INCOME TAXATION OF CORPORATIONS

DOMESTIC
Definition Sec 22 (B) & (C ) Applies to corporation created or organized in the Philippines or under its laws

CORPORATIONS RESIDENT FOREIGN

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

NON-RESIDENT FOREIGN

Tax Code Reference Tax Base

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 34% in 1998 33% in 1999 32% in 2000-2005 35 % in 2006-2008 30% in 2009 & thereafter 20% FT 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 EXEMPT 20% FT

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

Interest on foreign currency deposit system 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

7.5% FT N/A

7.5% FT N/A

EXEMPT [RA No. 9294]

EXEMPT [RA No. 9294]

N/A

INCOME TAXATION OF CORPORATIONS

DOMESTIC
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 Royalties 10% FT

CORPORATIONS RESIDENT FOREIGN

10% FT

NON-RESIDENT FOREIGN
N/A

N/A

EXEMPT [RA No. 9294]

N/A

N/A

10% FT

N/A

20% FT

20% FT

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

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

5% / 10% FT 34% in 1998 33% in 1999 32% in 2000-2005 35 % in 2006-2008 30% in 2009 & thereafter 2%

5% / 10% FT 34% in 1998 33% in 1999 32% in 2000-2005 35 % in 2006-2008 30% in 2009 & thereafter N/A

Tax Rate - Minimum Corporate Income Tax (MCIT)

2%

INCOME TAXATION OF CORPORATIONS

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

CORPORATIONS RESIDENT FOREIGN

15% 10%

NON-RESIDENT FOREIGN
N/A N/A

N/A 10%