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Questions and Answers
What is the tax rate on Philippine Gross Income for a Non-resident Foreign Corporation?
What is the tax rate on Philippine Gross Income for a Non-resident Foreign Corporation?
What percentage of Gross Income can corporations deduct as an Optional Standard Deduction?
What percentage of Gross Income can corporations deduct as an Optional Standard Deduction?
Which type of corporation is exempt from Corporate Income Tax?
Which type of corporation is exempt from Corporate Income Tax?
What type of organization is a labor organization not organized principally for profit?
What type of organization is a labor organization not organized principally for profit?
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What type of corporation is a cemetery company, owned and operated exclusively for the benefit of its members?
What type of corporation is a cemetery company, owned and operated exclusively for the benefit of its members?
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What type of organization is a non-stock corporation operated exclusively for religious, charitable, scientific, athletic, or cultural purposes?
What type of organization is a non-stock corporation operated exclusively for religious, charitable, scientific, athletic, or cultural purposes?
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What type of corporation is a farmers’ association operated as a sales agent for the purpose of marketing the products of its members?
What type of corporation is a farmers’ association operated as a sales agent for the purpose of marketing the products of its members?
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Which corporations can use the Optional Standard Deduction (OSD)?
Which corporations can use the Optional Standard Deduction (OSD)?
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What is excluded from the term 'corporation'?
What is excluded from the term 'corporation'?
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What is the regular corporate tax rate for a domestic corporation with total assets exceeding P100,000,000?
What is the regular corporate tax rate for a domestic corporation with total assets exceeding P100,000,000?
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Which of the following is a condition for a domestic corporation to be subject to a 20% regular corporate tax rate?
Which of the following is a condition for a domestic corporation to be subject to a 20% regular corporate tax rate?
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What is the tax rate on branch profits remitted by a foreign corporation to its head office?
What is the tax rate on branch profits remitted by a foreign corporation to its head office?
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What is not considered as 'Branch Profits'?
What is not considered as 'Branch Profits'?
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Which of the following authorities is an exception to the branch profits remittance tax?
Which of the following authorities is an exception to the branch profits remittance tax?
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What is the tax rate on the taxable income of a resident foreign corporation?
What is the tax rate on the taxable income of a resident foreign corporation?
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What is a prerequisite for a corporation to be considered a domestic corporation?
What is a prerequisite for a corporation to be considered a domestic corporation?
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Study Notes
Corporation Definition
- A corporation includes partnerships, joint stock companies, joint accounts, associations, and insurance companies.
Exclusions
- The term corporation does not include general professional partnerships and joint ventures or consortiums formed for specific projects.
Types of Corporations
Domestic Corporation
- A domestic corporation is created or organized in the Philippines under its laws.
- It is subject to 25% or 20% regular corporate tax on worldwide taxable income.
- Conditions for 20% regular corporate income tax rate:
- Asset test: total assets (excluding land) do not exceed P100,000,000.
- Income test: taxable income does not exceed P5,000,000.
Resident Foreign Corporation
- A resident foreign corporation is created or organized under foreign laws, engaged in trade or business within the Philippines.
- It is subject to 25% regular corporate tax on Philippine taxable income.
Branch Profits Remittance Tax
- Applies to profits remitted by a branch of a foreign corporation to its head office.
- Tax rate: 15% (may be reduced if there is a treaty).
- Exceptions: income not connected to ordinary trade or business in the Philippines.
Optional Standard Deduction (OSD) for Corporations
- 40% of gross income (deduct cost of sales from gross sales/receipts).
- Only applicable to corporations subject to regular corporate income tax.
Sub-Classification of Corporate Income Taxpayers
Domestic Corporations
- Exempt domestic corporations:
- Exempt non-profit corporations under the NIRC (e.g., labor, agriculture, or horticultural organizations).
- Government agencies and instrumentalities.
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Description
This quiz covers the definition of a corporation for income tax purposes, including what types of entities are considered corporations and what exceptions apply.
