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.
