MCIT o Caused temporary business operations

shutdown.
RR 09-98: Implementing Republic Act No. 8424, "An Act b. Force majeure;
Amending the National Internal Revenue Code, as o Irresistible force by an act of god;
Amended" Relative to the Imposition of the Minimum lightning, earthquake, storm, floods,
Corporate Income Tax (MCIT) on Domestic Corporations and war, insurgency.
Resident Foreign Corporations c. Legitimate business reverses.
o Fire, robbery, theft, embezzlement,
MCIT on domestic corporations: other economic reasons determined by
1. 2% of gross income; Finance Secretary.
 Except:
a. Passive income subjected to final tax at MCIT cannot be applied to domestic corporations:
source; 1. Proprietary educational institutions;
b. Income exempt from income tax;  Subject to 10% on taxable income
c. Income subject to final withholding tax 2. Non-profit hospitals;
(RR12-07)  Subject to 10% on taxable income
2. At the end of the taxable year (calendar or fiscal 3. Foreign Currency Deposit Units (FCDUs), depositary
year, depending on the accounting period banks under the expanded foreign currency deposit
employed); system
 Filed in appropriate tax return with  On income from foreign currency transactions:
corporation’s annual final adjusted income a. Local commercial banks;
return; b. Branches of foreign banks authorized by BSP
 Domestic corporations not required to pay MCIT to transact business with FCDUs
on quarterly basis. Repealed by RR 12-07  On interest income from foreign currency loans
3. Beginning the 4th taxable year immediately following granted to PH residents under the expanded
the taxable year when corporation commenced foreign currency deposit system
business operations;  Subject to 10% final income tax of such income
 Year registered with the BIR. 4. Firms taxed under a special income tax regime:
4. Imposed whenever taxable income is: a. PEZA law (RA 7916)
a. Zero; b. Bases Conversion Development Act (RA
b. Negative; 7227)
c. 2% MCIT greater than 30% Normal
Corporate Income Tax (NCIT) MCIT on resident foreign corporations:
5. If domestic corporation partly covered by both 1. 2% of gross income from sources within the
regular and special income tax systems, MCIT covers Philippines;
only the regular income tax system; 2. Beginning the 4th taxable year immediately following
6. Any excess of MCIT over the NCIT are carried over on the taxable year when corporation commenced
annual basis credited against NCIT for 3 immediately business operations;
succeeding taxable years; 3. Only whenever amount of MCIT is greater than NCIT
 Recorded as asset under account title “deferred 4. Same with 6-8 with domestic corporations;
charges-MCIT” 5. MCIT only applies to resident foreign corporations
 Any amount not credited against NCIT in the 3 subjected to NCIT.
year period loses creditability and
 Amount not credited will be removed and MCIT cannot be applied to resident corporations:
deducted from the “deferred charges-MCIT” by 1. International carriers
a debit entry to “retained earnings” and a credit  Subject to 2.5% of gross Philippine billings
entry to “deferred charges-MCIT” because it is 2. Offshore Banking Units (OBUs)
not deductible from gross income, it being an  On income from foreign currency transactions:
income tax a. Local foreign banks;
7. Comparison of MCTI and NCIT made at end of b. Branches of foreign banks authorized by BSP
taxable year; to transact business with OBUs
8. Finance Secretary may suspend MCIT upon CIR-  On interest income from foreign currency loans
verified submission by corporation of their granted to PH residents
substantial losses grounded on:  Subject to final income tax at 10% of such
a. Prolonged labor dispute; income
o Strikes staged by employees lasting 3. Regional Operating Headquarters (ROHQs)
more than 6 months within a taxable  Subject to 10% on taxable income
period. 4. Firms taxed under special income tax regime:
 a. PEZA law (RA 7916) 5. Excess MCIT from previous taxable years not allowed
b. Bases Conversion Development Act (RA to be credited from annual MCITs because they are
7227) only applied against NCIT.
RR 12-07: Amending Certain Provisions of Revenue
Regulations No. 9- 98 Relative to the Due Date Within Which
to Pay Minimum Corporate Income Tax (MCIT) Imposed on
Domestic Corporations and Resident Foreign Corporations
Pursuant to Section 27 (E) and Section 28 (A) (2) of the 1997
National Internal Revenue Code, as Amended

