Sec.

27 & 28 –Tax on Corporations

Domestic Resident Foreign Non Resident
Corporation Corporation Foreign Corporation

In General 32% shall imposed on 32% shall imposed on Same with resident
taxable income within taxable income within foreign corp.
and without the Philippines
Philippines

It has the option to be It has the option to be n/a

taxed at 15% of gross taxed at 15% of gross
income income

Proprietary Applicable to non 10%

Educational profit Provided, that if
Institutions and the gross income from
Hospitals unrelated trade,
business or other
activity exceeds fifty
percent (50%) of the
total gross income

Government-owned or existing under a

Controlled- special or general laws
Corporations, =Apply Sec. 27(A)
Agencies or
Instrumentalities
 Domestic Resident Foreign Non Resident Foreign
Corporation Corporation Corporation
Rates of Tax on Interest on currency bank deposits & 20% 20%
Certain Passive yield or any other monetary benefit
Incomes from deposit substitutes & from Trust
& similar arrangement

interest income derived by a domestic 7.5% 7.5%

corporation from a depository bank
under the expanded foreign currency
deposit

Capital Gains from the Sale of Shares Not over Not over Not over P100,000……….
of Stock Not Traded in the Stock P100,000………. P100,000………. 5% 5% Amount in excess of
Exchange 5% Amount in excess P100,000.. 10%
Amount in of P100,000.. 10%
excess of
P100,000.. 10%

Tax on Income Derived under the 10% 10%

Expanded Foreign Currency Deposit
System
. Interoperate Dividends
exempt exempt 15% final tax* subject to
the rule on tax credit for
tax actually paid and tax
deemed paid. Otherwise,
subject to regular income
tax rate of as mentioned
in sec. 27 A

Capital Gains Realized from the Sale, 6%

Exchange or Disposition of Lands
and/or Buildings
 Domestic Corporation Resident Foreign Non
Corporation Resident
Foreign
Corporation
Minimum A minimum corporate
Corporate Income income tax of two percent
Tax on Domestic (2%0 of the gross income as
Corporations of the end of the taxable
year, as defined herein, is
hereby imposed on a
corporation taxable

Minimum A minimum corporate income

Corporate Income tax of two percent (2%) of gross
Tax on Resident income, as prescribed under
Foreign Section 27 (E) of this Code,
Corporations shall be imposed, under the
same conditions, on a resident
foreign corporation taxable
under paragraph (1) of this
Subsection.

International 2.5%
Carrier
1.International Air
Carrier
2.International
Shipping

Offshore Banking Final tax of 10% on gross

Units. income from transactions with
residents
 Domestic Resident Foreign Corporation Non Resident
Corporatio Foreign
n Corporation
Tax on Branch Any profit remitted by a branch to
Profits Remittances its head office shall be subject to a
tax is subject to 15% on branch
profit remittance
Regional or Area Regional or area Exempt
Headquarters and headquarters as
Regional Operating defined in Section
Headquarters of 22(DD)
Multinational Regional operating
Companies headquarters as
defined in Section 10% of taxable income
22(EE) shall pay a tax
of ten percent (10%)
of their taxable
income
Nonresident cinematographic
Cinematographic film owner, lessor,
Film Owner, Lessor or distributor
or Distributor shall pay a tax of
twenty-five
percent (25%) of
its gross income
from all sources
within the
Philippines
 Domestic Resident Foreign Non Resident Foreign
Corporation Corporation Corporation

Nonresident Owner or A nonresident owner or lessor

Lessor of Vessels of vessels shall be subject to a
Chartered by tax of four and one-half
Philippine Nationals percent (4 1/2%) of gross
rentals, lease or charter fees
from leases

Nonresident Owner Rentals, charters and other

fees derived by a nonresident
or Lessor of Aircraft, lessor of aircraft, machineries
Machineries and
Other Equipment and other equipment shall be
subject to a tax of seven and
one-half

Tax on Certain Interest on A final withholding tax at the

Incomes Received by a Foreign rate of twenty percent (20%) is
Nonresident Foreign Loans hereby imposed on the
Corporation amount of interest on foreign
loans contracted on or after
August 1, 1986;
Section 29
IMPOSITION OF IMPROPERLY ACCUMULATED EARNINGS
TAX
 (A) In General- In addition to other taxes imposed by this Title, there is hereby
imposed for each taxable year on the improperly accumulated taxable income
of each corporation described in Subsection(B) hereof, an improperly
accumulated earnings tax equal to 10% of the improperly accumulated taxable
income.
(B) Tax on Corporations subject to improperly
Accumulated Earnings Tax.
Applicability Exceptions
It shall be applied to every It shall not apply to:
corporation formed or availed for 1. Public-held
the purposes of avoiding the corporations
income tax with respect to its 2. Banks and other Non
shareholders or the shareholder bank Financial
of any other corporation by Intermediaries
permitting earnings and profits 3. Insurance Companies
to accumulate instead of being
divided or distributed
(D) Improperly Accumulated Taxable Income
 Improperly Accumulated taxable income means taxable income adjusted by:
 1 Income Exempt from tax
 2 Income Excluded from gross income
 3 Income Subject to final tax
 4 the amount of net operating loss carry-over(NOLCO) deducted by:
 Dividends actually or constructively paid
 Income tax paid for the Taxable year.
(C) Evidence of Purpose to avoid Income Tax

1. Prima Facie Evidence- The fact that any corporation is a mere holding
company or investment company shall be prima facie evidence of a purpose
to avoid the tax upon its shareholders or members.

2. Evidence Determinative of Purpose- the fact that the earnings or profits of a

comparison are permitted to accumulate beyond the reasonable needs of the
business shall be determinative of the purpose to avoid the tax upon its
shareholders or members unless the corporation, by the clear preponderance
of evidence, shall prove to the contrary.
SECTION 30
Exemptions from Tax on Corporations

a)Labor, agricultural or horticultural organization not organized principally for profit.

b) 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.
c)A beneficiary society, order or association, operation for the exclusive benefit of the members
such as:

 Fraternal organization operating under the lodge system

 A mutual aid association
 A non-stock 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 non-stock corporation or their dependents.
d)Cemetery company owned and operated exclusively for the benefit of its members.
e)Non-stock 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.
f)Business league, chamber of commerce, or board of trade not organized for profit
 No part of the net income of which inures to the benefit of any private stockholder or
individual.
g)Civic league or organization not organized for profit but operated exclusively for the promotion
of social welfare.
h)A non-stock and non-profit educational institution.
i)Government educational institution.
j)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.
k)Farmers, fruit growers, or like association organized and operated as a sales agent for the
purpose of marketing products of its members and turning back to them the proceeds of sales
less the necessary selling expenses on the basis of the quantity of produce finished by them.

NOTE: The net 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 the tax imposed by the Code.