Optional Corporate Income Tax (Gross Income Tax)

Optional Corporate Income Tax (Gross Income Tax)

1.       The President, upon the recommendation of the Secretary of Finance may, effective January 1, 2000,            allow corporation to be subjected to optional corporation tax.

2.       The tax rate of 15% on the gross income.

3.       The following conditions shall have to be satisfied in the allowance of optional corporate tax:

a.        A tax effort ration of 20% of Gross National Product (GNP);

b.       A ratio of 40% of income tax collection of total tax revenue;

c.        A VAT effort of 4% of GNP; and

d.       A 0.9 ratio of the Consolidated Public Sector Financial Position to GNP.

4.       The option to be taxed based on gross income shall be available only to firms whose ratio of cost of      sales to gross sales or receipts from all sources does not exceed 55%.

5.       The election of the gross income option by the corporation shall be irrevocable for the three (3)          consecutive taxable years during which the corporation is qualified under the scheme.

6.       For purposes of the gross income tax, “Gross Income” derived from the business shall be equivalent to Gross Sales less sales returns, discounts and allowances and cost of goods sold.  “Cost of Goods Sold” shall include all business expenses directly incurred to produce the merchandise to bring them to their present location.  For trading concern, Cost of Goods Sold shall include the invoice cost of the goods sold, plus import duties, freight in transporting the goods to the place where the goods are actually sold including insurance while goods are in transit.