Due date within which to pay MCIT for domestic

corporations and resident foreign corporations:
1. Computation and payment of MCIT applies at time of
filing of the quarterly corporate income tax
(cumulative basis);
 To be paid not later than 60 days from the close
of each of the first 3 quarters of the taxable
year.
 Final adjustment return filed:
a. On or before April 15, if calendar year;
b. On or before the 4th month following the
close of the fiscal year.
 Filed with:
a. Authorized agent banks;
b. Revenue District Officer;
c. Collection Agent;
d. Duly authorized Treasurer of the city or
municipality having jurisdiction over the
principal office of the corporation, or where
its main books of accounts and other data
from which return is prepared, are kept.
2. If at final computation of annual income tax due,
annual NCIT is higher than annual MCIT, the
following are credited against annual NCIT:
a. Quarterly MCIT payments of current taxable
quarters;
b. Quarterly NCIT payments of current taxable
year
c. Excess MCIT in the prior year;
d. Expanded withholding taxes in the current
year;
e. Excess expanded withholding taxes in the
prior year.
3. If at final computation of annual income tax due,
annual MCIT is higher than annual NCIT, the
following are credited against annual MCIT:
a. Quarterly MCIT payments of current taxable
quarters;
b. Quarterly NCIT payments of current taxable
quarters;
c. Expanded withholding taxes in the current
year;
d. Excess expanded withholding taxes in the
prior year.
4. In payment of quarterly MCIT, excess MCIT from the
previous taxable years shall not be allowed to be
credited against NCIT;
RMC 04-03: Clarifying Items that would Constitute Gross b. Obtaining funds from the public through the
Receipts and Costs in Determining "Gross Income" on receipt of deposits;
Services for the Purpose of Computing the Minimum c. Trading of foreign exchange and other financial
Corporate Income Tax (MCIT) Pursuant to Sections 27(E) and instruments
28(A)(2) of the National Internal Revenue Code of 1997 6. Cost of services are limited to:
a. Salaries, wages, other employee benefits of
Sales of services subject to MCIT: personnel directly engaged in those activities;
1. Banks and non-bank financial intermediaries b. Interest expense except interest charged by or
performing quasi-banking activities; paid to the head office on funds classified as the
2. Insurance and pension funding companies branch’s assigned capita;
3. Finance companies and other financial intermediaries c. Philippine Deposit Insurance Commission
not performing quasi-banking activities; premium payments;
4. Brokers of securities (including banks); d. BSP supervision fees.
5. Customs, insurance, real estate, immigration, and
commercial brokers; Insurance and pension funding companies:
6. General engineering and/or building contractors;
7. Common carriers or transportation contractors;
8. Hotel, motel, rest/pension/lodging houses and resort
operators;
9. Food service establishments;
10. Lessors or property;
11. Telephone and telegraph, electric, gas, and water
utilities;
12. Radio and/or television broadcasting;
13. Any other kind of a similar nature as above.

Banks and non-bank financial intermediaries performing

quasi-banking activities:
1. Banks – regularly engaged in the lending of funds
obtained from the public through the receipt of
deposits or the sale of bonds, securities, or
obligations of any kind. May be a commercial, thrift,
development, rural, or specialized government bank.
2. Non-bank financial intermediary – primary functions
include the lending, investing, or placement of funds
or evidences of indebtedness or equity deposited
with them, acquired by them or otherwise coursed
through them, either for their own account or for
the account of others.
3. Quasi-banking activities – borrowing funds from 20
or more personal or corporate lenders at any one
time, through the issuance, endorsement, or
acceptance of debt instruments of any kind other
than deposits for the borrower’s own account, or
through the issuance of certificates of assignment
with recourse or repurchase agreements.
4. Gross receipts mean actual or constructive receipts
from the following:
 Derived from lending activities:
a. Interests;
b. Commissions;
c. Discounts;
 All items of gross income not subject to final
withholding income tax.
5. Cost of services refer those incurred directly and
exclusively for:
a. Lending/investment of funds;