WhatarethecriteriainimposingPhilippineIncomeTax?

a.
b.
c.

CITIZENSHIP/NATIONALITYPRINCIPLEacitizenofthePhilsissubjecttoPhilincometax(a)onhis
worldwideincome,ifheresidesinthePhils(b)onlyonhisPhilippinessourceincome,ifhequalifiesasanonresident
citizenwherehisforeignsourceincomeshallbetaxexempt.
RESIDENCE/DOMICILEPRINCIPLEanalienissubjecttoPhilincometaxbecauseofhisresidenceinthePhils.
AresidentalienisliabletopayPhilIncometaxonlyfromhisincomefromPhilsourcesbutistaxexemptfromforeign
sourceincome.
SOURCEOFINCOMEPRINCIPLEanalienissubjecttoPhilincometaxbecausehederivesincomefromsources
withinthePhils.Thus,anonresidentalienornonresidentforeigncorporationisliabletopayPhilincometaxonincome
fromsourceswithinthePhils.
Whenisincometaxable?
Income,gainorprofitissubjecttoincometaxwhenthefollowingrequisitesarepresent:

a.
b.
c.

Thereisincome,gainorprofit;
Theincome,gainorprofitisreceived,accruedorrealizedduringthetaxableyear;and
Theincome,gainorprofitisnotexemptfromincometax.
*Returnofcapitalisnotsubjecttoincometax.Thus,paymentofloanprincipalisexemptfromincometax.Costofsalesof
manufacturersanddealersofgoods,whichrepresentreturnofcapitalisnotsubjecttoincometax.
TESTSONTAXABILITYOFINCOME
1.FlowofWealthTestThedeterminingfactorfortheimpositionofincometaxiswhetheranygainwasderivedfromthe
transaction.
2.RealizationTestunlesstheincomeisdeemed"realized,"thereisnotaxableincome.
3.EconomicBenefitPrincipleTestflowofwealthrealizedistaxableonlytotheextentthatthetaxpayeriseconomically
benefited.
OPTIONALSTANDARDDEDUCTION(OSD)
itismerelyaprivilegethatmaybeenjoyedbycertainindividualtaxpayers.Therequisitesforitsexerciseare:
a.OSDisavailableonlytocitizensorresidentaliens;thus,nonresidentaliensarenotentitledtoclaimtheoptionalstandard
deduction;
b.Thestandarddeductionisoptional;i.e.unlesstaxpayersignifiesinhisreturnhisintentiontoelectthisdeduction,heis
consideredashavingavailedoftheitemizeddeductions;
c.Suchelection,whenmadebythequalifiedtaxpayerisirrevocablefortheyearinwhichmade;however,hecanchangeto
itemizeddeductionsinsucceedingyear(s);
d.Theamountofstandarddeductionislimitedto10%oftaxpayersgrossincome;and
e.Proofofactualexpensesisrequired.
OptionalStandardDeduction.InlieuofthedeductionsallowedundertheprecedingSubsections,an
individualsubjecttotaxunderSection24,otherthananonresidentalien,mayelectastandard
deductioninanamountnotexceedingfortypercent(40%)ofhisgrosssalesorgrossreceipts,asthe
casemaybe.Inthecaseofacorporationsubjecttotaxundersection27(A)and28(A)(1),itmayelect
astandarddeductioninanamountnotexceedingfortypercent(40%)ofitgrossincomeasdefined
inSection32ofthisCode.Unlessthetaxpayersignifiesinhisreturnhisintentiontoelecttheoptional
standarddeduction,heshallbeconsideredashavingavailedhimselfofthedeductionsallowedinthe
precedingSubsections.Suchelectionwhenmadeinthereturnshallbeirrevocableforthetaxableyear
forwhichthereturnismade:Provided,Thatanindividualwhoisentitledtoandclaimedforthe
optionalstandardshallnotberequiredtosubmitwithhistaxreturnsuchfinancialstatements
otherwiserequiredunderthisCode:Provided,further,ThatexceptwhentheCommissionerotherwise
permits,thesaidindividualshallkeepsuchrecordspertainingtohisgrosssalesorgrossreceipts,or
thesaidcorporationshallkeepsuchrecordspertainingtohisgrossincomeasdefinedinSection32of

thisCodeduringthetaxableyear,asmayberequiredbytherulesandregulationspromulgatedbythe
SecretaryofFinance,uponrecommendationoftheCommissioner.(RA9504)

