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Taxation > Income Taxes On Corporation > Flashcards

Income Taxes On Corporation Flashcards

1
Q

An artificial being created by operation of law, having the right of succession and the powers, attributes, and properties authorized by law or incident to its existence.

A

Corporation

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2
Q

What is corporation?

A

It is an artificial being with the rights of succession, powers, attributes, and properties

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3
Q

How it is incorporated?

A

By the operation of law, that is authorized by law

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4
Q

The term corporation shall include :

A
  1. One person corporation ( OPC )
  2. Partnerships
  3. Joint stock companies
  4. Joint accounts
  5. Associations
  6. Insurance companies
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5
Q

The term corporation does NOT include :

A
  1. General professional partnerships
  2. Joint venture or consortium
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6
Q

3 types of corporation

A
  1. Domestic corporation ( DC )
  2. Resident foreign corporation ( RFC )
  3. Nonresident foreign corporation ( NRFC )
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7
Q

2 classification of corporation

A
  1. Ordinary corporations
  2. Special corporations
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8
Q

3 income taxes of corporation

A
  1. Regular income
  2. Passive income
  3. Capital gains
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9
Q

In domestic corporation, the regular corporate income taxes if its MSME is

A

20%

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10
Q

In domestic corporation, the regular corporate income taxes if its NON-MSME in net income is

A

25%

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11
Q

In resident foreign corporation, the regular corporate income taxes in net income is

A

25%

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12
Q

In domestic corporation and resident foreign corporation, the minimum corporate income taxes of gross income is

A

2%

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13
Q

In non-resident foreign corporation, the final withholding taxes in gross income is

A

25%

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14
Q

In domestic corporation and resident foreign corpoartion in passive income, the interest income is

A

20%

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15
Q

In domestic corporation and resident foreign corpoartion in passive income, the royalties is

A

20%

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16
Q

In domestic corporation and resident foreign corpoartion in passive income, the dividends is

A

Exempted

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17
Q

In passive income of non-resident foreign corporation the interest income is

A

25%

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18
Q

In passive income of non-resident foreign corporation the royalties is

A

30% in TRAIN LAW and 25% in CREATE LAW

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19
Q

Capital gains of domestic corporation, resident foreign corporation, and non-resident foreign corporation the shares of stocks is

A

15%

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20
Q

Capital gains of domestic corporation in real properties is

A

6%

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21
Q

Sources of income subject to tax

A
  1. Domestic corporation ( Philippines and Abroad )
  2. Resident foreign corporation ( philippines )
  3. Non-resident foreign corporation ( philippines )
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22
Q

The tax charged to the ordinary income of a domestic and resident foreign corporation in the philippines

A

Regular corporate income tax

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23
Q

Regular corporate income tax is also referred to as

A

The normal corporate tax or basic income tax

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24
Q

What is the regular corporate income tax ?

A

It is the basic income tax

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25
Q

How it is computed ?

A

The ordinary income and net income is computer according to the regular corporate income tax rate

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26
Q

Who is under the the regular corporate income tax ?

A

Corporations of both domestic and resident foreign

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27
Q

Where does this corporations should be ?

A

Philippines

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28
Q

RA 11534. April 11,2021

A

Corporate Recovery and Tax Incentives for Enterprises ( CREATE ACT )

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29
Q

RCIT rates under CREATE ACT effectivity dates of Domestic Corporation and Resident Foreign Corporation

A

July 1,2020

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30
Q

RCIT rates under CREATE ACT effectivity dates of Non-Resident foreign corporation

A

January 1,2021

31
Q

Micro small and medium enterprises ( MSME ) net taxable income and assets

A

5,000,000 for net taxable income and 100,000,000 for assets excluding land

32
Q

Transition period from TRAIN to CREATE Act 2020 of domestic corporation ( Non-MSME ) and resident foreign corporation

A

27.5 %

33
Q

Transition period from TRAIN to CREATE Act 2020 of domestic corporation ( MSME )

A

25%

34
Q

It is the 2% of the gross income as of the end of the taxable year, depending on the accounting period employed is imposed upon any domestic corporations and resident foreign corporation beginning on the fourth taxable year immediately following the taxable in which such corporation commenced its business operations

A

Minimum Corporate Income Tax ( MCIT )

35
Q

What is a minimum corporate income tax ( MCIT ) ?

A

It is the basic income tax applicable on 4th taxable year

36
Q

How it is computed ?

A

The ordinary income and gross income is computed through MCIT rate

37
Q

Who is under the MCIT ?

