 
Israel tax system15 5 2007
Israel tax system15 5 2007Israel tax system15 5 2007
Israel tax system15 5 2007
 
Direct Tax Code
Direct Tax CodeDirect Tax Code
Direct Tax Code
 
Nigretti Gianmauro: Chile 2016 - Corporate and Tax Highlights
Nigretti Gianmauro: Chile 2016 - Corporate and Tax HighlightsNigretti Gianmauro: Chile 2016 - Corporate and Tax Highlights
Nigretti Gianmauro: Chile 2016 - Corporate and Tax Highlights
 
Understanding the basics of corporate taxation Nigeria - BRC.pdf
Understanding the basics of corporate taxation Nigeria - BRC.pdfUnderstanding the basics of corporate taxation Nigeria - BRC.pdf
Understanding the basics of corporate taxation Nigeria - BRC.pdf
 
Blt 134 chapter 3
Blt 134 chapter 3Blt 134 chapter 3
Blt 134 chapter 3
 
Taxation in india
Taxation in indiaTaxation in india
Taxation in india
 
Corporate tax under 30 minutes sa consultants (1)
Corporate tax under 30 minutes sa consultants (1)Corporate tax under 30 minutes sa consultants (1)
Corporate tax under 30 minutes sa consultants (1)
 
Sjms budjet-highlights-2016
Sjms budjet-highlights-2016Sjms budjet-highlights-2016
Sjms budjet-highlights-2016
 
Corporate tax (India)
Corporate tax (India)Corporate tax (India)
Corporate tax (India)
 
TAXATION IN INDIA
TAXATION IN INDIATAXATION IN INDIA
TAXATION IN INDIA
 
Corporate Tax - All Sessions.pptx
Corporate Tax - All Sessions.pptxCorporate Tax - All Sessions.pptx
Corporate Tax - All Sessions.pptx
 
Basic accounting unit8
Basic accounting unit8Basic accounting unit8
Basic accounting unit8
 
Doing Business in Peru
Doing Business in PeruDoing Business in Peru
Doing Business in Peru
 
Chapter 4: How to pay taxes in Colombia
Chapter 4: How to pay taxes in ColombiaChapter 4: How to pay taxes in Colombia
Chapter 4: How to pay taxes in Colombia
 

Recently uploaded

falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
Falcon Invoice Discounting
 
How to Invest in Cryptocurrency for Beginners: A Complete Guide
How to Invest in Cryptocurrency for Beginners: A Complete GuideHow to Invest in Cryptocurrency for Beginners: A Complete Guide
How to Invest in Cryptocurrency for Beginners: A Complete Guide
Daniel
 
快速办理(RWTH毕业证书)德国亚琛工业大学毕业证录取通知书一模一样
快速办理(RWTH毕业证书)德国亚琛工业大学毕业证录取通知书一模一样快速办理(RWTH毕业证书)德国亚琛工业大学毕业证录取通知书一模一样
快速办理(RWTH毕业证书)德国亚琛工业大学毕业证录取通知书一模一样
yeuwffu
 
Principal of Economics by Gmanwik .pptx
Principal of Economics by Gmanwik  .pptxPrincipal of Economics by Gmanwik  .pptx
Principal of Economics by Gmanwik .pptx
PrashantBhargava14
 
一比一原版(cwu毕业证书)美国中央华盛顿大学毕业证如何办理
一比一原版(cwu毕业证书)美国中央华盛顿大学毕业证如何办理一比一原版(cwu毕业证书)美国中央华盛顿大学毕业证如何办理
一比一原版(cwu毕业证书)美国中央华盛顿大学毕业证如何办理
asukqco
 
Importance of community participation in development projects.pdf
Importance of community participation in development projects.pdfImportance of community participation in development projects.pdf
Importance of community participation in development projects.pdf
krisretro1
 
Power point analisis laporan keuangan chapter 7 subramanyam
Power point analisis laporan keuangan chapter 7 subramanyamPower point analisis laporan keuangan chapter 7 subramanyam
Power point analisis laporan keuangan chapter 7 subramanyam
FarhanRafifSidqi
 