SECTION25(TaxonNonresidentAlienIndividual)
NONRESIDENTALIENENGAGEDINTRADEOFBUSINESSINTHEPHILIPPINES
1.Netincometax
AnNRAETBissubjecttothenetincometax.
LiableonlyforincomederivedfromsourceswithinthePhilippines
2.FinalIncomeTax
a.Cashand/orpropertydividendsorshareinthedistributablenetincomeofapartnership(notgeneralpartnership),
Interests,RoyaltiesandOtherwinnings.
20%finalincometaxlevied
ForprizeslessthanP10k,theapplicabletaxisthenetincometax.
PrizesfromPCSOandLottoareexemptfromincometax.
Royaltiesforliteraryworksubjecttotaxrateofonly10%.
Interestincomefromlongtermdepositsandinvestmentsareexemptfromfinalincometax.
b.CapitalGains
SameasRAETBinthePhilippines
***SaleofSharesofstocknottradedinthestockexchange
Notover100k5%
Onanyamountinexcessof100k10%
***Saleofrealproperty
6%basedonthegrosssellingpriceorcurrentfairmarketvalue
NONRESIDENTALIENSNOTENGAGEDINTRADEORBUSINESSINTHEPHILIPPINES
1.NetIncomeTax
NRANETBshallbeliablefortheentireincomehereceivedfromallsourceswithinthePhilippinesbywayofthe
grossincometax.
Taxrateis25%ongrossincome
2.FinalIncomeTax
Saleofsharesofstockorsaleofrealpropertywhicharecapitalassets,usetaxrateof15%finalincometax.
SECTION22(Definitionofterms)
"corporation"shallincludepartnerships,nomatterhowcreatedororganized,jointstock
companies,jointaccounts(cuentasenparticipacion),association,orinsurancecompanies,butdoesnotinclude
generalprofessionalpartnershipsandajointventureorconsortiumformedforthepurposeofundertaking
constructionprojectsorengaginginpetroleum,coal,geothermalandotherenergyoperationspursuanttoan
operatingconsortiumagreementunderaservicecontractwiththeGovernment"Generalprofessional
partnerships"arepartnershipsformedbypersonsforthesolepurposeofexercisingtheircommonprofession,no
partoftheincomeofwhichisderivedfromengaginginanytradeorbusiness
"foreign",whenappliedtoacorporation,meansacorporationwhichisnotdomestic
"taxableyear" meansthecalendaryear,orthefiscalyearendingduringsuchcalendaryear,
uponthebasisofwhichthenetincomeiscomputedunderthisTitle.'Taxableyear'includes,inthecaseofareturn
madeforafractionalpartofayearundertheprovisionsofthisTitleorunderrulesandregulationsprescribedby
theSecretaryofFinance,uponrecommendationofthecommissioner,theperiodforwhichsuchreturnismade.
"depositsubstitutes"shallmeananalternativefromofobtainingfundsfromthepublic(theterm
'public'meansborrowingfromtwenty(20)ormoreindividualorcorporatelendersatanyonetime)otherthan
deposits,throughtheissuance,endorsement,oracceptanceofdebtinstrumentsfortheborrowersownaccount,for

thepurposeofrelendingorpurchasingofreceivablesandotherobligations,orfinancingtheirownneedsorthe
needsoftheiragentordealer.
'statutoryminimumwage'earnershallrefertoratefixedbytheRegionalTripartiteWageand
ProductivityBoard,asdefinedbytheBureauofLaborandEmploymentStatistics(BLES)oftheDepartmentof
LaborandEmployment(DOLE)
'minimumwageearner'shallrefertoaworkerintheprivatesectorpaidthestatutoryminimum
wage,ortoanemployeeinthepublicsectorwithcompensationincomeofnotmorethanthestatutoryminimum
wageinthenonagriculturalsectorwherehe/sheisassigned."

