Tax On Corp. Sample Problems

As a rule, Corporations including business partnership are subject to income tax except those enumerated in Section 30 of
the R.A 10963 (Train Law).
International Carrier
- 2% of the Gross Philippine Billings. GPB means gross revenues realized from carriage or persons, excess baggage,
cargo and mail originating from the Philippines under the following conditions:
o In a continuous and uninterrupted flight, and
o In case of transshipment, that portion of the cost of ticket corresponding to the leg flown from the
Philippines to the point of transshipment.
1. Dragon Fly has the following records of income for the period:
A. Continuous flight from Manila to Beijing = 1,000 tickets at P3,000 per ticket
B. Ticket sold for flight from Manila to Hongkong: Transfer flight from Hongkong to Beijing = 2,000 tickets at P3,000
per ticket
C. Direct flight from Manila to Hongkong = 3,000 tickets at P2,000 per ticket
Compute the income tax.
Offshore Banking Units (OBU)

- These resident foreign corporations are subject to 10% final tax on interest income derived from foreign currency
loans granted to residents.
Exceptions:
a. Income derived by OBU authorized by BSP from foreign currency transactions with nonresidents, other OBU’s,
local commercial banks and foreign banks; and
b. Income of nonresident individuals and nonresident corporations from transactions with offshore banking units is
exempted from Philippine income tax.
2. Aseanbank, Inc., an offshore banking unit and a resident foreign corporation, shows the following income and
expenses during the taxable year:
Interest income on foreign currency transactions from:
Nonresident other offshore banking units $1,000,000
Local commercial banks and foreign banks 1,500,000
Resident corporations and individuals 500,000
Operating expenses 400,000
Tax on Branch Profits Remittance

- They are subject to 15% tax on the amount remitted by branch to its head office excluding:
a. Income from activities that are registered with PEZA.
b. Passive income gains and profits received not directly connected with the conduct of its business in the
Philippines.
3. Astex Corporation, Phils., a branch of a foreign corporation located at Texas, USA doing business in the Philippines,
reported the following during the year:
Net operating income after tax P7,000,000

Tax-exempt dividend income 2,000,000
Total net income P9,000,000
The following year, the branch earmarked for remittance to the head office the P2,000,000 dividend and P5,000,000 of
its net operating income after tax. Compute the income tax.
Regional Operating Headquarters of Multinational Company

- Are branches established in the Philippines by multinational companies, which are engaged in any of the
following services, are subject to 10% tax rate based on their taxable income:
a. General administration and planning;
b. Business planning and coordination;
c. Sourcing and procurement of raw materials and components;
d. Corporate finance advisory services;
e. Marketing control and sales promotion
f. Etc.
4. Ace, Inc. Philippines is engaged in research and development services and product development related to computer
and aircraft parts. During the year, Ace reported the following income and expenses:
Sales P10,000,000
Cost of sales 4,000,000
Operating expenses 2,500,000
Interest income, net of final tax 200,000
Dividend income, tax-exempt 800,000
Nonresident foreign corporations
5. X, a special nonresident foreign corporations reveals its income and expenses within the Philippines as follows:
Gross receipts P5,000,000

Operating expenses 2,000,000
Compute the income tax if X is:

a. Cinematographic film distributor
b. Lessor of aircraft, or
c. Lessor of vessels chartered by Philippine Nationals
A. After 2 years of operation, a domestic corporation reported the following income and expenses:
3rd year 4th year 5th year 6th year
Sales P1,000,000 P2,500,000 P4,000,000 P5,000,000
Cost of sales 600,000 1,200,000 2,400,000 2,700,000
Operating expenses 300,000 1,300,000 1,400,000 1,500,000
Royalty income, net of tax 80,000 160,000 120,000 40,000
Interest income, net of tax 20,000 32,000 16,000 24,000
Dividend income (domestic) 50,000 60,000 70,000 80,000
Rent income 200,000 300,000 100,000 50,000
Quarterly tax paid 10,000 20,000 30,000 40,000
Required: Compute for the following:

1. Income tax still due and payable
2. Final tax
B. A domestic corporation has the following data:

Excess tax credits in 2018 P10,000
For the year 2019 (cumulative amount): 1st Qtr. 2nd Qtr.
Revenue, net of 1% withholding tax P495,000 P792,000
Deductions 480,000 700,000
The corporations deducted its first quarter 1% creditable tax from the first quarter income tax due and the remaining
was reduced by the excess tax credits in 2018.
1. Compute the income tax still due and payable in the first quarter of 2019?
2. Compute the income tax still due and payable in the second quarter of 2019?
C. The following income and expenses are shown by X Corporation:

Within Outside
Gross income P8,000,000 P4,000,000
Business expenses 5,000,000 3,000,000
Sale of land and warehouse (cost P2M) 3,000,000
Compute the taxable income and income tax due assuming X Corporation is:
a. Domestic Corporation
b. Resident Foreign Corporation

Tax On Corp. Sample Problems

Uploaded by

Copyright:

Available Formats

Tax On Corp. Sample Problems

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Tax On Corp. Sample Problems

Uploaded by

Copyright:

Available Formats

As a rule, Corporations including business partnership are subject to income tax except those enumerated in Section 30 of

the R.A 10963 (Train Law).

Compute the income tax.

Offshore Banking Units (OBU)

Compute the income tax.

Tax on Branch Profits Remittance

Net operating income after tax P7,000,000

Regional Operating Headquarters of Multinational Company

Compute the income tax.

Nonresident foreign corporations

Gross receipts P5,000,000

Compute the income tax if X is:

Required: Compute for the following:

B. A domestic corporation has the following data:

C. The following income and expenses are shown by X Corporation:

You might also like