CORPORATE INCOME TAX (Answer Key)

TARLAC STATE UNIVERSITY - COLLEGE OF BUSINESS AND ACCOUNTANCY
TAXATION 2021 Page 1 of 5
TAX ON CORPORATIONS
INCOME TAX FOR REGULAR AND SPECIAL CORPORATIONS
ABC Corporation just completed its third year of operations. It has the following financial information for
the taxable year 2021.
Philippines Bhutan
Gross Income P 4,500,000 P 600,000
Deductions 1,900,000 340,000
a. Assuming the taxpayer is an MSME, the taxable income and tax due is:
Taxable Income = P5,100,000 GI – P2,240,000 Deductions = P2,860,000
Tax Due = P2,860,000 TI x 20% = P572,000
b. Assuming the taxpayer is a Domestic Corporation, the taxable income and tax due is:
Tax Due = P2,860,000 TI x 25% = P715,000
c. Assuming the taxpayer is a Resident Foreign Corporation, the taxable income and tax due is:
Tax Due = P2,600,000 TI x 25% = P650,000
d. Assuming the taxpayer is a Resident Foreign Corporation and it remitted 60% of its net profit to its
head office abroad, the profit remittance tax due is:
Profit Remittance = (P2,600,000 TI – P650,000 Tax Due) x 60% = P1,170,000
Profit Remittance Tax Due = P1,170,000 x 15% = P175,500
e. Assuming the taxpayer is a Non-Resident Foreign Corporation, the tax due is:
Tax Due = P4,500,000 GI x 25% = P1,125,000
f. Assuming the taxpayer is an International Air Carrier whose gross Philippine billings and expenses
are the amounts stated in Philippines, the tax due is:
Tax Due = P4,500,000 GPB x 2.5% = P112,500
g. Assuming the taxpayer is a Non-Resident Owner of Aircrafts and its gross rentals and expenses are
those stated in Philippines, tax due is:
Tax Due = P4,500,000 GI/GR x 7.5% = P337,500
h. Assuming the taxpayer is a Non-Resident Owner of Vessels and its gross rentals and expenses are
those stated in Philippines, tax due is:
Tax Due = P4,500,000 GI/GR x 4.5% = P202,500
i. Assuming the taxpayer is a Non-Resident Cinematographic Film Owner, Lessor, or Distributor and its
gross rentals and expenses are those stated in Philippines, tax due is:
Tax Due = P4,500,000 GI/GR x 25% = P1,125,000
j. Assuming the taxpayer is a Regional Operating Headquarters of a Multinational Company, whose

gross income and expenses are those stated in Philippines, tax due is: (*RFC)
Tax Due = P2,600,000 TI x 10% = P260,000
k. Assuming the taxpayer is a Proprietary Educational Institution or Non-Profit Hospitals, its income
related to operations and expenses are those stated in Philippines, and income in unrelated business
and expenses are those in Bhutan, tax due is: (*DC)
Tax Due = P2,860,000 TI x 1% = P2,860,000
l. Assuming the taxpayer is a Proprietary Educational Institution or Non-Profit Hospitals, its income
related to operations and expenses are those stated in Bhutan, and income in unrelated business and
expenses are those in Philippines, tax due is: (*DC)
Tax Due = P2,860,000 TI x 25% = P715,000
TAX ON CORPORATIONS
REGULAR CORPORATE INCOME TAX WITH MINIMUM CORPORATE INCOME TAX AND WITHHOLDING
TAXES. (Amounts are in per quarter basis)
Regular/ Normal Creditable Excess MCIT

Quarter Income Tax MCIT Taxes Withheld Prior Year
First 110,000 70,000 20,000 30,000
Second 120,000 170,000 30,000
Third 250,000 100,000 40,000
Forth 260,000 150,000 35,000
a. The income tax due for the first quarter is:
b. The income tax due for the second quarter is:
c. The income tax due for the third quarter is:
d. The income tax due and payable for the year is:
e. Using the preceding item except that the minimum corporate income tax for the fourth quarter is
P450,000 (instead of P150,000), the income tax due for the year is:
MINIMUM CORPORATE INCOME TAX
The following information was obtained from the records of ABC Corporation from its 7 th to 10th year of
operation.
2019 2020 2021 2022
Gross Income 960,000 1,020,000 1,100,000 2,500,000
Deductions 930,000 920,000 1,000,000 1,430,000
a. The ending balance of Deferred Charges – MCIT for Year 7 is:
b. The ending balance of Deferred Charges – MCIT for Year 8 is:
c. The ending balance of Deferred Charges – MCIT for Year 9 is:
d. The ending balance of Deferred Charges – MCIT for Year 10 is:

TAX ON CORPORATIONS
QUARTERLY INCOME TAX WITH MCIT AND WITHHOLDING TAXES
ABC Corporation, a domestic corporation has the following data, in its 7 th year of operation:
(amounts are stated in a year-to-date basis)
Excess creditable tax payments from 2020 P15,000
For year 2021: 1st Quarter 2nd Quarter

