RR No. 12-2007: Amends certain provisions of Revenue Regulations No. 9-98 relative to the due date within which to pay Minimum Corporate Income Tax imposed on domestic corporations and resident foreign corporations

Key points

1. MCIT rate and when it applies. MCIT is 2% of gross income at the end of the taxable year, imposed on a domestic corporation beginning on the 4th taxable year after it commenced business operations. It applies when taxable income is zero or negative, or when MCIT is greater than the normal Income Tax.
2. Quarterly payment. MCIT is also computed and paid when filing the quarterly corporate ITR under Sections 75 and 77. If the quarterly MCIT is higher than the normal tax, the MCIT is paid. Excess MCIT from prior years cannot be credited, but expanded withholding tax, quarterly normal tax payments and MCIT paid in earlier quarters can be applied.
3. Cumulative computation. For quarterly ITRs due after effectivity, MCIT is computed on a cumulative basis over the current and previous quarters of the same year and compared with cumulative normal Income Tax. The higher amount is the basis of payment. For calendar-year filers, the third quarter ended September 2007 is due on or before November 29, 2007.
4. Year-end crediting. If annual normal tax is higher, quarterly MCIT paid is credited against it, along with excess prior-year MCIT within its prescriptive period and withholding taxes. If annual MCIT is higher, only current quarterly MCIT and normal tax payments and withholding taxes can be credited. Excess prior-year MCIT can be applied only against normal Income Tax.
5. Normal Income Tax and gross income. Normal Income Tax means the rates under Sections 27(A) and 28(A)(1): 34% on January 1, 1998; 33% from January 1, 1999; 32% from January 1, 2000; 35% from November 1, 2005; and 30% effective January 1, 2009 under RA No. 9337. Gross income means gross sales less returns, discounts, allowances and cost of goods sold (or the equivalent for services), plus other Section 32(A) items subject to normal tax, excluding exempt income and income subject to final withholding tax.

Who is affected

• Domestic corporations
• Resident foreign corporations

Deadlines and effectivity

• MCIT starts the 4th taxable year after business operations commenced
• Q3 2007 calendar-year return due on or before November 29, 2007
• Rate of 30% effective January 1, 2009