Special Corporations
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Transcript of Special Corporations
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SPECIAL CORPORATIONS
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What are Special Corporations?
They refer to corporations not subject to the normal income tax rate.
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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
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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.
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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
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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
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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.
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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
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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
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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.
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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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