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Questions and Answers

What is the main distinction between gross income and taxable income for corporations?

  • Taxable income is derived after deductions are applied. (correct)
  • Taxable income includes all forms of income without any deductions.
  • Gross income is calculated after taxes.
  • Gross income includes only operating revenues.

    • Which of the following statements correctly describes the tax treatment of PAGCOR and its contractees?

  • Contractees and licensees of PAGCOR are liable for corporate income tax.
  • The 5% franchise tax payment benefits both PAGCOR and its contractees. (correct)
  • PAGCOR must pay a 10% corporate income tax based on their gross income.
  • PAGCOR is exempt from all forms of taxation.

    • In the calculation of taxable income for corporations, which of the following deductions are typically allowed?

  • Only the Optional Standard Deduction.
  • Non-operating income and personal expenses.
  • Itemized deductions and the Optional Standard Deduction. (correct)
  • Penalties and fines incurred during business operations.

    • What defines the nature of e-Sabong as discussed in the content?

    <p>It refers to online wagering on live cockfighting matches through licensed platforms.</p> Signup and view all the answers

    Which calculation represents the total gross income for a corporation prior to deducting any expenses?

    <p>Gross income from operations plus non-operating income.</p> Signup and view all the answers

    Which tax obligations applies specifically to PAGCOR regarding its employees?

    <p>PAGCOR must withhold taxes on employee compensation.</p> Signup and view all the answers

    What is the criteria for gross income as defined for domestic and resident foreign corporations?

    <p>Gross income is the entire revenue before any deductions.</p> Signup and view all the answers

    What is the effect of the Bloomberry ruling on e-Sabong?

    <p>E-Sabong operators are subject to the same tax rules as PAGCOR.</p> Signup and view all the answers

    What is the gaming tax rate levied on Offshore Gaming Licensees (OGLs)?

    <p>5% of the Gross Gaming Revenue (GGR) or 5% of agreed predetermined minimum monthly revenue</p> Signup and view all the answers

    Which of the following accurately describes how taxable income is calculated for corporations?

    <p>Gross income minus deductions authorized for such types of income</p> Signup and view all the answers

    How is gross income defined for alien employees working in the Philippines under POGO entities?

    <p>All earnings including bonuses and in-kind allowances</p> Signup and view all the answers

    What is the minimum final withholding tax an alien employee must pay per taxable month in the Philippines?

    <p>P12,500</p> Signup and view all the answers

    Which type of tax is charged on income from non-gaming operations for Philippine-based OGLs?

    <p>25% income tax on taxable income</p> Signup and view all the answers

    In determining net income for taxation, which of the following statements is true?

    <p>Net income is the remainder after authorized deductions are subtracted from gross income.</p> Signup and view all the answers

    What is the tax treatment for income derived from E-Sabong operations?

    <p>Subject to the same gaming tax as other gaming operations</p> Signup and view all the answers

    What obligation do employers have regarding the final withholding tax for foreign employees in the Philippines?

    <p>Employers are responsible for withholding and remitting the tax monthly.</p> Signup and view all the answers

    What distinguishes a domestic corporation from a foreign corporation regarding income taxation?

    <p>Domestic corporations are taxed on income from both national and international sources.</p> Signup and view all the answers

    Which entity is considered a corporation for tax purposes?

    <p>A partnership other than a general professional partnership.</p> Signup and view all the answers

    What is the tax treatment of income generated by PAGCOR?

    <p>PAGCOR pays corporate income tax on all income.</p> Signup and view all the answers

    Which of the following correctly describes taxable income?

    <p>Taxable income is gross income minus allowable deductions.</p> Signup and view all the answers

    How is net income calculated in the context of corporate taxation?

    <p>Net income is gross income minus all operational costs and allowable deductions.</p> Signup and view all the answers

    What is the final tax rate on passive income for corporate taxpayers?

    <p>Passive income has a specific final withholding tax rate depending on the source.</p> Signup and view all the answers

    What defines a micro, small, or medium enterprise (MSME) for tax purposes?

    <p>A categorized entity based strictly on its revenue and number of employees.</p> Signup and view all the answers

    What is the main factor in determining the taxability of E-Sabong in the Philippines?

    <p>E-Sabong income is taxed as part of normal corporate income if registered.</p> Signup and view all the answers

    Study Notes

    Income Tax for Corporations

    • General Professional Partnerships: Partnerships formed for a specific profession, where no part of the income is from trade or business.
    • Government-Owned or Controlled Corporations (GOCCs): Corporations owned or controlled by the government.
    • Foreign-Sourced Dividends: Dividends received from non-resident foreign corporations.

    Sources of Income

    • Domestic Corporations: Taxable on income from sources inside and outside the Philippines.
    • Foreign Corporations: Taxable only on income from Philippine sources, regardless of whether they reside in the Philippines.
    • Partnerships (except General Professional Partnerships): Considered corporations for tax purposes.

    Tax Rates

    • Domestic Corporations:

      • Normal Rate: 25% (effective July 1, 2020).
      • Minimum Corporate Income Tax (MCIT): 1%.
      • Improperly Accumulated Earnings: 10%.

    • Foreign Corporations:

      • 25% (effective July 1, 2020) on income from within the Philippines. Varying rates apply in some cases, such as special allowances for dividends or interests received in the Philippines.

    • Special Corporations (GOCCs): Specific tax rates depend on the details of their particular operations, as defined by the law.

    Additional Details

    • Just-In-Time Inventory Agreement (JIT): Does not automatically make a company subject to Philippine income tax, requires a presence/permanent establishment (PE) in the Philippines.
    • The text discusses various sources of income, identifying when income is considered from within or outside the Philippines.
    • Tax treatment for different types of corporations is detailed including those engaged in specific sectors like international transport, and construction projects.

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