INCOME TAX ON CORPORATION

CORPORATIONS

✓Domestic Corporations (DC)

✓Resident Foreign Corporations (RFC)
✓Non-Resident Foreign Corporations (NRFC)
✓Special Corporations
 CORPORATION (SECTION 22B OF NIRC)

✓The term “corporation” shall include:

oPartnerships (no matter how created or organized)
oJoint stock companies
oJoint accounts (cuentas en participacion)
oassociations
oInsurance companies
✓It does not include:
oGPPs
oJV or consortium formed for the purpose of undertaking construction projects, or
engaging in petroleum, coal, geothermal and other energy operations pursuant to an
operating or consortium agreement under a service contract with the Government.
GPPS (GENERAL PROFESSIONAL
PARTNERSHIPS)
✓Partnerships formed by persons
ofor the sole purpose of exercising their common profession
oNo part of the income of that GPPs is derived from engaging in any trade or
business.
DOMESTIC CORPORATION

✓A corporation that is
oOrganized in the Philippines, and
oCreated under Philippine Laws

✓TAKE NOTE:
oFor taxation purposes, do not consider the definition of a domestic
corporation under the Revised Corporation Code.
oAs long as the corporation is ORGANIZED and CREATED in the Philippines
and under its laws, that is considered a domestic corporation.
FOREIGN CORPORATION

✓A corporation that is
oOrganized outside of the Philippines, and
oCreated under Foreign Laws

✓Resident Foreign Corporation – engaged in Trade or Business in the

Philippines.
✓Non-resident Foreign Corporation – NOT engaged in Trade or Business in the
Philippines.
 CORPORATION (ENGAGED IN TRADE OR
BUSINESS)

Kind of TP Source of A (All B C (CG from D (CG from sale of E (Intercoporate F (MCIT)
Income income (Passive sale of real property dividends tax)
other Income) shares of classified as Capital ICDT
Within Withou
than stocks) Assets)
t
BCDE)
DC NIT FWT FWT (15%) FWT (6%) DC to DC 2% (1%)
  (20%), (exempt)
EFCDS-
15%
RFC
  NIT FWT FWT (5%
and 10%)  DC to
(exempt)
RFC 2% (1%)

NRFC
  GIT FWT (5%
and 10%)  FC to DC (15%
FT) 
PASSIVE INCOME (SECTION 27D-1)

✓Passive Income
oInterest on bank deposits (20%)
oExcept if depositary bank under the EFCDS (15%)
oTAKE NOTE: Long-term deposit does not apply to corporations
oRoyalties (20%)
oTAKE NOTE: No literary and musical composition.
INCOME DERIVED UNDER THE EFCDS
(SECTION 27D-3)
✓Depositary bank
oUnder the EFCDS
oIncome from foreign currency transactions
oWith non-resident, OBUs, local commercial banks authorized by the
BSP to transact business with FCDSU and other depositary banks
under EFCDS
oIncome derived shall be exempt from all taxes.
INCOME DERIVED UNDER THE EFCDS
(SECTION 27D-3)
✓Subject to 10% FT
oIf the transaction is with residents other than OBUs, and the
depositary bank under EFCDS.
✓EXCEPT
oThose net income specified by the Sec of Finance are to be
subjected to regular income tax.
✓Any income of Non-residents (individual or corporation) from
transactions with depositary bank under EFCDS shall be EXEMPT from
income tax.
CAPITAL GAINS FROM SALE OF SHARES OF
STOCKS (SECTION 27D-2)

✓Capital Gains
oShares of stock held as capital assets
oFor Domestic Corporation – 15%
oFor Foreign Corporation (RFC and NRFC)
o5% CGT if Net Capital Gains do not exceed 100K
o10% CGT if more than 100K
oExcept if sold or disposed of through the stock exchange.
oTAKE NOTE: Treatment is the same as in an individual taxpayer
CAPITAL GAINS FROM SALE OF REAL
PROPERTY CLASSIFIED AS CAPITAL ASSETS
(SECTION 27D-5)
✓Capital Gains
oLand/building held as capital assets.
o6% capital gains tax
oTAKE NOTE: Treatment is the same as in an individual taxpayer
CAPITAL GAINS (SALE OF SHARES OF STOCK AND
REAL PROPERTY CLASSIFIED AS CAPITAL ASSETS

