TAX ON CORPORATIONS A. Coverage of the term “Corporation” [Sec 22(B)] The term “corporation” includes partnerships, no matter how created or organized, joint-stock companies, joint accounts (cuentas en participacion), associations, or insurance companies It does NOT include: 1. general professional partnerships (partnerships formed by persons for the sole purpose of exercising their common profession, no part of the income of which is derived from engaging in any trade or business) 2. joint venture or consortium formed for the purpose of undertaking construction projects or engaging in petroleum, coal, geothermal and other energy operations pursuant to an operating consortium agreement under a service contract with the Government. B. Classification of Corporations General Types 1.Domestic Corporation (DC) - one created or organized in the Philippines or under its laws [Sec 22(C)] 2. Foreign Corporation (FC) – one that is not domestic [Sec 22(D)] Resident Foreign Corporation (RFC) - a foreign corporation engaged in trade or business within the Philippines [Sec 22(H)] Non-resident foreign corporation (NRFC) - a foreign corporation not engaged in trade or business within the Philippines [Sec 22(I)] Special Types 1. Proprietary educational institutions and non-profit hospitals 2. Domestic Depository Bank (Foreign Currency Deposit Units) 3. Offshore Banking Units 4. Resident Depository Bank (Foreign Currency Deposit Units) 5. Resident international carrier 6. Non-resident owner or lessor of vessel 7. Non-resident cinematographic film owner, lessor or distributor 8. Non-resident lessor of aircraft, machinery and other equipment 9. Regional/Area Headquarters & Regional Operating Headquarters of Multinational companies C. Scope of Taxation Type of Corporation
Allowed Business Deductions?
Sources of Taxable Income
Domestic Corporation (DC) Within and OUTSIDE the Philippines Resident Foreign Corporation (RFC) Within the Philippines Non-resident Foreign Corporation Within the Philippines (NRFC) non-resident foreign corporations are taxed on GROSS INCOME.
Yes Yes No.
NOTE: A good example of a resident foreign corporation is the Philippine branch of a foreigncorporation duly licensed by the Securities and Exchange Commission. The Philippine branch is merely an extension of the foreign head office (i.e., non-resident foreign corporation); hence it does not have nor issue Philippine shares of stock. There is only one single entity to speak of. However, for income tax purposes, only the income of the Philippine branch from sources within the Philippines is subject to income tax and the income of the Philippine branch as well as that of the foreign head office from sources outside the Philippines are exempt from Philippine income tax.
D. Tax on Domestic Corporations Domestic corporations are subject to any or some of the following: Capital Gain Tax Final Tax on Passive Income Normal Tax [OR] Minimum Corporate Income Tax (MCIT) [OR] Gross Income Tax (GIT) Improperly Accumulated Earnings Tax (IAET) [only if a domestic and closely-heldcorporation] 1.Capital Gains subject to Capital Gains Tax a. On sale, barter, exchange or other disposition of shares of stock of a domesticcorporation not listed and traded through a local stock exchange, held as acapital asset: On the net capital gain: Not over P100, 000 Final Tax of 5% On any amount in excess of P100, 000 Final Tax of 10% [NOTE: Tax treatment is the same as that of individuals.] b. On the sale, exchange or disposition of lands and/or buildings which are not actually used in the business of a corporation and are treated as capital assets On thegross selling price, or the current fair market value at the time of the sale, whichever ishigher, a final tax of 6% NOTE: Tax treatment is the same as that of individuals. The capital gains tax is applied on the gross selling price or the current fairmarket value at the time of the sale, whichever is higher. Any gain or loss onthe sale is immaterial because there is a conclusive presumption by law that the sale resulted in a gain. 2. Passive Income Subject to Final Tax Interest Income: *on any currency bank deposit, yield or any other monetary benefit from depositsubstitutes, trust funds and similar arrangements - 20% * under the expanded foreign currency deposit system (EFCDS) - 7.5% Dividends received from another domestic corporation (Intercompany Dividend) - EXEMPT Royalties (any kind) – 20% 3. Income subject to Normal Tax [OR] Minimum Corporate Income Tax (MCIT) [OR] Gross Income Tax (GIT) NORMAL CORPORATE INCOME TAX RATE 30% of net taxable income Tax formula for normal tax: Gross Income (ALL income items EXCEPT passive income subjectto final tax and capital gain with capital gain tax) Pxxx Less: Allowable deductions for expenses and losses xxx Taxable Income subject to normal tax Pxxx MINIMUM CORPORATE INCOME TAX (MCIT)
2% of MCIT Gross Income
What is MCIT gross income? Gross sales less sales returns, discounts andallowances and cost of goods sold.Cost of goods sold includes all business expensesDIRECTLY incurred to produce the merchandise to bring them to their presentlocation and use. [Sec. 27 (E) (4)] MCIT gross income differentiated from the normal tax gross income thelatter would include other incidental income items, such as rent income, interest, gain on sale of assets, certain tax refunds, etc.