TechnoXander Confirmation of Payee Product Pack 1.pdf
TechnoXander Confirmation of Payee Product Pack 1.pdfTechnoXander Confirmation of Payee Product Pack 1.pdf
TechnoXander Confirmation of Payee Product Pack 1.pdf
richardwellington119
 
Monthly Market Risk Update: June 2024 [SlideShare]
Monthly Market Risk Update: June 2024 [SlideShare]Monthly Market Risk Update: June 2024 [SlideShare]
Monthly Market Risk Update: June 2024 [SlideShare]
Commonwealth
 
Initial Public Offering (IPO) Process.ppt
Initial Public Offering (IPO) Process.pptInitial Public Offering (IPO) Process.ppt
Initial Public Offering (IPO) Process.ppt
ribhi87
 
PM pre reads for the product manager framework
PM pre reads for the product manager frameworkPM pre reads for the product manager framework
PM pre reads for the product manager framework
KishoreKatta6
 
Seven Camp April 2024 Cohort Booklet.pdf
Seven Camp April 2024 Cohort Booklet.pdfSeven Camp April 2024 Cohort Booklet.pdf
Seven Camp April 2024 Cohort Booklet.pdf
FinTech Belgium
 
Money20/20 and EU Networking Event of 20/24!
Money20/20 and EU Networking Event of 20/24!Money20/20 and EU Networking Event of 20/24!
Money20/20 and EU Networking Event of 20/24!
FinTech Belgium
 
Ending stagnation: How to boost prosperity across Scotland
Ending stagnation: How to boost prosperity across ScotlandEnding stagnation: How to boost prosperity across Scotland
Ending stagnation: How to boost prosperity across Scotland
ResolutionFoundation
 
Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...
Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...
Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...
nimaruinazawa258
 
Accounting Information Systems (AIS).pptx
Accounting Information Systems (AIS).pptxAccounting Information Systems (AIS).pptx
Accounting Information Systems (AIS).pptx
TIZITAWMASRESHA
 
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
taqyea
 
What's a worker’s market? Job quality and labour market tightness
What's a worker’s market? Job quality and labour market tightnessWhat's a worker’s market? Job quality and labour market tightness
What's a worker’s market? Job quality and labour market tightness
Labour Market Information Council | Conseil de l’information sur le marché du travail
 
Bridging the gap: Online job postings, survey data and the assessment of job ...
Bridging the gap: Online job postings, survey data and the assessment of job ...Bridging the gap: Online job postings, survey data and the assessment of job ...
Bridging the gap: Online job postings, survey data and the assessment of job ...
Labour Market Information Council | Conseil de l’information sur le marché du travail
 
FCCS Basic Accounts Outline and Hierarchy.pptx
FCCS Basic Accounts Outline and Hierarchy.pptxFCCS Basic Accounts Outline and Hierarchy.pptx
FCCS Basic Accounts Outline and Hierarchy.pptx
nalamynandan
 

Recently uploaded (20)

falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
falcon-invoice-discounting-a-premier-investment-platform-for-superior-returns...
 
How to Invest in Cryptocurrency for Beginners: A Complete Guide
How to Invest in Cryptocurrency for Beginners: A Complete GuideHow to Invest in Cryptocurrency for Beginners: A Complete Guide
How to Invest in Cryptocurrency for Beginners: A Complete Guide
 
快速办理(RWTH毕业证书)德国亚琛工业大学毕业证录取通知书一模一样
快速办理(RWTH毕业证书)德国亚琛工业大学毕业证录取通知书一模一样快速办理(RWTH毕业证书)德国亚琛工业大学毕业证录取通知书一模一样
快速办理(RWTH毕业证书)德国亚琛工业大学毕业证录取通知书一模一样
 
Principal of Economics by Gmanwik .pptx
Principal of Economics by Gmanwik  .pptxPrincipal of Economics by Gmanwik  .pptx
Principal of Economics by Gmanwik .pptx
 
一比一原版(cwu毕业证书)美国中央华盛顿大学毕业证如何办理
一比一原版(cwu毕业证书)美国中央华盛顿大学毕业证如何办理一比一原版(cwu毕业证书)美国中央华盛顿大学毕业证如何办理
一比一原版(cwu毕业证书)美国中央华盛顿大学毕业证如何办理
 
Importance of community participation in development projects.pdf
Importance of community participation in development projects.pdfImportance of community participation in development projects.pdf
Importance of community participation in development projects.pdf
 