Taxpayer Sale of Shares of Stock in Sale of real property

Domestic Corporation
(capital assets)
Individual, Estates, 15% of net capital gains 6% of the gross selling price
and Trusts (NIRC, Sec. 24C) or FMV whichever is higher
(NIRC, Sec. 24D)
Domestic 15% of net capital gains 6% of the gross selling price
Corporation (NIRC, Sec. 27.D.2) or FMV whichever is higher
(NIRC, Sec. 27.D.5)
CAPITAL GAINS (SALE OF SHARES OF STOCK AND
REAL PROPERTY CLASSIFIED AS CAPITAL ASSETS

Taxpayer Sale of Shares of Stock in Sale of real property

Domestic Corporation
(capital assets)
Resident Foreign 5% of NCG not over 100k No provision for capital
Corporation 10% of NCG over 100k gains for sale of realty.
(NIRC, Sec. 28.A.7.c) Hence, subject to RCIT rate.
(INGLES, 2018)
Nonresident Foreign 5% of NCG not over 100k No provision for capital
Corporation 10% of NCG over 100k gains for the sale of realty.
(NIRC, Sec. 28.B.5.c) Hence, subject to RCIT. (Id)
MINIMUM CORPORATE INCOME TAX (MCIT) –
SECTION 27E

✓When can be imposed?

oMCIT > RCIT
o2% of Gross Income
✓Beginning on the fourth (4th) taxable year immediately following the year in
which such corporation commenced its business.
✓Domestic corporations including non-profit, exempt, and special
corporations.
✓Resident Foreign Corporations
ILLUSTRATION (MCIT)

Suppose Corp A’s data for the first 5 years of operation (2017 to 2021) are as follows:
2017 2018 2019 2020 2021
Gross Income 200,000.00 250,000.00 300,000.00 950,000.00 1,250,000.00
Allowable 250,000.00 200,000.00 250,000.00 925,000.00 1,205,000.00
Deductions
Net Income (50,000.00) 50,000.00 50,000.00 25,000.00 45,000.00
Tax rate N/A 30% 30% 25% 25%
Tax Due (RCIT) N/A 15,000.00 15,000.00 6,250.00 11,250.00
MCIT 4,000.00 5,000.00 6,000.00 9,500.00 12,500.00
Compute for the MCIT.
What year can Corp A be charged with the MCIT?
CARRY FORWARD OF THE EXCESS MCIT

✓What is the Rule?

✓It shall be carried forward in the three (3) immediately succeeding taxable
years.
✓Credited against the normal income tax.
 ILLUSTRATION (MCIT CARRY-OVER)

Suppose Corp A’s data for the 5 years of operations (2017 to 2021) are as follows: (note
Corp A has been in the business for 10 years now).
2017 2018 2019 2020 2021
Gross Income 200,000.00 250,000.00 300,000.00 950,000.00 1,250,000.00
Allowable 250,000.00 200,000.00 250,000.00 925,000.00 1,205,000.00
Deductions
Net Income (50,000.00) 50,000.00 50,000.00 25,000.00 45,000.00
Tax rate N/A 30% 30% 25% 25%
Tax Due N/A 15,000.00 15,000.00 6,250.00 11,250.00
MCIT 4,000.00 5,000.00 6,000.00 9,500.00 12,500.00
In what year can the MCIT be carried over?
SOLUTION (MCIT CARRY-OVER)

2017 2018 2019 2020 2021

RCIT 0.00 15,000.00 15,000.00 6,250.00 11,250.00
MCIT 4,000.00 5,000.00 6,000.00 9,500.00 12,500.00
Tax Due 4,000.00 15,000.00 15,000.00 9,500.00 12,500.00
MCIT to 4,000.00 (4,000.00) 0.00 3,250.00 none
carried over
Tax Due 11,00.00 15,000.00

Suppose in 2022 – net loss, 2023 – RCIT of 3,000.00, 2024 – RCIT of 5,000.00
How much MCIT can be carried over in 2024?
SUSPENSION FROM IMPOSITION OF MCIT

✓What is the Rule?

