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Questions and Answers
Foreign corporations operating in the Philippines are taxable on income derived from sources within and outside the Philippines.
Foreign corporations operating in the Philippines are taxable on income derived from sources within and outside the Philippines.
True
Rank and file employees may be subject to fringe benefit tax.
Rank and file employees may be subject to fringe benefit tax.
False
Lodging costs for foreign travel are taxable fringe benefits regardless of the amount.
Lodging costs for foreign travel are taxable fringe benefits regardless of the amount.
True
Non-resident owners, lessors, or distributors of cinematographic films are taxed at 15% of gross income.
Non-resident owners, lessors, or distributors of cinematographic films are taxed at 15% of gross income.
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Every corporation must file a quarterly summary declaration of its gross income and deductions on a cumulative basis for the preceding quarter.
Every corporation must file a quarterly summary declaration of its gross income and deductions on a cumulative basis for the preceding quarter.
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Compensation income includes types of employee benefits that are subject to regular tax.
Compensation income includes types of employee benefits that are subject to regular tax.
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Capital assets held for longer than one year are subject to 50% capital gains or loss recognition.
Capital assets held for longer than one year are subject to 50% capital gains or loss recognition.
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Perquisite benefits are fringe benefits subject to fringe benefit tax.
Perquisite benefits are fringe benefits subject to fringe benefit tax.
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Personal expenses of employees paid by the employer are not considered fringe benefits.
Personal expenses of employees paid by the employer are not considered fringe benefits.
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Fringe benefits provided for the employer's convenience are exempt from fringe benefit tax.
Fringe benefits provided for the employer's convenience are exempt from fringe benefit tax.
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The monetary value of benefits in kind is less than the property value.
The monetary value of benefits in kind is less than the property value.
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Educational assistance tied to the taxpayer's trade may be exempt if accompanied by an employee bond.
Educational assistance tied to the taxpayer's trade may be exempt if accompanied by an employee bond.
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The taxable fringe benefit for excessive benefits starts above PhP100,000.
The taxable fringe benefit for excessive benefits starts above PhP100,000.
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Managerial employees are excluded from paying fringe benefit tax.
Managerial employees are excluded from paying fringe benefit tax.
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The monetary value of employee housing benefits is equal to the full rental value.
The monetary value of employee housing benefits is equal to the full rental value.
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Cash benefits paid to employees are considered as their fair value.
Cash benefits paid to employees are considered as their fair value.
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Study Notes
Foreign Corporations and Income Tax
- Foreign corporations, regardless of business activity in the Philippines, are taxable on income sourced within or outside the Philippines.
- Fringe benefits are subject to withholding tax by employers.
Fringe Benefit Tax
- Rank-and-file employees may be subject to fringe benefit tax.
- Annual depreciation of movable property is 20% of its value.
- Lodging expenses on foreign travel are taxable fringe benefits, regardless of the amount.
- Employer-named employee expenses are considered employer business expenses.
Deductions for Foreign Corporations
- Domestic, resident foreign, and non-resident foreign corporations can deduct itemized deductions from business income, as per the Tax code.
- Returns showing cumulative income and deductions for a quarter do not have to be filed if no income tax is due for that period.
Specific Income Tax Cases
- Income from offshore banking units authorized by the BSP, from foreign currency transactions with local banks, is subject to 10% final tax.
- Non-resident cinematographic film owners, lessors, or distributors are taxed at 15% of gross income.
- Perquisite benefits function as compensation income, but are considered fringe benefits subject to fringe benefit tax.
- Ordinary assets are subject to regular income tax; capital assets (excluding domestic stocks and real properties) are also subject to regular income tax.
Corporate Quarterly Summary Declarations
- Every corporation must file a quarterly summary declaration of gross income and deductions, cumulatively, for the preceding quarter(s), to determine income tax.
Capital Gains/Losses Recognition
- Capital assets held for less than one year (short-term) are recognized at 100% of gain/loss.
- Capital assets held for more than one year (long-term) are recognized at 50% of gain/loss.
Fringe Benefits
- Fringe benefits cover benefits or incentives given to employees other than basic pay.
- Aircraft (including helicopters) are considered for business use and are not subject to fringe benefit tax.
- Fringe benefits specifically applicable to managerial and supervisory employees are not considered compensation income, but are still subject to final tax.
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Description
This quiz covers the taxation of foreign corporations operating in the Philippines, including withholding tax on fringe benefits and deductions available under the Tax code. It also addresses specific cases related to income tax and offshore banking units, providing a comprehensive understanding of tax regulations for foreign entities.
