taxation

A domestic corporation with not more than P100,000,000 assets and nor more than P5,000,000 taxable income shall be subject to:

• 20% income tax on taxable income within and without the Philippines.

• 25% income tax on gross income within the Philippines.

• 25% income tax on taxable income within the Philippines.

• 20% income tax on taxable income within the Philippines.

A one-person corporation is a corporation with a single stockholder and may be formed by any of the following except which one?

• Natural person

• Estate

• Trust

• None of the above

Which of the following statements in INCORRECT with respect to Optional Standard

Deduction (OSD)allowed to corporations?

• Unless the corporation signifies in the return the intention to elect

  the optional standard deduction, it shall be considered as having

  availed itself of the deductions allowed

• Such election of OSD when made in the return shall be irrevocable for

  the taxable year for which the return is made.

• The corporation that is entitled to and claimed for the optional

  standard deduction shall not be required to submit with its tax

  return such financial statements otherwise required under the Tax

  Code.

• The corporation shall keep such records pertaining to his gross income

  during the taxable year, as may be required by the rules and regulations

  promulgated by the Secretary of Finance, upon recommendation of the

  Commissioner.

Which of the following statements relative to a non-resident foreign corporation

is INCORRECT?

• It does not file an income tax return in the Philippines.

• Its taxable income in the Philippines is always subject to final

  withholding tax.

• It is taxed only on gross income derived from sources within the

  Philippines.

• It is taxed on net income derived from sources within the Philippines.

In determining the “Gross Philippines Billings” of a resident foreign corporation

operating as an international air or shipping carrier, the primary consideration

is:

• place of sale of the passage or freight document.

• place of original departure.

• place of final destination.

• nationality of the international carrier.

Answer explanation

Gross Philippine Billings' means gross revenue whether for passenger, cargo or mail originating from the Philippines up to final destination, regardless of the place of sale or payments of the passage or freight documents.

It is important to know the source of income for tax purposes (i.e. from within and

without the Philippines) because:

• some individuals and corporate taxpayers are taxed on their worldwide

  income while others are taxable only upon income from sources within

  the Philippines.

• the Philippines imposes income tax only on income from sources within.

• some individual taxpayers are citizens while others are aliens.

• export sales are not subject to income tax.

The following date are presented to for you for the taxable year 2024.

Gross sales, Philippines P5,000,000

Cost of sales, Philippines 2,000,000

Itemized deductions, Philippines 1,000,000

Gross sales, USA 10,000,000

Cost of sales, USA 6,000,000

Itemized deductions, USA 1,500,000

Income tax paid for the first 3 quarters 300,000

How much is the tax payable assuming the taxpayer is a corporation organized under

Philippines laws and its total assets do not exceed P100,000,000?

• P1,125,000

• 900,000

• P825,000

• P600,000

Answer explanation

The following date are presented to for you for the taxable year 2024.

Gross sales, Philippines P5,000,000

Cost of sales, Philippines 2,000,000

Itemized deductions, Philippines 1,000,000

Gross sales, USA 10,000,000

Cost of sales, USA 6,000,000

Itemized deductions, USA 1,500,000

Income tax paid for the first 3 quarters 300,000

How much is the tax payable assuming the taxpayer is a foreign corporation engaged

in trade or business in the Philippines and its total assets do not exceed

P100,000,000?

• P500,000

• P400,000

• P200,000

• P100,000

Answer explanation

Which of the following corporations is subject to the Minimum Corporate Income Tax (MCIT)?

• Proprietary educational institutions

• Resident foreign corporations

• Domestic corporations subject to special tax rates

• Offshore banking units

Under the National Internal Revenue Code of 1997, as amended, regional or area headquarters

of multinational companies shall pay a tax of:

• 10% of their taxable income

• 30% of their gross income

• 30% of their taxable income

• None, because they are exempt from income tax