RCIT
Type Rate Classification Base
DC 25% Income Net Income
DC (msme) 20% Income Net Income
RFC 25% Income Net Income
NRFC 25% Final Gross Rev. / Rec.
MCIT
Applicable for: DC & RFC during 4th year after start (x + 4)
Rate: 2%; 1% until June 2023; 1.5% for the whole 2023
Base: Gross Income + Non-operating income
Exception to MCIT: Labor Dispute loss of more than 6 mos.
NOLCO
Reqs: Net Loss for the year
Amount: Full amount of loss
Prescription date: Valid for 3 years
Treated as: Deductions for 3 yrs (5 until June 2023)
TAX CREDITS
1. Prior Year MCIT
2. Prior Year excess CWT
3. Current & Prev. Quarter CWT
4. Prior Quarter Tax Payments
5. Excess income tax payments if opted to be credited for next year
6. Foreign Tax Credit if not availed for deduction
Branch Profit remittance
Rate: 15% final tax on % remittance of prior (unremitted) and current year
Base: Net Income net of RCIT/MCIT less any passive income subj to FT (ignore if not include
Applicable for: % Remittance of RFC to home office (abroad) or increase in capital of branch (
Example of indirect remittance: remittance to resident affiliate, transfer of profit to branch ca
EXEMPTED CORPORATIONS
1. Joint ventures for energy construction with the government (not a corporation)
2. Non-profit non-stock corporations
- NSNP educational institutions = exempt all related & unrelated
- other NSNP institutions = exempt for related activities; devoted to purposes
3. GOCC
- excludes PCSO
- exempt only on related activities
**Rulings on non-traceable expenses of exempt or taxable income - pro-rated based on
4. Cooperatives
5. Other Exempts
SPECIAL CORPORATIONS
The Preferential rates pertain only to corporate/basic income tax. All special corps
A. Special Domestic
1. PEI
- private & stock, but for educational purposes
- 10% Income tax regardless if related/unrelated; starting July 2023;
- pre-dominance test: if more than 50% of Gross Income is unrelated, RCIT applies to who
- special privileges: PPE fringe benefit can be expensed outright
2. Non-profit Hospitals (public/non-profit)
- same requisites for PEI, but this time for charitable purposes.
3. FCDU / EFCDU - RCIT / MCIT After Create Law
- income from transactions with:
a. Non-resident - exempted (in favor of NRs)
b. Residents - 10% FWT on interest income from loans, RCIT for other income
c. Other FDCU/OBU - exempt
- all nonforex transactions are subject to RCIT
**Rulings on non-traceable expenses of exempt or taxable for FCDUs - pro-rated based on
4. Subcontractors of Petroleum / Gas - 8% for related activities only
B. Special Foreign
1. OBUs
- after CREATE, subject to 25% RCIT
2. ROHQ (Operating)
- after CREATE, subject to 25% RCIT
3. RAHQ (Area)
- exempted from income tax as they only support other headquarters.
3. International Carriers
- 2.5% of all Gross Philippine billings (GPB)
- situs: outbound flights, regardless of where payment is made
- endorsed to another carrier, airlifted in PH = excluded
- transshipped to another carrier, airlifted them in other country = GPB is based on rates of
- refunded or cancelled fares / non-revenue passengers = excluded
Example
Destination Rate Passengers Amount
HongKong 1500 10,000 15000000
Thailand 2000 500 1000000
China 2500 400 1000000
Total 17000000
Thailand is endorsed to another carrier, lifted them from Philippines
China is transshipped to another carrier, lifted them from HongKong
HongKong 15000000
China 600000
Gross Income 15600000
48-hour Rule
- Flights continued from PH after 48 hours are treated as originating from PH
- except if due to force majeure (fortuitious) or endorsed to another airline.
- Other income other than those mentioned = RCIT
C. Special NRFC
- general rule: all NRFC = 25% FWT
Exceptions:
1. PEZA / BOI
- 5% of gross income in lieu of all taxes; remit 3% to BIR, 2% to LGU
2. Lessor of PPE and Aircraft
- 7.5% Gross Philippine billings (excluding cost of services)
- 2.5% of GPB if Foreign Corp
3. Lessor of Foreign Vessels
- 4.5% Gross Income
- 2.5% of GPB if Foreign Corp (ang nagbenta)
4. Lessor of Cinema Films
- 25% Gross Income
IT
Remarks
w/ , w/o
Assets exc operating land £ 100m, NI £ 5m
w/ only
Exclude COGS/COS, no deductions
MCIT Carryover
Reqs: MCIT > RCIT
Amount: Excess of MCIT over RCIT
Prescription: 3 years
Treated as: Tax Credit for RCIT for 3 years
Rulings: Excess WHT and MCIT carryover for
prior year is deductible to all quarterly returns
Corprorate OPT
Base: Gross Income
Rate: 15% In lieu of all deductions
nd current year
me subj to FT (ignore if not included)
or increase in capital of branch (indirect)
ate, transfer of profit to branch capital.
nt (not a corporation)
nrelated as long as will be used for educ purposes
devoted to purposes
e income - pro-rated based on gross income
income tax. All special corps are still subject to FWT.
rting July 2023; 1% on CREATE
e is unrelated, RCIT applies to whole income
T for other income
e for FCDUs - pro-rated based on all income
activities only
adquarters.
ountry = GPB is based on rates of where they were carried
excluded
s originating from PH
d to another airline.