Minimum Corporate Income Tax (MCIT):
1. A
tax rate is 2% based on:
a) Gross
income within and without – Domestic corporation
b) Gross
income within – Resident foreign corporation
Computation of the Gross Income used
as a basis in computing the MCIT:
Merchandising/Manufacturing
Concerns
|
Service
Concerns
|
|||
Net
Sales
|
Pxxx
|
Gross
receipts/revenue
|
Pxxx
|
|
Less:
Cost of Sales
|
xxx
|
Less:
Direct cost of services
|
xxx
|
|
Gross
Income subject to MCIT
|
Pxxx
|
Gross
income subject to MCIT
|
Pxxx
|
|
- “Gross Income” shall include all
income earned or realized during the taxable year that is subject to normal
tax, including gross income derived outside of the main activities of the
taxpayer (RR 12-2007).
- “Direct Cost of Services” includes
salaries of personnel rendering the services, expenses on the facilities
directly utilized, cost of supplies, and the like.
2. The
tax is imposed beginning on the fourth
taxable year immediately following the year in which such corporation
commercial its business operation.
3. The
tax due is the higher between the minimum corporate income tax and normal or
regular corporate income tax.
4. Any
excess of the minimum corporate income tax over the normal corporate income tax
shall be carried forward and credited against the normal income tax for the
three succeeding taxable years. In addition, the normal tax should be
higher than the minimum corporate tax in the year to which the excess MCIT is
forwarded.
5. The
Secretary of Finance is authorized to suspend the imposition of minimum
corporate income tax on any corporation due to:
- losses on account of prolonged labor
disputes
- force majeure
- legitimate business reverses.
6. DOMESTIC
corporations NOT subject to MCIT
- Corporations under PEZA and Bases
Conversion Development Act
- Proprietary Educational Institutions
- Non-profit hospitals
- Domestic corporations engaged in
depository banks under the expanded foreign currency deposit unit (FCDUs) on their income from foreign currency
transactions with local commercial banks and other depository banks under the
foreign currency deposit system.
7. RESIDENT FOREIGN
corporations NOT subject to MCIT
- International carriers
- OBUs
- ROHQ
- Those under PEZA and BCDA