✓Corporation (DC or RFC)
✓Suffers losses (GI < allowable deductions)
✓Due to
✓prolonged labor disputes
✓Force majeure
✓Legitimate business reverses.
MCIT EXEMPT ENTITIES

1. Real Estate Investment Entities (REITs)

2. Domestic corporations (15% corporate income tax)
3. Domestic or resident corporations subject to a special tax rate
a) Proprietary educational Institution and non-profit hospitals
b) FCDUs and EFCDUs
c) International carriers
d) PEZA accredited entities and BCDA locators
4. ALL NRFCs
EXEMPT DOMESTIC CORPORATIONS (EXEMPT
FROM RCIT)
1. Exempt non-profit corporations under Section 30 of the NIRC.
2. Government Agencies and Instrumentalities
3. Exempt GOCCs
4. Cooperatives
EXEMPT NON-PROFIT CORPORATIONS UNDER
SECTION 30 OF THE NIRC (IN RELATION TO
COLUMN “A” OF DC)
✓The following corporations shall not be subject to income tax with
respect to the income received by them as “such”.
✓“as such” – means that the income was received as a result of the
activity which is the primary purpose of the creation of the said non-
profit domestic corporations.
EXEMPT NON-PROFIT CORPORATIONS UNDER
SECTION 30 OF THE NIRC (IN RELATION TO
COLUMN “A” OF DC)
✓EXCEPT (meaning the income received by this non-profit domestic
corporation is subject to RCIT)
✓Income of whatever kind and character
✓From any of their properties (real or personal)
✓From any of their activities conducted for profit
✓Regardless of the disposition of the said income.
EXEMPT NON-PROFIT CORPORATIONS UNDER
SECTION 30 OF THE NIRC (IN RELATION TO
COLUMN “A” OF DC)
✓Exception to the Exception
✓NSPEI – all assets and revenues ADE used for educational purposes are
EXEMPT from taxes and duties (basis – Constitution)
EXEMPT NON-PROFIT CORPORATIONS UNDER
SECTION 30 OF THE NIRC (IN RELATION TO
COLUMN “A” OF DC)
✓What is the commonality of the corporations or organizations
enumerated under Section 30 of the NIRC?
✓Non-profit corporation or organization
✓Primary purpose of the organization or corporation is “not-for-profit”.
GOVERNMENT AGENCIES AND
INSTRUMENTALITIES
✓Income
oDerived in the exercise of their government functions (governmental
functions) – not subject to tax (Section 32b7 of the NIRC)
oDerived in the exercise of their proprietary functions – subject to 30% RCIT

✓Real property owned by the government (government agencies)

oRPT – exempt (basis? Local Government Code)
oIf beneficial use is given to a non-exempt entity – not exempt from RPT.
GOVERNMENT AGENCIES AND
INSTRUMENTALITIES
✓Gifts or donations in favor of the government
oNot taxable income (Section 32B of the NIRC) – excluded from gross
income.
oNot subject to donor’s tax or estate tax – the 30% restriction does not
apply
GOVERNMENT AGENCIES AND
INSTRUMENTALITIES
What is the effect of the donation on the part of the donor?
✓If the donor is a compensation income earner – cannot deduct the
donated property from income (no authorized deductions)
✓If the donor is a SEP/SEI/MIE
✓If the donation is for a priority project – donation is deductible in full
✓If the donation is not for a priority project
✓Individual - 10% of NI prior to donations or actual amount
whichever is lower – deductible
✓ Corporation – 5% of NI prior to donations or actual amount
whichever is lower.
GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS (GOCCS)
✓Ordinary domestic corporations – subject to tax
✓EXCEPT:
✓SSS/GSIS
✓HDMF
✓PHIC
✓Local Water District
RESIDENT FOREIGN CORPORATION

✓Subject to 25% RCIT (same with the domestic corporation)

✓EXCEPT if opt to be taxed at a rate of 15% gross income tax.
✓The RFC should be engaged in trade or business in the Philippines.
SPECIAL RESIDENT FOREIGN CORPORATION

✓International carrier (2 ½ % based on GPB)

✓International AIR carrier
✓International shipping (but may avail of the preferential tax rate, or exemption
based on treaty or international agreement)
✓Offshore Banking Units (OBUs) – 25% RCIT
✓Tax on Branch Profit Remittances – subject to 15% FT
✓Regional Area HQs – exempt from income tax
✓Regional Operating HQs of multinational companies – 25% RCIT
INTERNATIONAL CARRIER

✓International carrier (2 ½ % based on GPB)

✓Except with preferential tax rate

✓GROSS PHILIPPINE BILLINGS – it is the amount of gross revenues derived

from carriage of persons, excess baggage, cargo, and mail originating from the
Philippines, in a continuous and uninterrupted flight, irrespective of the
place of sale or issue and the place of payment of the ticket, or passage
document.
INTERNATIONAL CARRIER

✓RULE ON REVALIDATED, EXCHANGED, OR ENDORSED TICKETS

✓Part of the GBP of the carrying airline

✓RULE ON TRANSSHIPMENTS OR INTERRUPTED FLIGHTS OR VOYAGES

✓Only the aliquot portion of the cost of the ticket corresponding to the leg flown
from the Philippines to the point of transshipment.

