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Corporate tax is a tax that must be paid by a corporation based on the amount of profit generated. In Philippines,
taxation system is governed by the Tax Reform Act 1997, passed into law on December 11, 1997 and became
effective on 01 January 1998. The law was aimed at the expanding the country's tax base and maintaining the
healthy fiscal standing of the government.
TAX BRACKET
For Individuals Earning Purely Compensation Income and Individuals Engaged in Business and Practice of
Profession
Over But Not Over Rate
P10,000 5%
P10,000 P30,000 P500 + 10% of the Excess over P10,000
P30,000 P70,000 P2,500 + 15% of the Excess over P30,000
P70,000 P140,000 P8,500 + 20% of the Excess over P70,000
P140,000 P250,000 P22,500 + 25% of the Excess over P140,000
P250,000 P500,000 P50,000 + 30% of the Excess over P250,000
P500,000 P125,000 + 34% of the Excess over P500,000 in 1998
Note: Effective January 1, 1999, the maximum rate shall be thirty-three percent (33%) and thirty-two percent (32%)
on January 1, 2000.
Note: When the tax due exceeds P2,000.00, the taxpayer may elect to pay in two equal installments, the first
installment to be paid at the time the return is filed and the second installment on or before July 15 of the same year
at the Authorized Agent Bank (AAB) within the jurisdiction of the Revenue District Office (RDO) where the taxpayer is
registered.
Tax Rate Taxable Base
1. Domestic Corporations:
Taxable income from all
a. In General 32%
sources
b. Minimum Corporate Income
2% Gross Income
Tax*
c. Improperly Accumulated Improperly Accumulated
Earnings 10% Taxable Income
2. Proprietary Educational Taxable income from all
10%
Institution sources
3. Non-stock, Non-profit Taxable income from all
10%
Hospitals sources
4. GOCC, Agencies &
Instrumentalities
Taxable income from all
a. In General 32%
sources
b. Minimum Corporate Income
2% Gross Income
Tax*
c. Improperly Accumulated Improperly Accumulated
10%
Earnings Taxable Income
5. National Gov’t. & LGUs
Taxable income from all
a. In General 32%
sources
b. Minimum Corporate Income
2% Gross Income
Tax*
c. Improperly Accumulated Improperly Accumulated
10%
Earnings Taxable Income
6. Taxable Partnerships
Taxable income from all
a. In General 32%
sources
b. Minimum Corporate Income
2% Gross Income
Tax*
c. Improperly Accumulated Improperly Accumulated
10%
Earnings Taxable Income
7. Exempt Corporation
a. On Exempt Activities 0%
Taxable income from all
b. On Taxable Activities 32%
sources
8. General Professional
0%
Partnerships
9. Corporation covered by Rate specified under the
Special Laws respective special laws
Taxable income from all
a. In General 32%
sources
b. Minimum Corporate Income
2% Gross Income
Tax*
c. Improperly Accumulated Improperly Accumulated
10%
Earnings Taxable Income
*Beginning on the 4th year immediately following the year in which such corporation commenced its business
operations, when the minimum corporate income tax is greater than the tax computed using the normal income tax.
Tax Rate Taxable Base
0%
E) General Professional Partnerships
F) Domestic Corporations
1) a. In General 32%
b. Minimum Corporate Income Tax 2%
c. Improperly Accumulated Earnings 10%
2) Proprietary Educational Institution 10%
3) Non-stock, Non-profit Hospitals 10%
7) Exempt Corporation
a. On Exempt Activities 0%
b. On Taxable Activities 32%
Rate specified under
8) Corporation covered by Special Laws the respective special
laws
*Cash and/or Property Dividends, Share in the distributable net income of the partnership, Interest on any bank
deposits, Royalties (except on books as well as literary works and musical composition), Prizes (except prizes
amounting to P10,000 or less), Winnings