How to compute income tax for Domestic Corporations and business partnerships?

This article is guest posted by Garry S. Pagaspas, CPA

In this post let us tackle the manner of computing income taxes for domestic corporations in the Philippines. I included ordinary partnerships because under the law, they are taxed similarly as corporations, regardless of their creation, except general professional partnerships and certain joint ventures and consortiums. In this post, I will simply refer them both as corporate taxpayers or corporations.

As we all know, taxable income as to nature of income may be classified as an ordinary income that is subject to the normal corporate income tax of 30% starting January 1, 2009, or a final income subject to final withholding taxes of varying rates which are not required to be declared in the income tax returns (ITR) as the corresponding tax is being withheld upon their payment of such income. Examples of income subject to final taxes are interest income on Philippine bank deposits, dividends from domestic corporations, winnings and prizes, except PCSO and LOTTO winnings, and prizes not exceeding P10,000, royalties, and others. In this post, we will discuss ORDINARY income computations so you will be guided comes the ITR deadlines. Read more