business operations whenever the amount of the minimum corporate income tax is

Business operations whenever the amount of the

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business operations, whenever the amount of the minimum corporate income tax is greater than the normal income tax due for such year. In computing for the minimum corporate income tax due from a resident foreign corporation, the rules prescribed under Sec. 2.27(E) of these Regulations shall apply: Provided, however, that only the gross income from sources within the Philippines shall be considered for such purposes. Exceptions – The minimum corporate income tax shall only apply to resident foreign corporations which are subject to normal income tax. Accordingly, the minimum corporate income tax shall not apply to the following resident foreign corporations: (a) Resident foreign corporations engaged in business as “international carrier” subject to tax at two and one-half percent (2 ½%) of their “Gross Philippine Billings”; (b) Resident foreign corporations engaged in business as Offshore Banking Units (OBUs) on their income from foreign currency transactions with local commercial banks, including branches of foreign bank, authorized by the Bangko Sentral ng Pilipinas (BSP) to transact business with Offshore Banking Units (OBU’s), including interest income from foreign currency loans granted to residents of the Philippines, subject to a final income tax at ten percent (10%) of such income; and
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(c) Resident foreign corporations engaged in business as regional operating headquarters subject to tax at ten percent (10%) of their taxable income. (d) Firms that are taxed under a special income tax regime such as those in accordance with RA 7916 and 7227 (the PEZA law and the Bases Conversion Development Act, respectively). EFFECTIVELY CLAUSE. These Regulations shall apply to domestic and resident foreign corporations on their aforementioned taxable income derived beginning January 1, 1998 pursuant to the pertinent provisions of RA 8424, provided, however, that corporations using the fiscal year accounting period and which are subject to MCIT on income derived pertaining to any month or months of the year 1998 shall not be imposed with penalties for late payment of the tax. Edgardo B. Espiritu Secretary of Finance Recommending Approval: Beethoven L. Rualo Commissioner of Internal Revenue
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