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    Chapter 3

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    ceray
    This document summarizes taxation for resident corporations in the Philippines under the TRAIN law. Resident corporations are foreign corporations authorized to do business in the Philippines. They are taxed differently than domestic corporations. Resident corporations pay a 25% normal tax on taxable income from all sources within and outside the Philippines. Beginning in the fourth year of operations, they also pay the higher of a 25% normal tax or a 2% minimum corporate income tax on gross income. Additionally, resident corporations pay a 15% profit remittance tax on any profits remitted abroad, unlike domestic corporations which are exempt from this tax. An example is provided where a resident corporation paid P75,000 in profit remittance tax on a P500,

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    Chapter 3

    Uploaded by

    ceray
    28 views7 pages
    This document summarizes taxation for resident corporations in the Philippines under the TRAIN law. Resident corporations are foreign corporations authorized to do business in the Philippines. They are taxed differently than domestic corporations. Resident corporations pay a 25% normal tax on taxable income from all sources within and outside the Philippines. Beginning in the fourth year of operations, they also pay the higher of a 25% normal tax or a 2% minimum corporate income tax on gross income. Additionally, resident corporations pay a 15% profit remittance tax on any profits remitted abroad, unlike domestic corporations which are exempt from this tax. An example is provided where a resident corporation paid P75,000 in profit remittance tax on a P500,

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    This document summarizes taxation for resident corporations in the Philippines under the TRAIN law. Resident corporations are foreign corporations authorized to do business in the Philippines. They are taxed differently than domestic corporations. Resident corporations pay a 25% normal tax on taxable income from all sources within and outside the Philippines. Beginning in the fourth year of operations, they also pay the higher of a 25% normal tax or a 2% minimum corporate income tax on gross income. Additionally, resident corporations pay a 15% profit remittance tax on any profits remitted abroad, unlike domestic corporations which are exempt from this tax. An example is provided where a resident corporation paid P75,000 in profit remittance tax on a P500,

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    28 views7 pages

    Chapter 3

    Uploaded by

    ceray
    This document summarizes taxation for resident corporations in the Philippines under the TRAIN law. Resident corporations are foreign corporations authorized to do business in the Philippines. They are taxed differently than domestic corporations. Resident corporations pay a 25% normal tax on taxable income from all sources within and outside the Philippines. Beginning in the fourth year of operations, they also pay the higher of a 25% normal tax or a 2% minimum corporate income tax on gross income. Additionally, resident corporations pay a 15% profit remittance tax on any profits remitted abroad, unlike domestic corporations which are exempt from this tax. An example is provided where a resident corporation paid P75,000 in profit remittance tax on a P500,

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    INCOME

    TAXATION
    UNDER THE TRAIN
    LAW

    Jesrelle Vhon G. Habana, CPA, MBA


    1
    CHAPTER 3
    Tax On Resident Corporations

    2
    RESIDENT CORPORATION
    - is a corporation organized
    under foreign laws authorized by
    Philippine regulatory agencies to
    do business in the Philippines

    One who looks around shall find


    many foreign-named corporations -
    foreign corporations - and find them
    doing lucrative manufacturing
    business or doing wholesale and retail
    business.

    How are resident corporations taxed? 3


    (a) On sale of shares of stock of a domestic corporation not
    listed and traded thru a local stock exchange, held as capital
    assets Final tax of 15%
    On the capital gain

    (b) From sources within the Philippines, on passive income of:


    Interest under the expanded foreign currency
    deposit system Final tax of 15%

    (c) From sources within the Philippines, on passive income of:


    Interest on any currency bank deposit, yield or
    other monetary benefit from deposit substitute, Final tax of 20%
    trust fund and similar arrangement, royalty

    (d) Dividend from domestic corporation (intercompany Exempt


    dividend)

    (e) Taxable income (NET) from all sources within and outside the
    Philippines-
    NORMAL TAX (NT, or RCIT) 25%

    But, beginning with the fourth year from start of


    operations, whichever is higher of:
    NORMAL TAX on taxable income (net) and 25%
    MINIMUM CORPORATE INCOME TAX (MCIT), on
    MCIT gross Income 2% 4
    THE PROFIT REMITTANCE TAX
    Any profit remitted by a branch to its head
    office shall be subject to a final tax at fifteen
    percent (15%) which shall based on the total profit
    applied or earmarked for remittance, without any
    deduction for the tax component thereof, except
    those activities which are registered with the
    Philippine Economic Zone Authority (PEZA).

    NOTE:
    Resident Corporation have
    15% Profit Remittance Tax
    unlike Domestic
    Corporation.
    5
    ILLUSTRATION
    A branch office of a resident
    corporation applied thru the Philippine
    banking system for a remittance to its
    mother company abroad of P500,000
    from its profits from Philippine
    operations. The profit remittance tax
    should have been P500,000 multiplied
    by 15%, or P75,000, and the net
    remittance would have been
    P425,000. 6
    THANK
    YOU!
    From the book of
    Virgilio Reyes

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