RR No. 09-98: Prescribes the regulations to implement RA No. 8424 relative to imposition of the Minimum Corporate Income Tax on domestic corporations and resident foreign corporations

Summary

RR No. 09-98 implements RA No. 8424 on the Minimum Corporate Income Tax (MCIT) on domestic corporations and resident foreign corporations.

Key points

1. Rate and start. An MCIT of 2% of gross income as of the end of the taxable year applies to domestic corporations. It starts in the 4th taxable year immediately following the taxable year the corporation commenced business operations.
2. When MCIT is imposed. MCIT applies when operations have zero or negative taxable income, or when the MCIT amount is greater than the normal income tax due.
3. Mixed tax systems. For a domestic corporation partly under the regular income tax system and partly under a special income tax system, MCIT applies on the operations under the regular system.
4. Effectivity and fiscal year relief. The Regulations apply to taxable income derived beginning January 1, 1998. Fiscal-year corporations subject to MCIT on income for any month of 1998 are not penalized for late payment of the tax.

Who is affected

• Domestic corporations
• Resident foreign corporations
• Fiscal-year corporations subject to MCIT on 1998 income

Deadlines and effectivity

• Applies to taxable income derived beginning January 1, 1998
• MCIT starts in the 4th taxable year immediately following the year business operations commenced

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