SECTION 6 (Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax
AdministrationandEnforcement)
(A)ExaminationofReturnsandDeterminationofTaxDue.Afterareturnhasbeenfiledasrequiredunderthe
provisionsofthisCode,theCommissionerorhisdulyauthorizedrepresentativemayauthorizetheexaminationofany
taxpayerandtheassessmentofthecorrectamountoftax:Provided,however;Thatfailuretofileareturnshallnotpreventthe
Commissionerfromauthorizingtheexaminationofanytaxpayer.
ThetaxoranydeficiencytaxsoassessedshallbepaiduponnoticeanddemandfromtheCommissionerorfromhis
dulyauthorizedrepresentative.
Anyreturn,statementofdeclarationfiledinanyofficeauthorizedtoreceivethesameshallnotbewithdrawn:
Provided, That within three (3) years from the date of such filing, the same may be modified, changed, or amended:
Provided,further,Thatnonoticeforauditorinvestigationofsuchreturn,statementordeclarationhasinthemeantimebeen
actuallyserveduponthetaxpayer.
(B)FailuretoSubmitRequiredReturns,Statements,ReportsandotherDocuments.Whenareportrequiredbylaw
asabasisfortheassessmentofanynationalinternalrevenuetaxshallnotbeforthcomingwithinthetimefixedbylawsor
rules and regulations or when there is reason to believe that any such report is false, incomplete or erroneous, the
Commissionershallassessthepropertaxonthebestevidenceobtainable.
Incaseapersonfailstofilearequiredreturnorotherdocumentatthetimeprescribedbylaw,orwillfullyor
otherwisefilesafalseorfraudulentreturnorotherdocument,theCommissionershallmakeoramendthereturnfromhis
ownknowledgeandfromsuchinformationashecanobtainthroughtestimonyorotherwise,whichshallbeprimafacie
correctandsufficientforalllegalpurposes.
(C)AuthoritytoConductInventorytaking,surveillanceandtoPrescribePresumptiveGrossSalesandReceipts.
TheCommissionermay,atanytimeduringthetaxableyear,orderinventorytakingofgoodsofanytaxpayerasabasisfor
determininghisinternalrevenuetaxliabilities,ormayplacethebusinessoperationsofanyperson,naturalorjuridical,under
observationorsurveillanceifthereisreasontobelievethatsuchpersonisnotdeclaringhiscorrectincome,salesorreceipts
forinternalrevenuetaxpurposes.Thefindingsmaybeusedasthebasisforassessingthetaxesfortheothermonthsor
quartersofthesameordifferenttaxableyearsandsuchassessmentshallbedeemedprimafaciecorrect.
WhenitisfoundthatapersonhasfailedtoissuereceiptsandinvoicesinviolationoftherequirementsofSections
113and237ofthisCode,orwhenthereisreasontobelievethatthebooksofaccountsorotherrecordsdonotcorrectly
reflect the declarations made or to be made in a return required to be filed under the provisions of this Code, the
Commissioner,aftertakingintoaccountthesales,receipts,incomeorothertaxablebaseofotherpersonsengagedinsimilar
businesses under similar situations or circumstances or after considering other relevant information may prescribe a
minimumamountofsuchgrossreceipts,salesandtaxablebase,andsuchamountsoprescribedshallbeprimafaciecorrect
forpurposesofdeterminingtheinternalrevenuetaxliabilitiesofsuchperson.
(D)AuthoritytoTerminateTaxablePeriod._WhenitshallcometotheknowledgeoftheCommissionerthata
taxpayerisretiringfrombusinesssubjecttotax,orisintendingtoleavethePhilippinesortoremovehispropertytherefrom
ortohideorconcealhisproperty,orisperforminganyacttendingtoobstructtheproceedingsforthecollectionofthetaxfor
thepastorcurrentquarteroryearortorenderthesametotallyorpartlyineffectiveunlesssuchproceedingsarebegun
immediately,theCommissionershalldeclarethetaxperiodofsuchtaxpayerterminatedatanytimeandshallsendthe
taxpayeranoticeofsuchdecision,togetherwitharequestfortheimmediatepaymentofthetaxfortheperiodsodeclared
terminatedandthetaxfortheprecedingyearorquarter,orsuchportionthereofasmaybeunpaid,andsaidtaxesshallbedue

