t

a
x
a
t
I
o
n

OUTLINE
I.

DEFINITION OF CORPORATION ;
1.1 DEFINITION UNDER TAXATION; (Sec. 22 NIRC (B), as Amended)
1.2
DEFINITION UNDER CORPORATION CODE OF THE PHIL. (Sec. 2 Bp. Blg. 68
Corp. of Phil.).

II.

SPECIAL CORPORATION
A. DOMESTIC CORPORATION; and
B. FOREIGN CORPORATION;
B.1 RESIDENT FOREIGN CORPORATION ( Sec. 22 (H) NIRC, as amended);
B.2 NON RESIDENT FOREIGN CORPORATION (Sec. 22 (I) NIRC, as amended).

III.

EXEMPTION

IV.

JOINT VENTURE

I.Definition of Corporation

II.Special Corporation
>Sources
Sourceswithin
from
>Created
within
and without
Nonresident
the
or Phil.
organized
Sources
the Phil.
foreign
in
from
thecorporation
within
Philippines
the Philippines
or under its laws.

CASE
CIR

III. Why Exempt?

Basis;
I. CONSTITUTION(Sec. 28 (3) Art. VI 1987 Phil
Cons.);
II. NIRC (Sec. 32 (B) NIRC, as Amended) & (Sec.
73 (B);
III. LOCAL GOVERNMENT CODE( Sec. 234 (a),
(b),(c), (d), (e), LGC)

I. Sec.28 (3) 1987 Phil. Cons

(3) Charitable institutions, churches and
personages or convents appurtenant
thereto, mosques, non-profit cemeteries,
and all lands, buildings, and improvements,
actually, directly, and exclusively used for
religious, charitable, or educational
purposes shall be exempt from taxation.
(Exempted only in Real Property tax)

II. Sec. 32 (B) NIRC, as

Amended

(B) Exclusions from Gross Income

The following items shall not
be included in gross income and
shall be exempt from taxation
under this Title:

Cont;

Proceeds of the Life Insurance

Sec. 73 (B) NIRC, as

Amended
General Rule:
(B)

A stock dividend representing the transfer of surplus to

capital account shall not be subject to tax.
Exemption:

However,

if a corporation cancels or redeems stock issued as a

dividend at such time and in such manner as to make the
distribution and cancellation or redemption, in whole or in part,
essentially equivalent to the distribution of a taxable dividend,
the amount so distributed in redemption or cancellation of the
stock shall be considered as taxable income to the extent that it
represents a distribution of earnings or profits.

III. LOCAL GOVERNMENT

CODE( Sec. 234 (a), (b),(c), (d),
(e), LGC)
Exemptions from Real Property Tax The following are exempted
from payment of the real property tax

(a)Real Property owned by the Republic of the Philippines

or any of its political subdivisions except when the
beneficial use thereof has been granted, for consideration
or otherwise, to a taxable person;
(b)Charitable institutions, churches, parsonages or
convents appurtenant thereto, mosques, nonprofit or
religious cemeteries and all lands, buildings, and
improvements actually, directly, and exclusively used for
religious, charitable or educational purposes;

Cont;
(c)All machineries and equipment that are actually, directly
and exclusively used by local water districts and governmentowned or controlled corporations engaged in the supply and
distribution of water and/or generation and transmission of
electric power;
(d)All real property owned by duly registered operatives as
provided for under R.A. No. 6983; and
(e)Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of
real property tax previously granted to, or presently enjoyed by,
all persons, whether natural or juridical, including all governmentowned or controlled corporations are hereby withdrawn upon the
effectivity of this code.

IV. JOINT VENTURE