Power point analisis laporan keuangan chapter 7 subramanyam
Power point analisis laporan keuangan chapter 7 subramanyamPower point analisis laporan keuangan chapter 7 subramanyam
Power point analisis laporan keuangan chapter 7 subramanyam
 
TechnoXander Confirmation of Payee Product Pack 1.pdf
TechnoXander Confirmation of Payee Product Pack 1.pdfTechnoXander Confirmation of Payee Product Pack 1.pdf
TechnoXander Confirmation of Payee Product Pack 1.pdf
 
Monthly Market Risk Update: June 2024 [SlideShare]
Monthly Market Risk Update: June 2024 [SlideShare]Monthly Market Risk Update: June 2024 [SlideShare]
Monthly Market Risk Update: June 2024 [SlideShare]
 
Initial Public Offering (IPO) Process.ppt
Initial Public Offering (IPO) Process.pptInitial Public Offering (IPO) Process.ppt
Initial Public Offering (IPO) Process.ppt
 
PM pre reads for the product manager framework
PM pre reads for the product manager frameworkPM pre reads for the product manager framework
PM pre reads for the product manager framework
 
Seven Camp April 2024 Cohort Booklet.pdf
Seven Camp April 2024 Cohort Booklet.pdfSeven Camp April 2024 Cohort Booklet.pdf
Seven Camp April 2024 Cohort Booklet.pdf
 
Money20/20 and EU Networking Event of 20/24!
Money20/20 and EU Networking Event of 20/24!Money20/20 and EU Networking Event of 20/24!
Money20/20 and EU Networking Event of 20/24!
 
Ending stagnation: How to boost prosperity across Scotland
Ending stagnation: How to boost prosperity across ScotlandEnding stagnation: How to boost prosperity across Scotland
Ending stagnation: How to boost prosperity across Scotland
 
Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...
Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...
Tdasx: Interpreting the 2024 Cryptocurrency Market Funding Trends and Technol...
 
Accounting Information Systems (AIS).pptx
Accounting Information Systems (AIS).pptxAccounting Information Systems (AIS).pptx
Accounting Information Systems (AIS).pptx
 
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
一比一原版美国新罕布什尔大学(unh)毕业证学历认证真实可查
 
What's a worker’s market? Job quality and labour market tightness
What's a worker’s market? Job quality and labour market tightnessWhat's a worker’s market? Job quality and labour market tightness
What's a worker’s market? Job quality and labour market tightness
 
Bridging the gap: Online job postings, survey data and the assessment of job ...
Bridging the gap: Online job postings, survey data and the assessment of job ...Bridging the gap: Online job postings, survey data and the assessment of job ...
Bridging the gap: Online job postings, survey data and the assessment of job ...
 
FCCS Basic Accounts Outline and Hierarchy.pptx
FCCS Basic Accounts Outline and Hierarchy.pptxFCCS Basic Accounts Outline and Hierarchy.pptx
FCCS Basic Accounts Outline and Hierarchy.pptx
 

