Tax on Estates and Trusts

Estate: properties, rights and obligations including those properties, earnings, or obligations that have accrued thereto since the
opening of succession
Trust: administration of funds and properties on behalf of individuals

In the meantime that the property is not yet transferred to the successors or beneficiaries, the estate or trust can generate earnings
- Subject to income tax
- Determined in the same basis and manner as in the case of individual taxpayers

Special deductions: the estate is allowed to deduct the amount of income of the estate during the taxable year that is paid or credited to
the legatee, heir, or beneficiary, subject to creditable withholding tax of 15%
- The allowed deduction shall form part of the income of the recipient legatee, heir, or beneficiary, subject to creditable
withholding tax of 15%
- Trust administered in a foreign country, special deductions shall not be allowed and the amount of income included in the
return of the estate or trust shall not be included in the income of the beneficiaries

Income tax on Corporations

MCIT: Minimum corporate income tax: 2% of the gross income as of the end of the taxable year. beginning on the fourth taxable year
immediately following the year in which such corporation commenced its business operations, when the minimum income tax is greater
than the tax computed under Subsection (A) of this Section for the taxable year: Provided, That effective July 1, 2020 until June 30,
2023, the rate shall be one percent (1%).
- Any excess of the minimum corporate income tax over the normal income tax shall be carried forward and credited against the
normal income tax for the three (3) immediately succeeding taxable years.
- The Secretary of Finance is hereby authorized to suspend the imposition of the minimum corporate income tax on any
corporation which suffers losses on account of prolonged labor dispute, or because of force majeure, or because of legitimate business
reverses.
- Purpose is to forestall the prevailing practice of corporations in overclaiming deductions

Corporations not considered as corporations for income tax purposes: (TAX EXEMPT ENTITIES)
1. Joint construction venture
2. General professional partnership
3. Joint venture for engaging in petroleum, coal, geothermal and other energy operations pursuant to a consortium agreement
with the government
4. Tax exempt GOCCs: SSS, GSIS, Philhealth, Pag-Ibig, local water district

Corporations that are tax exempt: (Sec. 30)

1. Labor, agricultural or horticultural organizations
2. Mutual savings bank not having a capital stock represented by shares, and cooperative bank without capital stock organized
and operated for mutual purposes and without profit;
3. A beneficiary society, order or association, operating for the exclusive benefit of the members such as a fraternal organization
operating under the lodge system, or mutual aid association or a nonstock corporation organized by employees providing for the
payment of life, sickness, accident, or other benefits exclusively to the members of such society, order, or association, or nonstock
corporation or their dependents;
4. Cemetery company owned and operated exclusively for the benefit of its members;
5. Nonstock corporation or association organized and operated exclusively for religious, charitable, scientific, athletic, or cultural
purposes, or for the rehabilitation of veterans, no part of its net income or asset shall belong to or inure to the benefit of any member,
organizer, officer or any specific person;
6. Business league chamber of commerce, or board of trade, not organized for profit and no part of the net income of which
inures to the benefit of any private stock-holder, or individual;
7. Civic league or organization not organized for profit but operated exclusively for the promotion of social welfare;
8. A nonstock and nonprofit educational institution;
9. Government educational institution;
10. Farmers' or other mutual typhoon or fire insurance company, mutual ditch or irrigation company, mutual or cooperative
telephone company, or like organization of a purely local character, the income of which consists solely of assessments, dues, and fees
collected from members for the sole purpose of meeting its expenses; and
11. Farmers', fruit growers', or like association organized and operated as a sales agent for the purpose.
the income of whatever kind and character of the foregoing organizations from any of their properties, real or personal, or from any of
their activities conducted for profit regardless of the disposition made of such income, shall be subject to tax imposed under this Code.
Non-resident foreign Corporation
Source General Rule International air carrier and
Branch profit remittanceROHQ
international shipping

Tax Base Taxable income on all Gross Philippine total profits applied Gross rental or fees
sources within Billings or earmarked for within the
remittance without
any deduction for the tax
component

Tax Rate for RFC 25% effective 2.5% 15% Sec. 22 (DD)
January 1, 2021 exempt:

Sec. 22 (EE): 10% on

taxable income

(DD) The term 'regional or area headquarters' shall mean a branch established in the Philippines by multinational companies and which
headquarters do not earn or derive income from the Philippines and which act as supervisory, communications and coordinating center
for their affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets.
(EE) The term 'regional operating headquarters' shall mean a branch established in the Philippines by multinational companies which
are engaged in any of the following services: general administration and planning; business planning and coordination; sourcing and
procurement of raw materials and components; corporate finance advisory services; marketing control and sales promotion; training
and personnel management; logistic services; research and development services and product development; technical support and
maintenance; data processing and communications; and business development.

Tax on certain income received by NRFC

1. Interest from Deposits and Yield or any other Monetary Benefit from Deposit Substitutes, Trust Funds and Similar
Arrangements and Royalties: 20%, 15%
2. Income Derived under the Expanded Foreign Currency Deposit System
3. CGT on sales of shares of stock not traded in the stock exchange

Offshore gaming license: The non-gaming revenues derived within the Philippines of foreign-based offshore gaming licensees as
defined and duly licensed by the Philippine Amusement and Gaming Corporation or any special economic zone authority or tourism
zone authority or freeport authority shall be subject to an income tax equivalent to twenty-five percent (25%) of the taxable income
derived during each taxable year.

Offshore banking Units: GR: Tax-exempt, Exc: 10% FT on transactions with residents

Non-resident foreign Corporation

Source General Rule Nonresident Cinematographic
NonresidentFilmOwner Nonresident
or Lessor ofOwner or Lessor of
Owner, Lessor or Distributor.
Vessels Chartered Aircraft,
by Philippine
Machineries and Other
Nationals Equipment.

Tax Base Gross income Gross income Gross rentals or Gross rental or
on all sources on all sources fees fees within the Ph
within within

Tax Rate for NRFC 25% effective 25% 4.5% 7.5%

January 1, 2021

Tax on certain income received by NRFC

1. Interest on foreign loans: 20% on the amount of foreign interest
2. Intercorporate dividends: 15% provided the foreign country also grants 15% (Reciprocity)
3. Sales of shares of stock not listed and traded through PSE: 15%