✓EXCLUSION IN GPB
✓Non-revenue passengers
✓Refunded tickets
INTERNATIONAL CARRIER

✓OFFLINE INTERNATIONAL CARRIERS

✓Subject to RCIT

✓OFFLINE INTERNATIONAL CARRIERS – those without flights, or voyage

starting from or passing through any point in the Philippines.

✓It is the branch or sales agents in the Philippines that is subjected to RCIT
SPECIAL NON-RESIDENT FOREIGN
CORPORATIONS
✓Subject to 25% final tax, in general

1. NR cinematographic film owner, lessor, or distributor. (25% FT on their GI

from all sources derived in the Philippines.
2. NR lessor of vessels chartered by Philippines nationals. (4 ½ % FT on their
Gross Rentals derived in the Philippines.
3. NR owner or lessor of aircraft, machinery, and other equipment. (7 ½ % FT
on their gross income from rental, charter, and other fees.)
SPECIAL DOMESTIC CORPORATIONS

1. Private Educational Institution

2. Non-profit Hospital
3. FCDUs or EFCDUs
4. PEZA or BOI Registered Enterprise
PRIVATE EDUCATIONAL INSTITUTIONS

✓Any private school maintained and administered by private individuals or

groups.
✓With an issued permit to operate from DEPED, CHED, or TESDA.
 PROPRIETARY HOSPITAL

✓Private hospitals
✓No income or assets of which accrues to or benefits any member, or specific
person
✓With all the net income or assets devoted to the institution’s purposes and all
its activities conducted not-for-profit.
PRIVATE EDUCATIONAL INSTITUTIONS AND
PROPRIETARY HOSPITAL
✓May be allowed to apply the 10% preferential rate. Except for passive
income.
✓Provided that:
✓The gross income from unrelated trade, business, or other activity does
not exceed 50% of the total gross income derived by such educational
institutions, or proprietary hospitals.
✓Failure to comply with the criteria will be subjected to 30% RCIT on the
basis of their taxable income.
UNRELATED TRADE, BUSINESS, OR OTHER
ACTIVITY
✓Any trade, business, or other activity
✓The conduct of which is not substantially related to the exercise or
performance of such institution of its primary purpose, or function.
HOW TO COMPUTE THE INCOME TAX DUE OF A
CORPORATION?
HOW TO COMPUTE THE INCOME TAX DUE OF A
CORPORATION?
Sales P XXX.XX
Less:
Sales Returns and Allowances P XXX.XX
Sales Discount XXX.XX XXX.XX
Net sales P XXX.XX
Less: Cost of Sales (Sales less COS = GI x tax rate)-for NRFC XXX.XX
Gross Income XXX.XX
Allowable Deductions / Itemized or OSD) XXX.XX
Net income subject to tax PXXX.XX
Tax rate 25%
Tax Due 100,000.00 P XXX.XX
Tax Credit (CWT -50k+ Quarterly Paid Tax, 15,000.00) (65,000.00) (XXX.XX)
Income Tax Payable 35,000.00 P XXX.XX
RULE ON DEDUCTIONS: CORPORATION

1. If a corporation is subject to NET INCOME TAX, may claim deductions

✓EXCEPT, Non-Resident Foreign Corporation (NRFC). – Subject to Gross
Income Tax.
2. If a corporation is subject to Final Withholding Tax (FWT) or Gross
Income Tax (GIT) – no deductions.
3. Itemized Deductions or Optional Standard Deductions – applicable also
to corporations that are allowed to claim deductions. (Refer to number 1
above)
4. The 8% Gross Income Tax is NOT APPLICABLE TO CORPORATIONS.
DEDUCTIONS OF A CORPORATION: RULE

Kind of Source of A (All B C (CG D (CG from sale

TP Income incom (Passiv from sale of real property
With With e e of shares classified as
in out other Incom of stocks) Capital Assets)
than e)
BCDE)
DC   NIT FWT FWT FWT

