San Beda College of Law

2005 CENTRALIZED BAR OPERATIONS

M EMORY A ID IN T AXATION L AW
ANNEX B
TAX RATES FOR CORPORATIONS

GENERAL FOREIGN CORPORATIONS

DOMESTIC CORPORATIONS
CATEGORIES RESIDENT FOREIGN CORPORATIONS NON-RESIDENT CORPORATIONS

IN GENERAL, INCLUDING GOCCs, AGENCIES OR (EXISTING UNDER THE LAWS OF FOREIGN (NOT ENGAGED IN TRADE OR BUSINESS IN
INSTRUMENTALITIES (EXCEPT GSIS, SSS, PHIC, PCSO AND COUNTRY, ENGAGED IN TRADE OR BUSINESS THE PHIL.)
PAGCOR) ENGAGED IN A SIMILAR BUSINESS INDUSTRY OR WITHIN THE PHIL.)
ACTIVITIES

SOURCES OF INCOME ALL SOURCES WITHIN THE PHIL. WITHIN THE PHIL.

NATURE OF INCOME TAXABLE BASE/RATE

In General TAX INCOME TAXABLE INCOME GROSS INCOME

35%(Normal Domestic Rate) Same as Normal Domestic Rate Same as Normal Domestic Rate.
34% - 1998
33% - 1999
32% - 2000 onwards
A. Transition Period
1. For Corp. Adopting fiscal year accounting period,
income and expenses shall be deemed to have been
earned and spent equally for each month of the period.
2. Taxable Income x No. of Mos. Covered x Tax Rate
12 Mos. by the tax rate

B. Government or its Political Subdivision.

1. Income derived from any public utility or from the
exercise of any essential government function accruing
to the Government of the Phil. Or to any political
subdivision thereof is excluded from gross income[Sec.
32(B)(7)(b)]

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 San Beda College of Law

2005 CENTRALIZED BAR OPERATIONS

M EMORY A ID IN T AXATION L AW
GENERAL FOREIGN CORPORATIONS
DOMESTIC CORPORATIONS
CATEGORIES RESIDENT FOREIGN CORPORATIONS NON-RESIDENT CORPORATIONS

Optional Corporate Tax GROSS INCOME - 15% N.A.

Interest on currency
bank deposit and yield
or any other monetary Interest Income on foreign loans contracted
Gross Income ( within ) 20% FWT
benefit from deposit on or after Aug. 1, 1986(20%fwt)
substitutes and from
trust funds and similar
arrangements royalties

Income derived under 1. Gross interest income derived by a domestic corporation and a resident foreign corporation from a Any income from transaction with
the expanded FCDS depositary bank 7.5% FWT. depository banks under FCDS shall be
2. Income derived by a depository bank from foreign currency transactions with local commercial banks exempt from income tax
including branches of foreign banks, other depositary banks, and residents 10% Final Tax.

Inter-corporate Dividends received by a domestic corporation from another Dividends received from a domestic Dividend received from a domestic corp.
dividends and income domestic corporation shall not be subject to tax. corporation not subject to tax. 15% FWT, Provided foreign law allows
from a taxable taxpayer clause, otherwise it will be
partnership subject to the normal domestic rate

Capital Gains from the Net Capital Gain

sale of shares of stock’s Not over P100,000 – 5%
not traded in the local Excess of P100,000 – 10%
stock exchange.

Capital Gains Realized

Gross Selling Price or FMV whatever is higher 6% Final Tax
from the Disposition of
Land and/or Buildings

Minimum Corporate
Gross Income – 2% MCIT N.A.
Income Tax (MCIT)
Please refer to B-1
Improperly Improperly Accumulated Taxable Income –10% tax (in
N.A.
Accumulated Earnings addition to other income taxes)

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 San Beda College of Law

2005 CENTRALIZED BAR OPERATIONS

M EMORY A ID IN T AXATION L AW
GENERAL FOREIGN CORPORATIONS
DOMESTIC CORPORATIONS
CATEGORIES RESIDENT FOREIGN CORPORATIONS NON-RESIDENT CORPORATIONS
(IAE) Tax
Please refer to B-1

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