Steven David C. Albarillo
MCIT(minimum corporate income tax)
Under the CTRP, an MCIT equivalent to two percent (2%) of gross income is imposed beginning the fourth (4th) taxable year immediately following the taxable year in which such corporation started its business operations. The MCIT is imposed whenever such corporation has zero or negative taxable income or whenever the amount of the MCIT is greater than the regular corporate income tax due from such corporation. An MCIT equivalent to two (2%) of the gross income derived from sources within the Philippines is also imposed on resident foreign corporations. Carry forward of MCIT
Under the tax scheme, any excess of the MCIT over the regular corporate income tax is carried forward on an annual basis and can be credited against the regular income tax for three years. The MCIT is imposed only on domestic Corporations that are subject to regular corporate tax. Hence, it is not imposed on the following: * proprietary educational institutions and nonprofit hospitals as they are subject to ten percent (10%) on their taxable income; * the Foreign Currency Deposit Units (FCDU) as their income from foreign currency transactions with local commercial banks and foreign banks and their interest income from foreign currency loans granted to residents of the Philippines are subject to final tax at ten percent (10%) of such income; and * firms that are taxed under a special income tax regime such as those in accordance with the Philippine Economic Zone Authority Law and the Bases Conversion Development Act. * "international carrier" as they are subject to a tax of two and one-half percent (2 ½%) of their Gross Philippine Billings * Offshore Banking Units (OBUs) as their income from foreign currency transactions with local commercial bank and foreign banks and interest income from currency loans granted to residents of the Philippines are subject to a final income tax of ten percent (10%) of gross...
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