Philippines Corporate Income Tax

Corporate income tax rates and base

Corporate income tax is governed by the NIRC as amended by the CREATE Act (RA 11534) and CREATE MORE (RA 12066). The regular rate is 25%, with a reduced 20% rate for qualifying smaller domestic corporations.

• Regular corporate income tax rate — 25% of net taxable income percent (NIRC Section 27(A), as amended by CREATE Act (RA 11534))
• Reduced rate for small domestic corporations — 20% for domestic corporations with net taxable income not over PHP 5,000,000 AND total assets not over PHP 100,000,000 (excluding land on which the business is situated) percent (NIRC Section 27(A), as amended by CREATE Act (RA 11534))
• Resident foreign corporation rate — 25% on Philippine-source net taxable income percent (NIRC Section 28(A), as amended by CREATE Act (RA 11534))
• Non-resident foreign corporation rate — 25% final tax on gross Philippine-source income percent (NIRC Section 28(B), as amended by CREATE Act (RA 11534))
• Minimum corporate income tax (MCIT) — 2% of gross income, from the 4th taxable year of operations, when it exceeds the regular CIT percent (NIRC Section 27(E), as amended by CREATE Act (RA 11534))
• Tax base — Net taxable income (gross income less allowable deductions); resident corporations may elect the 40% Optional Standard Deduction in lieu of itemized deductions (NIRC Sections 31, 34)
• Dividends between domestic corporations — Dividends received by a domestic or resident foreign corporation from a domestic corporation are exempt from income tax (NIRC Section 27(D)(4))
• Withholding tax on dividends to non-resident foreign corporations — 25% final WHT, reduced to 15% if the recipient's home country allows a tax-sparing credit (or does not tax the dividend) percent (NIRC Section 28(B)(5)(b))
• Withholding tax on dividends to non-resident individuals — 25% (NRA not engaged in trade/business); 20% for NRA engaged in trade or business percent (NIRC Sections 25(A)(2), 25(B))
• Final tax on interest income — 20% final tax on peso bank deposits, deposit substitutes and similar arrangements percent ((rate standardized at 20% under recent passive-income reform — confirm scope)) (NIRC Section 27(D)(1); RA 12214 (passive income rationalization))
• Final tax on royalties — 20% final tax on royalties earned as passive income (domestic corporations) percent (NIRC Section 27(D)(1))
• Branch profit remittance tax — 15% on profits remitted by a Philippine branch to its foreign head office percent ((approx — confirm 15% rate)) (NIRC Section 28(A)(5))
• Annual income tax return deadline — 15th day of the 4th month after the close of the taxable year (15 April for calendar-year filers), BIR Form 1702-RT/1702-MX/1702-EX (NIRC Section 52(C); BIR Form 1702)
• Quarterly corporate returns — BIR Form 1702Q filed within 60 days after the close of each of the first three quarters (NIRC Section 75; BIR Form 1702Q)