andpayableimmediatelyandshallbesubjecttoallthepenaltieshereafterprescribed,unlesspaidwithinthetimefixedinthe
demandmadebytheCommissioner.
(E)AuthorityoftheCommissionertoPrescribeRealPropertyValues.TheCommissionerisherebyauthorizedto
dividethePhilippinesintodifferentzonesorareasandshall,uponconsultationwithcompetentappraisersbothfromthe
privateandpublicsectors,determinethefairmarketvalueofrealpropertieslocatedineachzoneorarea.Forpurposesof
computinganyinternalrevenuetax,thevalueofthepropertyshallbe,whicheveristhehigherof;
(1)thefairmarketvalueasdeterminedbytheCommissioner,or
(2)thefairmarketvalueasshowninthescheduleofvaluesoftheProvincialandCityAssessors.
(F) Authority of the Commissioner to inquire into Bank Deposit Accounts. Notwithstanding any contrary
provisionofRepublicActNo.1405andothergeneralorspeciallaws,theCommissionerisherebyauthorizedtoinquireinto
thebankdepositsof:
(1)adecedenttodeterminehisgrossestate;and
(2)anytaxpayerwhohasfiledanapplicationforcompromiseofhistaxliabilityunderSec.204(A)(2)ofthisCode
byreasonoffinancialincapacitytopayhistaxliability.
Incaseataxpayerfilesanapplicationtocompromisethepaymentofhistaxliabilitiesonhisclaimthathisfinancial
positiondemonstratesaclearinabilitytopaythetaxassessed,hisapplicationshallnotbeconsideredunlessanduntilhe
waivesinwritinghisprivilegeunderRepublicactNO.1405orunderothergeneralorspeciallaws,andsuchwaivershall
constitutetheauthorityoftheCommissionertoinquireintothebankdepositsofthetaxpayer.
(G)AuthoritytoAccreditandRegisterTaxAgents.TheCommissionershallaccreditandregister,basedontheir
professional competence, integrity and moral fitness, individuals and general professional partnerships and their
representativeswhoprepareandfiletaxreturns,statements,reports,protests,andotherpaperswithorwhoappearbefore,the
Bureaufortaxpayers.Withinonehundredtwenty(120)daysfromJanuary1,1998,theCommissionershallcreatenational
andregionalaccreditationboards,themembersofwhichshallserveforthree(3)years,andshalldesignatefromamongthe
seniorofficialsoftheBureau,one(1)chairmanandtwo(2)membersforeachboard,subjecttosuchrulesandregulationsas
theSecretaryofFinanceshallpromulgateupontherecommendationoftheCommissioner.
Individualsand general professional partnershipsand theirrepresentativeswhoare deniedaccreditationbythe
Commissionerand/orthenationalandregionalaccreditationboardsmayappealsuchdenialtotheSecretaryofFinance,who
shallruleontheappealwithinsixty(60)daysfromreceiptofsuchappeal.FailureoftheSecretaryofFinancetoruleonthe
Appealwithintheprescribedperiodshallbedeemedasapprovaloftheapplicationforaccreditationoftheappellant.
(H) Authority of the Commissioner to Prescribe Additional Procedural or Documentary Requirements. The
Commissionermayprescribethemannerofcompliancewithanydocumentaryorproceduralrequirementinconnectionwith
thesubmissionorpreparationoffinancialstatementsaccompanyingthetaxreturns.
SECTION7(AuthorityoftheCommissionertoDelegatePower)
TheCommissionermaydelegatethepowersvestedinhimunderthepertinentprovisionsofthisCodetoanyorsuch
subordinateofficialswiththerankequivalenttoadivisionchieforhigher,subjecttosuchlimitationsandrestrictionsasmay
be imposed under rules and regulations to be promulgated by the Secretary of finance, upon recommendation of the
Commissioner:Provided,However,ThatthefollowingpowersoftheCommissionershallnotbedelegated:
(a)ThepowertorecommendthepromulgationofrulesandregulationsbytheSecretaryofFinance;
(b)Thepowertoissuerulingsoffirstimpressionortoreverse,revokeormodifyanyexistingrulingoftheBureau;
(c)Thepowertocompromiseorabate,underSec.204(A)and(B)ofthisCode,anytaxliability: Provided,
however,ThatassessmentsissuedbytheregionalofficesinvolvingbasicdeficiencytaxesofFivehundredthousandpesos
(P500,000)orless,andminorcriminalviolations,asmaybedeterminedbyrulesandregulationstobepromulgatedbythe
Secretaryoffinance,uponrecommendationoftheCommissioner,discoveredbyregional anddistrictofficials,maybe
compromisedbyaregionalevaluationboardwhichshallbecomposedoftheRegionalDirectorasChairman,theAssistant
RegionalDirector,theheadsoftheLegal,AssessmentandCollectionDivisionsandtheRevenueDistrictOfficerhaving
jurisdictionoverthetaxpayer,asmembers;and
(d)Thepowertoassignorreassigninternalrevenueofficerstoestablishmentswherearticlessubjecttoexcisetax
areproducedorkept.
ASSESSMENT