Gross Income, net of 1% withholding tax P495,000 P792,000
Deductions P480,000 P700,000
a. How much is the income tax still due and payable in the first quarter?
RCITax Due = GI P500,000 (P495K/99%) – P480,000 Deductions = P20,000 x 25% = P5,000
MCITax Due = GI P500,000 x 1% = P5,000
RCIT P5,000
Less: CWT 2020 5,000
Tax Due and Payable P 0
b. How much is the income tax still due and payable in the second quarter?
RCITax Due = GI P800,000 (P792K/99%) – P700,000 Deductions = P100,000 x 25% = P25,000
MCITax Due = GI P800,000 x 1% = P8,000
RCIT P25,000
Less: CWT 2020 15,000
CWT 2021 8,000 (P800K-P792K)
Tax Due and Payable P 2,000
TAX ON CORPORATIONS
ITEMIZED DEDUCTIONS AND OPTIONAL STANDARD DEDUCTION
ABC Corporation, a domestic corporation was on its sixth year of operations.

The following data pertain to its operations in the Philippines for the years 2021 and 2022:
2020 2021 2022

Gross Income 6,200,000 7,200,000
Business Expenses 5,300,000 6,120,000
MCIT 10,000
A. Taxable Income and Income Tax Due
a. Using Itemized Deduction in 2021 and 2022 is:

2021:
RCITax Due = GI P6,200,000 – P5,300,000 Deductions = P900,000 x 25% = P225,000
MCITax Due = GI P6,200,000 x 1% = P62,000
RCIT P225,000
Less: MCIT 2020 10,000
Tax Due and Payable P215,000
2022:
RCITax Due = GI P7,200,000 – P6,120,000 Deductions = P1,080,000 x 25% = P270,000
MCITax Due = GI P7,200,000 x 1% = P72,000
RCIT P270,000
Tax Due and Payable P270,000
b. Using Optional Standard Deduction (OSD) in 2021 and 2022 is:

2021 2022
Gross Income P 6,200,000 P 7,200,000
Less: 40% OSD 2,480,000 2,880,000
Taxable Income P 3,720,000 P 4,320,000
x Regular Tax Rate 25% 25%
Tax Due P 930,000 P 1,080,000
Less: MCIT 2020 10,000 - .
Tax Due and Payable P 920,000 P 1,080,000
B. Assuming the taxpayer is a Non-Resident Foreign Corporation, tax due for 2022 is:
Tax Due = P7,200,000 GI x 25% = P1,800,000
TAX ON CORPORATIONS
NET OPERATING LOSS CARRYOVER
The following information was obtained from the records of ABC Corporation in its 5 th year to 8th year of
operation.
2019 2020 2021 2022
Gross Income 3,000,000 3,050,000 3,200,000 3,700,000
Allowable Deductions 3,200,000 3,050,000 3,100,000 3,200,000
Applying the rules on Net Operating Loss, compute for the following (using the most beneficial aspect
for the business):
a. The income tax due and payable for Year 5 is:
b. The income tax due and payable for Year 6 is:
c. The income tax due and payable for Year 7 is:
d. The income tax due and payable for Year 8 is:

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TARLAC STATE UNIVERSITY - COLLEGE OF BUSINESS AND ACCOUNTANCY

TAXATION 2021 Page 1 of 5

INCOME TAX FOR REGULAR AND SPECIAL CORPORATIONS

j. Assuming the taxpayer is a Regional Operating Headquarters of a Multinational Company, whose

Regular/ Normal Creditable Excess MCIT

a. The income tax due for the first quarter is:

b. The income tax due for the second quarter is:

c. The income tax due for the third quarter is:

MINIMUM CORPORATE INCOME TAX

a. The ending balance of Deferred Charges – MCIT for Year 7 is:

b. The ending balance of Deferred Charges – MCIT for Year 8 is:

c. The ending balance of Deferred Charges – MCIT for Year 9 is:

d. The ending balance of Deferred Charges – MCIT for Year 10 is:

QUARTERLY INCOME TAX WITH MCIT AND WITHHOLDING TAXES

Excess creditable tax payments from 2020 P15,000

For year 2021: 1st Quarter 2nd Quarter

ITEMIZED DEDUCTIONS AND OPTIONAL STANDARD DEDUCTION

ABC Corporation, a domestic corporation was on its sixth year of operations.

2020 2021 2022

A. Taxable Income and Income Tax Due

a. Using Itemized Deduction in 2021 and 2022 is:

b. Using Optional Standard Deduction (OSD) in 2021 and 2022 is:

NET OPERATING LOSS CARRYOVER

a. The income tax due and payable for Year 5 is:

b. The income tax due and payable for Year 6 is:

c. The income tax due and payable for Year 7 is:

d. The income tax due and payable for Year 8 is:

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