RMC No. 04-2003: Clarifies the items that would constitute gross receipts and cost of services for purposes of computing the gross income on sale of services, which shall be the basis of the 2% Minimum Corporate Income Tax (MCIT)

Summary

RMC No. 04-2003 clarifies which items make up gross receipts and cost of services in computing gross income on sale of services, the basis of the 2% Minimum Corporate Income Tax (MCIT).

Key points

1. Purpose. The Circular specifies the items that comprise gross receipts and the corresponding cost of services for particular industries. The result is the gross income on sale of services used as the MCIT basis.
2. Financial industries covered. These are banks and non-bank financial intermediaries performing quasi-banking activities, insurance and pension funding companies, and finance companies and other financial intermediaries not performing quasi-banking activities. Securities brokers (excluding banks) are also covered.
3. Other industries covered. These are customs, insurance, real estate, immigration and commercial brokers, general engineering and/or building contractors, and common carriers or transportation contractors. Also covered are hotel, motel, rest/pension/lodging house and resort operators, food service establishments, lessors of property, telephone and telegraph, electric, gas and water utilities, and radio and/or television broadcasting.

Who is affected

• Corporations in the twelve listed industries subject to the 2% MCIT

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.