ThepowertoassessandcollectthecorrectamountoftaxvestedwiththeCommissionerofInternalRevenueunderthetax
Code.Afterreturnisfiled,theCommissionerorhisdulyauthorizedrepresentativemauauthorizetheexaminationofany
taxpayerandtheassessmentofthecorrectamountoftax.(sec6,NIRC)
Assessmeanstoimposeatax;todeclareataxtobepayable;toapportionataxtobepaidorcontributedtofixarate;tofix
orsettleasumtobepaidbywayoftax.
Presumptionofcorrectness:TheassessmentsmadebytheCommissionerandhisauthorizedagentsarepresumedtobe
correct.Theburdenofprooftoshowtheincorrectnessorinaccuracyofsuchassessmentsorthedetailsthereofliesonthe
taxpayer. Unless rebutted, all presumptions generally indulged in favor of the correctness of the assessment by the
Commissioneragainstthetaxpayer.
AnassessmentisissuedbytheBIRbasedonfindingsoffactand/orlaw.Infact,thefactualand/orlegalbasesofthe
assessmentmustbestated:otherwise,theassessmentisnullandvoid.
QUESTIONOFFACTthedoubtordifferencearisesastothetruthorfalsehoodoftheallegedfacts.
QUESTIONOFLAWthedoubtordifferencearisesastowhatthelawisonacertainstateoffacts.
ASSESSMENTPROCESSstartswiththeselfassessmentbythetaxpayerofhistaxliability,thefilingofthetaxreturnand
thepaymentoftheentiretaxdueshowninhistaxreturninaccordancewiththemethodsandwithinthedatesprescribedin
thelawandregulations.
BESTEVIDENCEOBTAINABLEwhenareportrequiredbylawasabasisfortheassessmentofanytaxshallnot
forthcomingwithinthetimefixedbylawsorrulesandregulations,orwhenthereisreasontobelievethatanysuchreportis
false,incompleteorerroneous,theCommissionershallassessthepropertaxonthebestevidenceobtainable.
NETWORTHMETHODsupportedbysection43ofthe1997taxcode,whichallowstheCommissionertouseany
methodofcomputation,oraccounting,whichwouldmore,clearlyreflecttheincomeofthetaxpayer.
PRINCIPLEOFESTOPPELtheerrormadebyataxofficialintheassessmentofhistaxliabilitiesdoesnothavetheeffect
ofrelievingthetaxpayerfromtheobligationtopaythefullamountofhistaxliability,fortaxesarefixedbylawandthe
governmentusneverestoppedtocollectthelegitimatetaxesbecauseoferrorscommittedbyitsagents.
CIRVSISABELACULTURAL