ACC311_Corporate Income Taxation in the Philippines

  • 2. CREATE LAW Republic Act (RA) No. 11534, otherwise known as the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act was created by the Philippine Congress in response to the COVID-19 pandemic as a fiscal relief to domestic and foreign corporations doing business in the Philippines. It seeks to amend several provisions in the old Tax Code, with a central focus on lowering corporate income tax rates and rationalizing fiscal incentives to better attract local and foreign investments in the Philippines.
  • 3. CREATE LAW Before the COVID-19 pandemic, CREATE Act was initially known as TRABAHO bill (or Tax Reform for Attracting Better and Higher-quality Opportunities). When the bill failed to pass Congress, it was renamed to CITIRA (or Corporate Income Tax and Incentives Reform Act), which also failed to pass Congress because it was deemed as a non- priority and non-urgent bill during the outbreak of COVID-19. The addition of COVID-19 related provisions propelled the passage of the bill into law.
  • 6. Classification of Corporations • incorporated under the laws of the Philippines. Domestic Corporation • One formed, organized, or existing under any laws other than those of the Philippines Foreign Corporation
  • 7. Types of Foreign Corporation Resident Foreign Corporation •Those engaged in trade or business within the Philippines. Non – Resident Foreign Corporation •Those not engaged in trade or business within the Philippines.
  • 8. Sources of Taxable Income Type of Corporation Sources of Taxable Income Within the Philippines Outside the Philippines Domestic ✅ ✅ Resident Foreign ✅ ❎ Non - Resident Foreign ✅ ❎
  • 9. Classification of Corporations Corporation Tax Base Domestic Taxable Income from all sources within and outside the Philippines Resident Foreign Taxable Income from sources within the Philippines Non - Resident Foreign Gross Sales/Receipts from sources within the Philippines
  • 10. Income Tax Rule on Regular Corporation Domestic Corporation 20% or 25% Regular Corporate Income Tax subject to the Minimum Corporate Income Tax. Resident Foreign Corporation 25% Regular Corporate Income Tax subject to the Minimum Corporate Income Tax.
  • 11. Tax Base Tax Base for RCIT purposes is taxable income which is the gross income less allowable deductions. Tax base for MCIT, is the gross income. Gross income as contemplated in the tax code, is Net sales or receipts (Gross Sales/Receipt less sales returns, discounts and allowances) less any Cost of Sales or Cost of Services.
  • 12. Tax Base • For Non – resident Foreign Corporation, the tax base is the Gross Sales or Receipts which generally connotes Sales/Receipts less discounts, returns & allowances, or Net Sales/Receipts.
  • 14. Corporate Income Taxation Regular Corporate Income Tax • Applies to all corporations in general. • It covers all taxable income of corporations that are not subject to final tax and capital gains tax. Minimum Corporate Income Tax • Applies to domestic corporation. • MCIT does not apply to non- resident foreign corporations. However, resident foreign corporations are also liable for MCIT.
  • 15. Regular Corporate Income Tax Income Tax rate for all corporate is 30% notwithstanding if they are domestic or foreign. Beginning July 1, 2020, the effective rate shall be 25%, under the CREATE Law. A reduced rate of 20% will apply to a domestic corporation (MSMEs) with: Net taxable income not exceeding P5,000,000; and Total assets not exceeding P100,000,000.
  • 17. Regular Corporate Income Tax Assuming the Jean Company is a MSME
  • 18. Minimum Corporate Income Tax The MCIT is 2% of Gross Income. However, under the CREATE Law, the rate shall be 1% beginning July 1, 2020 until June 30, 2023. A company is liable for MCIT starting the 4th year immediately following the year in which it commenced its operation. MCIT is implemented on domestic and resident foreign corporations when: • They have zero or negative taxable income; or • MCIT is greater than the regular corporate income tax due.
  • 22.
  • 23. Sub-Classification of Corporate Income Taxpayers • Domestic Corporations • Exempted domestic Corporation • Government agencies & instrumentalities • Certain GOCCs • Special domestic Corporation • Proprietary Educational institutions and non-profit hospital • Subject to 10% tax on world taxable income subject to the predominance test • Under CREATE, effective Jul. 1, 2020 – Jun. 30, 2023 the tax rate is 1%.
  • 24. Sub-Classification of Corporate Income Taxpayers • Foreign Corporations • Special resident foreign corporations • International carrier • Offshore banking unit • Branch profit remittances • RAHQs and ROHQs • Special non-resident foreign corporations • Non-resident cinematographic film owner, lessor or distributor • Non-resident lessor of vessels, chartered by Philippine nationals • Non-resident owner or lessor of aircraft, machineries and other equipment
  • 25. Special resident foreign corporations • Under CREATE LAW, OBU is treated as regular foreign corporation. Tax Rate Tax Base International carrier 2.5% Gross Philippine Billings Offshore banking unit 25% Taxable Income Branch profit remittances 15% Total profit applied or earmarked for remittance RAHQs (RAH or RHQ) Exempt ROHQs 10% Taxable Income
  • 26. Special non-resident foreign corporations Tax Rate Tax Base Non-resident cinematographic film owner, lessor or distributor 25% Gross income from all sources within the Philippines Non-resident lessor of vessels, chartered by Philippine nationals 4.5% Gross rentals, lease or charter fees Non-resident owner or lessor of aircraft, machineries and other equipment 7.5% Rentals, lease or charter fees