RFC   NIT FWT FWT 

NRFC   GIT FWT 

OPTIONAL STANDARD DEDUCTIONS:

1. OSD is in place of the itemized deductions.

2. A corporation that is subject to Net Income Tax may opt to choose this
type of deduction.
3. This is 40% of the Gross Income of the corporation.
4. This type shall be expressly chosen at the start of the taxable year.
Usually during the first quarter of the taxable year.
5. Unlike itemized deductions, here, there is no requirement to
substantiate the expenses for BIR Reporting purposes.
ITEMIZED DEDUCTIONS:

Rule on Deductibility?
1. The expenses should be necessary for the conduct of trade or
business of the corporation.
2. The expenses should be reasonable in amount.
3. It is actually paid or incurred by the corporation during the taxable
period.
4. The expenses should be supported by valid receipts or documents
acceptable to the BIR.
5. Corresponding withholding taxes must have been withheld AND
remitted to the BIR, if there is a requirement to withheld.
ITEMIZED DEDUCTIONS:

1. Business Expenses
2. Interests on Loan
3. Taxes
4. Losses
5. Bad Debt
6. Depreciation / Depletion
7. Charitable and other contributions
8. Pensions
9. Research and Development
BUSINESS EXPENSES

1. Salary and wages of the employees

2. Utility expenses (electricity, water, internet connections)
3. Rent Expenses – here, the lessee does not acquire any interest other
than that of a possessor.
✓What if “rent to town”?
✓Not part of the business expenses
✓It should be a capital expenditure
BUSINESS EXPENSES

4. Marketing Expense – purpose?

✓IF to increase the sales – allowed as a deductible expense, including its
marketing collaterals.
✓IF to maintain the sales of the business – capital expenditure, is not
allowed to be claimed as business expenses.
5. Transportation Expense
6. Communication Expense
7. Representation (with limit)
What if bribes and kickbacks? Deductible?
✓Not Deductible as business expense
INTEREST ON LOANS

1. The loan was used to fund the trade or business of the corporation.
2. Tax arbitrage rule also applied.
 INTEREST ON LOANS (EXCEPTIONS)

1. The loan was used to fund the trade or business of the corporation.
2. Tax arbitrage rule also applied.
3. Optional treatment of interest expense:
✓Taxpayer (individual/corporation)
✓There is a loan with interest.
✓The proceeds of the loan were used by the debtor (individual or corporation)
to fund its trade or business.
✓The interest incurred for such a loan may be recognized in the books of the
taxpayer as
✓Itemized deduction or
✓Capital expenditure
TAXES (PERMIT, LICENSES, AND TAXES)

✓Taxes incurred by the corporation in the conduct of trade or business, or as an

incident thereto. (General Rule)
✓EXAMPLE:
✓Real property tax (real property owned by the corporation)
✓Business permits

✓What about the taxes incurred to transfer the property acquired by the
Corporation? Is this part of the “taxes”?
LIMITATIONS OF TAX DEDUCTIONS

✓In the case of NRA-ETB or Resident Foreign Corporation

oDeductions of taxes (except those expressly stated to be not deductible)
oShall be allowed only IF and to the extent that they are connected with income from
sources within the Philippines.
EXCEPTIONS TO DEDUCTIBILITY OF TAX

1. Income Tax provided under Title II of the Tax Code.

2. Income tax imposed by authority of any foreign country.
3. Estate and donor’s taxes.
4. Assessment tax
LOSSES (CASUALTY LOSSES)

✓In general, losses ACTUALLY SUSTAINED during the taxable year.

✓Which are not covered by an insurance
✓Of property connected with a trade or business if due to theft, robbery, fire,
shipwrecks, and embezzlement.
✓Losses incurred in trade or business
EXCEPTION TO THE DEDUCTIBILITY OF LOSSES

✓No loss shall be allowed as a deduction from gross income if:

✓At the time of the filing of the return, such loss has been claimed as a
deduction for estate tax purposes. (applicable only to an individual taxpayer)
PROOF OF LOSS

✓If property, it should be the book value of the property lost recognized in the
book of the corporation.
✓If cash, it should be the actual amount lost.
 NET OPERATING LOSS CARRY-OVER (NOLCO)
✓Net operating loss?
oShall mean excess of allowable deductions over gross income of the business in
a taxable year.
✓RULE on NOLCO?
oNet of operating loss for any taxable year immediately preceding the current
taxable year.
oThe net operating loss had not been previously deducted from gross income.
oCan be carried for the next THREE (3) CONSECUTIVE years IMMEDIATELY
following the year of such loss
oProvided however, that any loss incurred in the taxable year during which the
taxpayer is exempt, any net loss incurred during such taxable year shall not be
allowed as a deduction.
 NET OPERATING LOSS CARRY-OVER (NOLCO)

✓Cont: RULE on NOLCO?

