Corporate Income Tax Calculator Philippines [Fast & Accurate]

“Calculate Your Corporate Tax in Seconds – Simplify Your Compliance!”

Corporate Income Tax Calculator

Welcome to the Philippines Corporate Income Tax Calculator, a tool designed to help businesses in the Philippines determine their corporate income tax liability.

This calculator is tailored for different types of corporations, including domestic, small domestic, resident foreign, and non-resident foreign corporations.

It takes into account gross income, deductions, and years of operation to compute the final tax liability, including the application of the Minimum Corporate Income Tax (MCIT) where applicable.

How to Use the Corporate Income Tax Calculator

To calculate your corporate income tax, follow these steps:

  1. Select Corporation Type:
    • Choose the type of your corporation from the dropdown menu:
      • Domestic Corporation: A corporation organized under Philippine laws.
      • Domestic (Small: Assets ≤ ₱100M, Net Income ≤ ₱5M): A domestic corporation with total assets not exceeding ₱100 million and net taxable income not exceeding ₱5 million.
      • Resident Foreign Corporation: A foreign corporation engaged in trade or business in the Philippines through a branch office.
      • Non-Resident Foreign Corporation: A foreign corporation not engaged in trade or business in the Philippines but earning income from Philippine sources.
  2. Enter Gross Income:
    • Input your corporation’s gross income in Philippine Pesos (₱). This is the total revenue before any deductions.
  3. Select Deduction Type:
    • Choose between:
      • Itemized Deductions: Enter the total amount of your itemized deductions (e.g., business expenses, depreciation).
      • Optional Standard Deduction (OSD): No input is required; the calculator will automatically apply a 40% deduction on gross income.
  4. Enter Years in Operation:
    • Input the number of years your corporation has been operating. This is important for determining if the Minimum Corporate Income Tax (MCIT) applies (from the 4th year onward).
  5. Calculate:
    • Click the “Calculate” button to compute your corporate income tax. The results will display:
      • Gross Income
      • Taxable Income (after deductions)
      • Regular Corporate Income Tax (CIT)
      • Minimum Corporate Income Tax (MCIT, if applicable)
      • Final Corporate Income Tax (the higher of Regular CIT or MCIT)
  6. Reset:
    • Click “Reset” to clear the form and start over.

How to Calculate Corporate Income Tax (CIT) in the Philippines

Let’s walk through two examples to illustrate how the calculation is done.

Example 1: Domestic Corporation with Itemized Deductions

  • Corporation Type: Domestic Corporation
  • Gross Income: ₱10,000,000
  • Deduction Type: Itemized Deductions
  • Itemized Deductions: ₱2,000,000
  • Years in Operation: 5

Step-by-Step Calculation:

  • Taxable Income = Gross Income – Itemized Deductions = ₱10,000,000 – ₱2,000,000 = ₱8,000,000
  • Regular CIT = Taxable Income × 25% = ₱8,000,000 × 25% = ₱2,000,000
  • MCIT = Gross Income × 2% = ₱10,000,000 × 2% = ₱200,000 (applies since the corporation has been operating for 5 years)
  • Final Tax = Higher of Regular CIT or MCIT = ₱2,000,000

Result:

  • Gross Income: ₱10,000,000
  • Taxable Income: ₱8,000,000
  • Regular CIT (25%): ₱2,000,000
  • MCIT (2%): ₱200,000
  • Final Corporate Income Tax: ₱2,000,000

Example 2: Small Domestic Corporation with OSD

  • Corporation Type: Domestic (Small: Assets ≤ ₱100M, Net Income ≤ ₱5M)
  • Gross Income: ₱6,000,000
  • Deduction Type: OSD
  • Years in Operation: 3

Step-by-Step Calculation:

  • Taxable Income = Gross Income × 60% (OSD) = ₱6,000,000 × 60% = ₱3,600,000
  • Regular CIT = Taxable Income × 20% (small corporation rate) = ₱3,600,000 × 20% = ₱720,000
  • MCIT: Not applicable (corporation has been operating for only 3 years; MCIT applies from the 4th year)
  • Final Tax = Regular CIT = ₱720,000

Result:

  • Gross Income: ₱6,000,000
  • Taxable Income: ₱3,600,000
  • Regular CIT (20%): ₱720,000
  • Final Corporate Income Tax: ₱720,000

What is Corporate Income Tax in the Philippines

Corporate income tax (CIT) in the Philippines is governed by the National Internal Revenue Code (NIRC) and its implementing rules, with recent updates from the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act of 2021.

The tax is imposed on a corporation’s net income, except for non-resident foreign corporations, which are taxed on gross income from Philippine sources.

Below is a summary of key tax rates and rules:

  • Domestic Corporations:
    • Standard CIT rate: 25% on net taxable income from all sources (worldwide).
    • Reduced rate: 20% for small corporations with net taxable income ≤ ₱5 million and total assets ≤ ₱100 million.
    • MCIT: 2% of gross income, applicable from the 4th year of operation if it exceeds the regular CIT.
  • Resident Foreign Corporations:
    • Taxed at 25% on net taxable income from Philippine sources.
    • Taxed similarly to domestic corporations, except for capital gains on non-business buildings, which are treated as ordinary income.
  • Non-Resident Foreign Corporations:
    • Taxed at 25% on gross income from Philippine sources.
    • Certain income, such as reinsurance premiums, may be exempt, or lower rates (e.g., 15% on dividends) may apply under tax treaties.
  • Special Cases:
    • Proprietary educational institutions and non-profit hospitals: 10% on net income if ≤ 50% of gross income is from unrelated trade or business.
    • Non-stock, non-profit educational institutions and other non-profits: Exempt if all assets and revenues are used for educational purposes.
    • Regional or area headquarters of multinationals: Exempt if they do not derive income and act only as supervisory or communications centers.
  • Deductions:
    • Corporations can choose between:
      • Itemized Deductions: Specific expenses like business costs, depreciation, and other allowable deductions.
      • Optional Standard Deduction (OSD): 40% of gross sales or gross receipts, simplifying tax calculations.
  • Minimum Corporate Income Tax (MCIT):
    • Applies to domestic corporations starting from the 4th year of operation.
    • Calculated as 2% of gross income.
    • Payable if MCIT exceeds the regular CIT, ensuring a minimum tax contribution.

The CREATE Act, signed in 2021, reduced CIT rates to support business recovery post-pandemic.

Additionally, the Ease of Paying Taxes Act (Republic Act No. 11976), effective January 22, 2024, streamlines tax compliance processes.

Tax laws and rates can change, so it’s advisable to consult the Bureau of Internal Revenue (BIR) or a tax professional for the latest information.

Disclaimer

This calculator is for informational purposes only. For official tax filings, refer to the BIR or consult a tax advisor. Tax laws and rates are subject to change, so always verify the latest regulations.