Normal Tax Computation
MCIT Computation
Sales revenue Less: Sales Discounts Sales Allowances Net Sales Less: Cost of Goods Sold Gross Income from Sales Add Incidental Income: Rent Income Interest Income Normal Tax Gross Income Less: Allowable deductions Net Taxable Income
Pxxx (xxx) (xxx) Pxxx (xxx) xxx xxx xxx xxx Pxxx (xxx) Pxxx
Pxxx (xxx) (xxx) Pxxx (xxx) Pxxx (xxx) Pxxx
Sales Revenue Less: Sales Discounts Sales Allowances Net Sales Less: Cost of Goods Sold MCIT Gross Income Less: Operating Expenses Net Operating Income Add Incidental Income: Rent Income Interest Income Gain on Sale of Property Net Income
xxx xxx xxx Pxxx
When is the MCIT computed? Beginning on the fourth taxable year immediately following the year in which such corporation commenced its business operations What amount of income tax is paid by the corporation to the BIR? normal tax and the minimum corporate income tax.
Whichever is HIGHER between the
ILLUSTRATION: E Co., a domestic trading corporation, in its fourth year of operations had a gross profit from sales of P300, 000 and net taxableincome of P100, 000. How much was the income tax paid by the corporation for the year? MCIT (P300, 000 x 2%)P6, 000 Normal income tax (P100, 000 x 30%) P30, 000 Income Tax to be paid for the year (whichever is higher) P30, 000 Excess MCIT carry-forward Any excess of the minimum corporate income tax over the normal income tax shall becarried forward and credited against the NORMAL TAX for the three (3) immediatelysucceeding taxable years. [Sec. 27 (E) (2)] In the year to which carried forward, thenormal tax should be higher than the MCIT. ILLUSTRATION: A domestic corporation had the following data oncomputations of the normal tax (NT) and the minimum corporate incometax (MCIT) for five years. Year 4 MCIT NT
80,000.00 20,000.00
Year 5 50,000.00 30,000.00
The excess MCIT over NT carry-forward is shown below: Year 4 Year 5 MCIT NT NT is Higher From year 4 From year 5 From year 7 Tax Due
80,000.00 20,000.00 60,000.00
50,000.00 30,000.00 20,000.00
Year 6
Year 7
30,000.00 40,000.00
Year 6 30,000.00 40,000.00
40,000.00 20,000.00
Year 7 40,000.00 20,000.00 20,000.00
40,000.00 (40,000.00) 80,000.00
50,000.00
-
Year 8 35,000.00 70,000.00
Year 8 35,000.00 70,000.00 70,000.00
40,000.00
(20,000.00) (20,000.00) 30,000.00
While only P40, 000 out of P60, 000 excess MCIT in Year 4 was used in Year 6, the unused P20, 000 cannot be used in Year 8 because Year 8 was beyond three years from Year 4. Relief from MCIT The Secretary of Finance is authorized to suspend the imposition of the minimum corporate income tax on any corporation which suffers LOSSES: on account of prolonged labor dispute (losses from a strike staged by employees that lasts for more than 6 months and caused the temporary shutdown of operations), or because of force majeure (acts of God and other calamity; includes armed conflicts like war or insurgency), or because of legitimate business reverses (substantial losses due to fire, robbery, theft or other economic reasons). GROSS INCOME TAX (GIT) The President, upon the recommendation of the Secretary of Finance, may allow domestic corporations the option to be taxed at fifteen percent (15%) of gross income, after the following conditions have been satisfied:
Tax effort ratio Ratio of Income Tax collection to total tax revenue VAT tax effort Ratio of Consolidated Public Sector Financial Position (CPSFP) to GNP Ratio of the Corporation’s Cost of Sales to Gross Sales
20% of Gross National Product (GNP) 40% 4% of GNP 0.90% Does not exceed 55%
The election of the gross income tax option by the corporation shall be irrevocable for three (3) consecutive taxable years during which the corporation is qualified under the scheme. Computation of GIT Gross Income Gross sales less sales returns, discounts and allowances and cost of goods sold. Cost of goods sold shall include all business expenses directly incurred to produce the merchandise to bring them to their present location and use. [Sec. 27 (A)] 4. Improperly Accumulated Earnings Tax (IAET) [Sec. 29, as implemented by RR 2-2001 which prescribes rules governing the impositionof IAET] a. Rule There is imposed for each taxable year, in addition to other taxes, a tax equal to 10% of the improperly accumulated taxable income of domestic and closely- held corporations formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting the earnings and profits of the corporation