Facts:IsabelaCulturalCorporation(ICC),adomesticcorporationreceivedanassessmentnoticefordeficiencyincometaxand
expandedwithholdingtaxfromBIR.ItarosefromthedisallowanceofICCsclaimedexpenseforprofessionalandsecurity
servicespaidbyICC;aswellastheallegedunderstatementofinterestincomeonthethreepromissorynotesduefromRealty
InvestmentInc.ThedeficiencyexpandedwithholdingtaxwasallegedlyduetothefailureofICCtowithhold1%ewithholding
taxonitsclaimeddeductionforsecurityservices.
ICCsoughtareconsiderationoftheassessments.Havingreceivedafinalnoticeofassessment,itbroughtthecasetoCTA,which
heldthatitisunappealable,sincethefinalnoticeisnotadecision.CTAsrulingwasreversedbyCA,whichwassustainedby
SC,andcasewasremandedtoCTA.CTArenderedadecisioninfavorofICC.Itruledthatthedeductionsforprofessionaland
securityserviceswereproperlyclaimed,itsaidthatevenifserviceswererenderedin1984or1985,theamountisnotyet
determinedatthattime.Henceitisaproperdeductionin1986.ItlikewisefoundthatitistheBIRwhichoverstatetheinterest
income,whenitappliedcompoundingabsentanystipulation.
PetitionerappealedtoCA,whichaffirmedCTA,hencethepetition.
Issue:Whetherornottheexpensesforprofessionalandsecurityservicesaredeductible.
Held:No.Oneoftherequisitesforthedeductibilityofordinaryandnecessaryexpensesisthatitmusthavebeenpaidorincurred
duringthetaxableyear.Thisrequisiteisdependentonthemethodofaccountingofthetaxpayer.Inthecaseatbar,ICCisusing
theaccrualmethodofaccounting.Hence,underthismethod,anexpenseisrecognizedwhenitisincurred.UnderaRevenue
AuditMemorandum,whenthemethodofaccountingisaccrual,expensesnotbeingclaimedasdeductionsbyataxpayerinthe
currentyearwhentheyareincurredcannotbeclaimedinthesucceedingyear.

Theaccrualofincomeandexpenseispermittedwhenthealleventstesthasbeenmet.Thistestrequires:1)fixingofarightto
incomeorliabilitytopay;and2)theavailabilityofthereasonableaccuratedeterminationofsuchincomeorliability.Thetest
does not demand that the amount of income or liability be known absolutely, only that a taxpayer has at its disposal the
informationnecessarytocomputetheamountwithreasonableaccuracy.
Fromthenatureoftheclaimeddeductionsandthespanoftimeduringwhichthefirmwasretained,ICCcanbeexpectedtohave
reasonablyknowntheretainerfeeschargedbythefirm.Theycannotgiveasanexcusethedelayedbilling,sinceitcouldhave
inquiredintotheamountoftheirobligationandreasonablydeterminetheamount.