A

Domestic and Resident Foreign Corporation

38
Q

Minimum corporate income tax shall be imposed whenever :

A
  1. Corporation has zero taxable income
  2. Corporation has negative taxable income
  3. Whenever the amount of minimum corporate income tax is greater than regulat corporate income tax due
39
Q

Minimum corporate income tax exempt :

A
  1. Domestic Corporation
  2. Resident foreign corporation
  3. Corporations registered under philippine economic zone authority ( PEZA ) and bases conversion development authority ( BCDA )
40
Q

Minimum corporate income tax exempt in domestic corporation

A
  1. Proprietary educational institutions
  2. Non-profit hospitals
  3. Domestic corporations engaged in depository banks under the expanded foreign currency deposit unit ( FCDUs )
41
Q

Minimum corporate income tax exempt in resident foreign corporation

A
  1. International carriers
  2. Regional operating headquarters ( ROHQs ) up to 2021 taxable year under CREATE Act
42
Q

Minimum corporate income tax on or before june 30,2020

A

2%

43
Q

Minimum corporate income tax on july 1, 2020 to June 30,2023

A

1%

44
Q

Minimum corporate income tax beginning july 30,2023

A

2%

45
Q

Transition period rate from TRAIN to CREATE Act 2020 and 2023

A

1.5%

46
Q

Any excess of the minimum corporate income tax over the regular corporate income tax shall be carried forward and credited against the regular corporate income tax for the three immediately succeeding taxable year

A

Carry forward of excess minimum corporate income tax ( MCIT Carry-over )

47
Q

The secretary of finance is authorized to suspend the imposition if minimum corporate income tax on any corporation due to :

A
  1. Losses on account of prolonged labor disputes
  2. Force majeure
  3. Legitimate business reverses
48
Q

A form of penalty tax equal to ten percent imposed on domestic corporations classified as closely-held corporations on their improperly accumulated taxable income for the purpose of avoiding tax liability for their shareholders if they decide to distribute in the form of dividends

A

Improperly accumulatee earnings tax ( IAET )

49
Q

What is improperly accumulated earnings tax ( IAET ) ?

A

It is the penalty tax for tax liability avoidance

50
Q

How is improperly accumulated earnings tax computed ?

A

By 10%

51
Q

Who is under the improperly accumulated earnings tax ( IAET ) ?

A

Domestic corporations that is closely-held

52
Q

Improperly Accumulated Earnings Tax exempt :

A
  1. Publicly-held corporations
  2. Banks and other non-bank financial intermediaries
  3. Insurance companies
  4. Taxable partnerships
  5. General professional partnerships
  6. Non-taxable joint ventures
  7. Enterprises registered with PEZA and under Bases Conversion and Development Act
53
Q

Corporations subject to income tax rates which are lower than the regular corporate income tax rates ( RCIT ) of 20% or 25%

A

Special Corporations

54
Q

What is special corporations ?

A

Corporations that have preferential tax

55
Q

How its tax computed ?

A

The special corporations net income is computed by preferential tax rate

56
Q

Income taxes of special corporation

A
  1. Ordinary income that has lower income tax rates
  2. Passive income with the same FWT rates
  3. Capital gains tax with the same CGT rates
57
Q

Special corporations in domestic

A
  1. Proprietary educational institutions
  2. Non-profit hospitals
58
Q

Proprietary educational institutions and non-profit hospital under Special Corporations tax rate

A

Train law is 10% and CREATE Act is 1% ( 2020 ) ; 10% ( beginning july 2023 )

59
Q

Tax base in special corporation in domestic

A

Net income

60
Q

Exceptions of special corporation in domestic

A
  1. Proprietary educational institutions and non-profit hospitals with related income
  2. Non-stock and non-profit educational institution not under sec.3 of RR 3-2022
61
Q

Special corporations in resident foreign corporations

A
  1. International carriers
  2. Regional operating headquarters ( ROHQs )
62
Q

International Carriers of special corporation tax rate

A

2.5%

63
Q

Tax base of international carriers under special corporation

A

Gross Philippine Billing ( GPB )

64
Q

International carriers may avail of a preferential rate or exception under

A

RA 10378 on the basis of ; Tax treaty, international agreement or reciprocity

65
Q

Regional operating headquarters ( ROHQs ) tax rate of special corporation

A

TRAIN LAW is 10% and CREATE Act is 10% til dec.31,2021

66
Q

Regional operating headquarters ( ROHQs ) tax base of special corporation

A

Net income

67
Q

Beginning Jan.1,2022 Regional Operating Headquarters are no longer considered as

A

Special corporations

68
Q

Non-resident foreign corporation under special corporation

A
  1. Non-resident cinematographic film owner, lessor or distributor
  2. Non-resident owner or lessor of vessels chartered by philippine nationals
  3. Non-resident owner or lessor of aircraft, machineries and other equipment
69
Q

Non-resident cinematographic film owner, lessor or distributor tax rate

A

25%

70
Q

Non-resident cinematographic film owner, lessor or distributor tax base

A

Gross income

71
Q

Non-resident owner or lessor of vessels chartered by philippine nationals tax rate

A

4.5 %

72
Q

Non-resident owner or lessor of vessels chartered by philippine nationals tax base

A

Gross rentals, lease or charter fees

73
Q

Non-resident owner or lessor of aircraft, machineries and other equipment tax rate

A

7.5%

74
Q

Non-resident owner or lessor of aircraft, machineries and other equipment tax base

A

Gross rentals, charters and other fees

Taxation (1 decks)

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