to accumulate instead of dividing them among or distributing them to the shareholders. b. Rationale If the earnings and profits were distributed, the shareholders would then be liable to income tax; if the distribution were not made to them, they would incur no tax in respect to the undistributed earnings and profits of the corporation. It is a tax in the nature of a PENALTY to the corporation for the improper accumulation of its earnings, and a DETERRENT to the avoidance of tax upon shareholders who are supposed to pay dividends tax on the earnings distributed to them. c. Exception The use of undistributed earnings and profits for the reasonable needs of the business would not generally make the accumulated or undistributed earnings subject to the tax. What is meant by “reasonable needs of the business” is determined by the IMMEDIACY TEST. Immediacy Test - It states that the “reasonable needs of the business” are the 1) immediate needs of the business; and 2) reasonably anticipated needs. How to prove the “reasonable needs of the business” The Corporationshould prove that there is 1) An immediate need for the accumulation of the earnings and profits; or 2) A direct correlation of anticipated needs to such accumulation of profits
d. Composition: The following constitute accumulation of earnings for the reasonable Needs of the business: (ILL ABE) 1) ALLOWANCE for the increase in the accumulation of earnings up to 100% ofthe paid-up capital of the corporation as of Balance Sheet date, inclusive of accumulations taken from other years; 2) Earnings reserved for definite corporate EXPANSION projects or programs requiring considerable capital expenditure as approved by the Board of Directors or equivalent body; 3) Earnings reserved for BUILDING, PLANT or EQUIPMENT ACQUISITION as approved by the Board of Directors or equivalent body; 4) Earnings reserved for compliance with any LOAN COVENANT or pre-existing obligation established under a legitimate business agreement; 5) Earnings required by LAW or applicable regulations to be retained by the corporation or in respect of which there is legal prohibition against its distribution; 6) In the case of subsidiaries of foreign corporations in the Philippines, all undistributed earnings intended or reserved for INVESTMENTS WITHIN THE PHILIPPINES as can be proven by corporate records and/or relevant documentary evidence. e. Covered Corporations only domestic and closely-held corporations are liable for IAET. 1. Closely-held corporations are those: a) at least 50% in value of the outstanding capital stock; or b) at least 50% of the total combined voting power of all classes of stock entitled to vote is owned directly or indirectly by or for not more than 20 individuals. Domestic corporations not falling under the aforesaid definition are, therefore, publicly-held corporations. f. Exempt Corporations: The IAET shall not apply to the following corporations: (BIGPEN-T) 1. Banks and other non-bank financial intermediaries; 2. Insurance companies; 3. Publicly-held corporations; 4. Taxable partnerships; 5. General professional partnerships; 6. Non- taxable joint ventures; and 7. Enterprises that are registered: a. with the Philippine Economic Zone Authority (PEZA) under R.A. 7916; b. pursuant to the Bases Conversion and Development Act of 1992 under R.A. 7227; and c. under special economic zones declared by law which enjoy payment of special tax rate on their registered operations or activities in lieu of other taxes, national or local. g. Computation Year's taxable income: Add: Income exempt from tax Income excluded from gross income Income subject to final tax Amount of net operating loss carry-over(NOLCO)deducted Total Less: Income tax paid/payable for the taxable year Dividends actually or constructively paid/issued from the applicable year's taxable income Amount reserved for the reasonable needs of the business emanating from the covered year's taxable income Improperly Accumulated Taxable Income Multiplied by IAET rate Improperly Accumulated Earnings Tax (IAET)
P XX XX XX XX XX P XX XX XX XX P XX 10% P XX
h. Limitation The profit that has been subjected to IAET shall no longer be subjected to IAET in later years even if not declared as dividend. However, profits which have been subjected to IAET, when declared as dividends, shall be subject to tax on dividends except in those instances where the recipient is not subject thereto.
