Showing posts with label Not Subject to MCIT. Show all posts
Showing posts with label Not Subject to MCIT. Show all posts

Thursday, October 16, 2014

Minimum Corporate Income Tax

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