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INCOME TAXATION OF CORPORATIONS

DOMESTIC
Definition

Tax Code Reference


Tax Base

Sec 22 (B) & (C )


Applies to corporation
created or organized
in the Philippines or
under its laws

CORPORATIONS
RESIDENT
FOREIGN

NON-RESIDENT
FOREIGN

Sec 22 (I)
Applies to a foregin
corporation not
engaged in trade or
business within the
Philippines
Sec 27
Sec 28 (A)
Sec 28 (B)
taxable income from taxable income from gross income from
all sources within
all sources within all sources within the
the Philippines
Philippines
and without the
Philippines

Tax Rates - In general

34% in 1998
33% in 1999
32% in 2000-2005
35 % in 2006-2008
30% in 2009 &
thereafter
Tax Rates - on Passive Income (Subject to Final Tax [FT])
Interest on any currency bank deposit and
20% FT
yield or any other monetary benefit from
deposit substitutes and from trust funds
and similar arragements

Sec 22 (H)
Applies to foreign
corporation engaged
in trade or business
within the Philippines

34% in 1998
33% in 1999
32% in 2000-2005
35 % in 2006-2008
30% in 2009 &
thereafter

34% in 1998
33% in 1999
32% in 2000-2005
35 % in 2006-2008
30% in 2009 &
thereafter

20% FT

Interest on foreign currency deposit system

7.5% FT

7.5% FT

34% in 1998
33% in 1999
32% in 2000-2005
35 % in 2006-2008
30% in 2009 &
thereafter
EXEMPT

Interest Income on Foreign Loans


contracted on or after August 1, 1986
Interest Income received by a FCDU
Income derived by a depository bank under
the expanded foreign currency deposit
system from foreign currency transactions
with nonresidents, offshore banking
units in the Philippines, local
commercial banks including branches
of foreign banks that may be authorized
by the Bangko Sentral ng Pilipinas (BSP) to
transact business with foreign currency
deposit system

N/A

N/A

20% FT

EXEMPT [RA No.


9294]

EXEMPT [RA No.


9294]

N/A

INCOME TAXATION OF CORPORATIONS

DOMESTIC

CORPORATIONS
RESIDENT
FOREIGN

NON-RESIDENT
FOREIGN

10% FT

10% FT

N/A

N/A

EXEMPT [RA No.


9294]

N/A

N/A

10% FT

N/A

Royalties

20% FT

20% FT

Dividends

EXEMPT

EXEMPT

34% in 1998
33% in 1999
32% in 2000-2005
35 % in 2006-2008
30% in 2009 &
thereafter
15% FT (conditional)

5% / 10% FT

5% / 10% FT

5% / 10% FT

6% FT
based on gross
selling price or FMV
whichever is higher

34% in 1998
33% in 1999
32% in 2000-2005
35 % in 2006-2008
30% in 2009 &
thereafter
2%

34% in 1998
33% in 1999
32% in 2000-2005
35 % in 2006-2008
30% in 2009 &
thereafter
N/A

Interest income from foreign currency loans


granted by such depository banks under
said expanded system to residents other
than offshore banking units in the
Philippines or other depository banks
under the expanded system
Interest Income received by an OBU
Income derived by a depository bank under
the expanded foreign currency deposit
system from foreign currency transactions
with nonresidents, offshore banking
units in the Philippines, local
commercial banks including branches
of foreign banks that may be authorized
by the Bangko Sentral ng Pilipinas (BSP) to
transact business with foreign currency
deposit system
Interest income from foreign currency loans
granted to residents other than offshore
banking units or local commercial
banks , including local branches of
foreign banks that may be authorized
by BSP to transact with offshore
banking units

Tax Rates - on capital gains


On shares of stock not traded (based on
net capital gains)
On Land or Buildings (classified as capital
assets)

Tax Rate - Minimum Corporate Income Tax


(MCIT)

2%

INCOME TAXATION OF CORPORATIONS

Tax Rate - Branch Profit Remittance Tax


(BPRT)
Tax Rate - Improperly Accumulated
Earnings Tax (Sec 29)
Atty. Marissa O. Cabreros (Ateneo School of Law)

DOMESTIC

CORPORATIONS
RESIDENT
FOREIGN

NON-RESIDENT
FOREIGN

N/A

15%

N/A

10%

10%

N/A

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