✓Provided that there is NO SUBSTANTIAL CHANGE in the ownership of the
business or enterprise in that:
oNot less than 75% in nominal value of outstanding issued shares, if the
business is in the name of a corporation, is held by or on behalf of the same
persons; or
oNot less than 75% of the paid up capital of the corporation, if the business is
in the name of the corporation, is held by or on behalf of the same persons.
 NET OPERATING LOSS CARRY-OVER (NOLCO)

✓Cont: RULE on NOLCO?

✓Provided that for mines other than oil and gas wells that are not exempt under
the Omnibus Investment Code
✓Can carry-over the Net Operating
✓Incurred within the first 10 years of operations
✓It can be carried for 5 years immediately following the year of such loss.
 BAD DEBT

✓ Receivables that are considered to be uncollectible during the taxable year.

✓Requirements?
✓The receivable was due to or in connection with the trade or business of the
taxpayer
✓It is considered worthless
✓Completely charged off in the book of the taxpayer during the taxable year.
✓Tax-benefit rule?
✓If later on, the bad debt was collected although it was charged as bad debt in
the previous year,
✓The amount collected will form part of the gross income of the taxpayer
 DEPRECIATION OR DEPLETION

✓It is the systematic allocation of the cost of the asset over its useful life.
✓The assets should be ordinary assets.
✓Used in the conduct of trade or business.
✓Owned by the taxpayer
 BAD DEBT

✓ Receivables that are considered to be uncollectible during the taxable year.

✓Requirements?
✓The receivable was due to or in connection with the trade or business of the
taxpayer
✓It is considered worthless
✓Completely charged off in the book of the taxpayer during the taxable year.
✓Tax-benefit rule?
✓If later on, the bad debt was collected although it was charged as bad debt in
the previous year,
✓The amount collected will form part of the gross income of the taxpayer
 CHARITABLE AND OTHER CONTRIBUTIONS

✓ Requisites for deductibility

1. The donee institution must be a domestic institution.
2. No income of the donee must inure to the benefit of any private stockholder
or individual.
3. The contribution must be valued at the tax basis of the property donated.
4. The taxpayer must be engaged in the trade or business.
5. The donee must issue a certificate of donation.
 CHARITABLE AND OTHER CONTRIBUTIONS

✓ Requisites for deductibility

6. If the amount of donation is at 50,000.00 or more, notice of donation must be
submitted to the BIR RDO within 30 days from receipt of the donation.
 CHARITABLE AND OTHER CONTRIBUTIONS

✓ Requisites for full deductibility of the charitable contributions.

1. If given to the government or its political subdivision, including GOCCs.
2. The donation is for a priority project of the government.
3. If given to foreign institutions, or international organizations, it should be in
pursuance or in compliance with the agreements, treaties, or special laws.
4. If donations is given to non-government organizations, said organization
should be accredited domestic organizations.
 CHARITABLE AND OTHER CONTRIBUTIONS

✓ Requisites for full deductibility of the charitable contributions.

1. If given to the government or its political subdivision, including GOCCs.
2. The donation is for a priority project of the government.
3. If given to foreign institutions, or international organizations, it should be in
pursuance or in compliance with the agreements, treaties, or special laws.
4. If donations is given to non-government organizations, said organization
should be accredited domestic organizations.
 CHARITABLE AND OTHER CONTRIBUTIONS

✓ Requisites for full deductibility of the charitable contributions.

- If failed to meet the above criteria, the deductibility of the charitable
contribution is subject to a limit.
✓10% in case of individual or 5% in case of corporation.
✓Of the taxable net income prior to charitable contributions
✓Or the actual charitable contributions.
✓Whichever is LOWER.
 RESEARCH AND DEVELOPMENT COST

✓Tax Treatment:
✓If related to capital assets:
✓Capitalized as part of the cost of the property and deducted through
depreciation.
✓If not related to capital assets:
✓Outright expense or
✓Deferred expenses and amortized for 60 months.