Improperlyaccumulatedearnings(IAE)
aretheprofitsofacorporationthatarepermittedtoaccumulateinsteadofbeingdistributedbyacorporationtoits
shareholdersforthepurposeofavoidingtheincometaxwithrespecttoitsshareholdersortheShareholdersofanother
corporation.
TAXRATE:10%oftheImproperlyAccumulatedTaxableIncome(inadditiontoothertaxes).
RationalebehindIAET:Iftheearningsandprofitsweredistributed,theshareholderswouldthenbeliabletoincometax
thereon,whereasifthedistributionwerenotmadetothem,theywouldincurnotaxinrespecttotheundistributedearnings
andprofitsofthecorporation.Thus,ataxisbeingimposed;
a.inthenatureofapenaltytothecorporationfortheimproperaccumulationofitsearnings,and
b.asaformofdeterrenttotheavoidanceoftaxuponshareholderswhoaresupposedtopaydividendstaxonthe
earningsdistributedtothembythecorporation.

IMPROPERLYACCUMULATEDTAXABLEINCOME
Taxableincomefortheyear
Add:Incomeexemptfromtax;Incomeexcludedfromgrossincome;Incomesubjecttofinaltax;Netoperatingloss
carryover(NOLCO)=Total
Less:Incometaxpaid/payableforthetaxableyear;Dividendsactuallyorconstructivelypaid/issuedfromthe
applicableyearstaxableincome;Amountreservedforthereasonableneedsofthebusinessasdefinedinthe
Regulations
___________________________________________
Taxbaseofimproperlyaccumulatedearningstax
EXCLUSIONS
ForcorporationsusingthecalendarbasistheaccumulatedearningstaxshallnotapplyonIAEasofDec.31,
1997.
Forfiscalyearbasis,thetaxshallnotapplytothe12monthperiodoffiscalyear19971998.
IAEasoftheendofacalendarorfiscalyearperiodonorafterDec.31,1998shallbesubjecttothe10%tax.
WHOARECOVERED?
GeneralRule:TheIAEtaxshallapplytoeverycorporationformedoravailedforthepurposeofavoidingthe
incometaxwithrespecttoitsshareholdersortheshareholdersofanyothercorporation,bypermittingearningsand
profitstoaccumulateinsteadofbeingdividedordistributed.Theseare:
1.DomesticcorporationsasdefinedundertheTaxCode;
2.Corporationswhichareclassifiedascloselyheldcorporations
thosecorporationsatleastfiftypercent(50%)invalueoftheoutstandingcapitalstockoratleast
fiftypercent(50%)ofthetotalcombinedvotingpowerofallclassesofstockentitledtovoteisowned
directlyorindirectlybyorfornotmorethantwenty(20)individuals.
--Domesticcorporationsnotfallingundertheaforesaiddefinitionare,thereforearepubliclyheld
corporations.
Exception:
Thesaidtaxshallnotapplyto:
1. Publiclyheldcorporations(Sec.29)
2. BanksandothernonbanksFinancialintermediaries(Sec.29)
3. Insurancecompanies(Sec.29)
4. Taxablepartnerships(deemedtohaveactuallyorconstructivelyreceivedthetaxableincomeunder(Sec.

73D)
5. Generalprofessionalpartnerships(exempt;taxableagainstthepartners)
6. Nontaxablejointventures
7. EnterprisesdulyregisteredwiththePhilippineEconomicZoneAuthority(PEZA)underR.A.7916
8. Foreigncorporations
PERIODFORPAYMENTOFDIVIDEND/PAYMENTOFIAET:Dividendsmustbedeclaredandpaidorissuednot
laterthanoneyearfollowingthecloseofthetaxableyear,otherwise,theIAET,ifany,shouldbepaidwithinfifteen
(15)daysthereafter.
FILINGOFINCOMETAXRETURNS

For individuals earning income

only as employees; for marginal
income earners

e April 15

For self-employed
individuals; for
individuals deriving
mixed income

For corporations, partnerships, and non-individual

taxpayers

April 15, August 15,

November 15

15th day of 4th month following close of taxable

year