special corporations
Post on 07-Dec-2015
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SPECIAL CORPORATIONS
What are Special Corporations?
They refer to corporations not subject to the normal income tax rate.
Classification of Special Corporations:Domestic Special Corporations
Foreign Special Corporation
• Proprietary educational institutions
• Proprietary hospitals
• International carrier• Regional Operating HQ• Offshore banking units• Branch remittances• Owner/lessor/distributor of
cinematographic film• NR Owner/lessor of
machinery/equipment/aircraft• NR Owner/lessor of vessels
chartered by Philippine nationals
What are Proprietary Educational Institutions?
Any private school maintained & administered by private individuals or groups with an issued permit to operate from DECS, or CHED or TESDA.
What is the Predominance Test on PHEI?
If the GI from unrelated trade/business/other activity > 50% of the total GI from all sources, ENTIRE taxable income shall be subject to the REGULAR corporate tax rate
Special Types of Domestic Corporation:
Domestic Corporation Tax Rate Tax BasePHEI 10% GI on related
trade/business/activity, subject to Predominance Test.
GOCC, Gov’t. Agencies/LGUs 30% GI on related trade/business/activity
GSIS/SSS/PHIC/PCSO ExemptDepositary Banks 10% Interest Income from
FC transactions
What is Gross Philippine Billings?
Refers to gross revenue derived from carriage of persons, excess baggage, cargo, and mail originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document.
Special Types of Foreign Corporation:
Foreign Corporation Tax Rate Tax Base
International Air Carrier/Shipping 2.5% Gross Philippine Billings
Owner /lessors of vessel charted by Philippine nationals
4.5% Gross Income
Owner/lessors of aircraft, machineries and other equipment
7.5% Gross Income
OBUs 10% Interest Income on FC transactions granted to Residents only.
Regional Operating HQ 10% Taxable Income
Cinematographic film owner, lessoror distributor
25% Gross Income
Distinction between ROH and RAH:Regional Operating HQ Regional Area HQ
Are branches established by multi-national co. which are engaged in any of the ff.: general administration and planning; business planning and coordination; sourcing and procurement of RM and components; corporate finance advisory services; marketing control and sales promotion; training and personnel mgt.; logistic services; R/D services and product dev’t.; technical support and maintenance; data processing and communications; and, business dev’t.
Are branches established by multi-national co. and which do not earn income from the Philippines and which act as supervisory, communications, and coordinating center for their affiliates, subsidiaries or branches.
Subject to 15% tax Tax-exempt
What is Branch Profit Remittance Tax?BPRT of 15% shall be imposed on any profit remitted by a branch to its head office.The Branch will first be subjected to ordinary corporate tax as a resident foreign corporation (30%). Afterwards, the profits for remittance shall then be subject to 15% BPRT.
What is Optional Gross Income Taxation?Effective Jan. 1, 2000: the President (upon recommendation of the Sec of Finance) may allow corporation an option to be taxed at 15% of gross income after the ff. conditions are satisfied:
The election of the option shall be irrevocable for 3 consecutive taxable years during which the corp. is qualified under the scheme.
Tax effort ratio 20% of GNP
Ratio of IT collection to total tax revenue 40%
VAT tax effort 4% of GNP
Ratio of Consolidated Public Sector Financial Position(CPSFP) to GNP
0.9%
Ratio of Cost of Sales to Gross Sales from all sources Not exceeding 55%
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