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  • Resident Foreign Corpo

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    Jorela Tipan
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    The document provides two illustrative problems about calculating the taxable income of resident foreign corporations in the Philippines. For the first corporation, the taxable income is P60,000 and it is subject to final income tax on gains from the sale of shares, interest income from a local bank deposit, and interest income from a foreign bank account. For the second corporation, its taxable income is P12,500 and it is subject to final income tax on interest income from a local bank deposit and a foreign bank account.

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    The document provides two illustrative problems about calculating the taxable income of resident foreign corporations in the Philippines. For the first corporation, the taxable income is P60,000 and it is subject to final income tax on gains from the sale of shares, interest income from a local bank deposit, and interest income from a foreign bank account. For the second corporation, its taxable income is P12,500 and it is subject to final income tax on interest income from a local bank deposit and a foreign bank account.

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    © All Rights Reserved
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    13 views3 pages

    Resident Foreign Corpo

    Uploaded by

    Jorela Tipan
    The document provides two illustrative problems about calculating the taxable income of resident foreign corporations in the Philippines. For the first corporation, the taxable income is P60,000 and it is subject to final income tax on gains from the sale of shares, interest income from a local bank deposit, and interest income from a foreign bank account. For the second corporation, its taxable income is P12,500 and it is subject to final income tax on interest income from a local bank deposit and a foreign bank account.

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    © All Rights Reserved
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    of 3

    Amante, Kevin

    Del Valle, Ryza Famille

    Tipan, Jorela

    RESIDENT FOREIGN CORPORATION

    Illustrative Problems

    1. The WERPA Manufacturing Corporation is a resident foreign corporation engaged


    in the production and distribution of green coffee in the Philippines. During the
    taxable year of 2016, it gained and incurred the following income and expenses,
    respectively:

    1. Gross sales in the Phils. P500,000

    2. Gross sales abroad P300, 000

    3. Cost of Sales – Phils P250, 000

    4. Cost of Sales – outside Phils P100, 000

    5. Total Expenses in the Phils P150, 000

    6. Total Expenses outside P100, 000

    7. Dividend from Plaridel Corp. (domestic) P20, 000

    8. Dividend from Lodi Corp. (Russian Corp.) P10, 000

    9. Rents received from apartments in the Philippines P50, 000

    10. Gain on sale of land located in Manila P50, 000

    11. Sale of shares of stock not listed and traded in

    stock exchange P10, 000

    12. Interest on currency deposit with BPI P5, 000

    13. Interest on dollar account with RCBC $100

    How much is the taxable income?

    What items are subject to final income tax?


    COMPUTATION

    Gross income from within the Philippines

    Gross Sales - Philippines. P500,000


    Less: Cost of Sales 250,000
    Gross Income P250,000
    Less: Cost of expenses 150,000
    P100,000

    Add: Rents Received from Rents within the Philippines - P50,000

    Gain on sale of land located in Manila - P50,000

    Gross Income: P200, 000


    Tax Rate: x 30%
    P 60, 000

    Sale of shares of stock not listed and traded in stock exchange

    P10,000
    X 5%
    P500

    Interest on currency deposit with BPI

    P5,000
    X 20%
    P1000

    Interest on dollar account with RCBC

    $100
    X 7 ½%
    $7.5
    2. FEDEX-YZ Shipping Company, a resident foreign corporation, earned the
    following income and incurred the following expenses during the 1st year of its
    operation.

    1. Gross Philippine Billings P500,000

    2. Gross sales from abroad P300, 000

    3. Dividend from ABC Corp. (domestic) P20, 000

    4. Dividend from DEF Corp. (Russian Corp.) P10, 000

    5. Interest on currency deposit with RT Bank P5, 000

    6. Interest on dollar account with TI Bank $100

    How much is the taxable income?

    What items are subject to final income tax?

    Gross Philippine Billings – P500, 000 x 2.5% = P12, 500

    Interest on currency deposit with BPI

    P5,000
    X 20%
    P1000

    Interest on dollar account with RCBC

    $100
    X 7 ½%
    $7.5

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