i. Declaration of Dividends from earnings For purposes of determining the source of earnings or profits declared or distributed from accumulated income, the dividends shallbe deemed to have been paid out of the most recently accumulated profits or surplus and shall constitute a part of the annual income of the recipient for the year in which received pursuant to Section 73(C) of the Code. j. Period for Payment of Dividend/IAET The dividends must be declared and paid or issued not later than one year following the close of the taxable year, otherwise, the IAET, if any, should be paid within fifteen (15) days thereafter. ONE LAST NOTE ON THE APPLICABILITY OF TAX RATES OF DOMESTIC CORPORATIONS: All corporations, agencies, or instrumentalities owned or controlled by the GOVERNMENT are taxable and shall pay such rate of tax upon their taxable income as are imposed on domestic corporations engaged in a similar business, industry, or activity. EXCEPTIONS (i.e, not taxable): o Government Service Insurance System (GSIS), o Social Security System (SSS), o Philippine Health Insurance Corporation (PHIC), o Philippine Charity Sweepstakes Office (PCSO) and o the Philippine Amusement and Gaming Corporation (PAGCOR)11 Note: Exemption for PAGCOR was withdrawn by RA 9337 E. Tax on Resident Foreign Corporations Resident foreign corporations are subject to any or some of the following: Capital Gain Tax Final Tax on Passive Income Normal Tax [OR] Minimum Corporate Income Tax (MCIT) [OR] Gross Income Tax (GIT) Branch Profit Remittance Tax Capital Gains subject to Capital Gains Tax On sale, barter, exchange or other disposition of shares of stock of a domestic corporation not listed and traded through a local stock exchange, held as a capital asset: On the net capital gain: Not over P100,000 Final Tax of 5% On any amount in excess of P100,000 Final Tax of 10% NOTE: Tax treatment is the same as that of individuals and domestic corporations. There is no corresponding provision for resident foreign corporations regarding capital gain tax on the sale of real property held as a capital asset. Hence, the net taxable income from the sale of real property realized by the resident foreign corporation shall be subject to the 30% normal corporate income tax. Passive Income Subject to Final Tax Interest Income: o on any currency bank deposit, yield or any other monetary benefit from deposit substitutes, trust funds and similar arrangements - 20% o under the expanded foreign currency deposit system (EFCDS) - 7.5% Dividends received from a domestic corporation (Intercompany Dividend) - EXEMPT Royalties (any kind) – 20% Income subject to Normal Tax [OR] Minimum Corporate Income Tax (MCIT) [OR] Gross Income Tax (GIT) The discussion with respect to this topic (income subject to normal tax, MCIT, or GIT) under the subheading of domestic corporations is equally applicable to resident foreign corporations, both as to concepts and computations, except that RFCs are taxed only on income from sources within the Philippines.
NORMAL CORPORATE INCOME TAX RATE 35% of net taxable income from sources within the Philippines MINIMUM CORPORATE INCOME TAX (MCIT) 2% of MCIT Gross Income from sources within the Philippines. The MCIT is imposed on RFCs under the same conditions as domestic corporations. [Sec. 28(A)(2)] GROSS INCOME TAX (GIT) The President, upon the recommendation of the Secretary of Finance, may allow resident foreign corporations the option to be taxed at fifteen percent (15%) of gross income within the Philippines, under the sameconditions as domestic corporations. [Sec. 28(A)(1)] . Branch Profit Remittance Tax [Sec. 28(A)(5)] Taxable transaction – any profit remitted by a branch to its head office Tax Rate and Base – 15% based on the total profits applied or earmarked for remittance without any deduction for the tax component Non-taxable activities –activities which are registered with the Philippine Economic Zone Authority Income NOT TREATED AS BRANCH PROFITS unless effectively connected with the conduct of trade or business in the Philippines: i. Interests, dividends, rents, royalties, including remuneration for technical services ii. salaries, wages premiums, annuities, emoluments iii. other fixed or determinable annual, periodic or casual gains, profits, income iv. capital gains received during each taxable year from all sources within the Philippines NOTES: - The branch profit remittance tax is imposed whether the head office of the foreign corporation is located in a tax treaty country, in a tax haven or other non-treaty country. - The branch profit remittance tax is imposed only on the profits remitted by a Philippine branch to the head office of a foreign corporation. Should the branch of a domestic corporation remit profits to its head office, the transaction is not subject to the branch profit remittance tax. F. Tax on Nonresident Foreign Corporations Non-resident foreign corporations are subject to any or some of the following: Capital Gain Tax Final Tax on Passive Income Final Tax on [Other] Gross Income from sources within the Philippines 1. Capital Gains subject to Capital Gains Tax On sale, barter, exchange or other disposition of shares of stock of a domestic corporation not listed and traded through a local stock exchange, held as a capital asset: On the net capital gain: Not over P100,000 Final Tax of 5% On any amount in excess of P100,000 Final Tax of 10% NOTE: Tax treatment is the same as that of individuals and domestic/resident foreign corporations. There is no corresponding provision for non-resident foreign corporations regarding capital gain tax on the sale of real property held as a capital asset. Hence, the gross income from the sale of real property realized by the non-resident foreign corporation shall be subject to a 30% final tax imposed on gross income from sources within the Philippines. 2. Passive Income Subject to Final Tax Interest o on foreign loans contracted on or after August 1, 1986 – 20% o under the expanded foreign currency deposit system (EFCDS) - EXEMPT Dividends (cash and/or property) received from a domestic corporation (Intercorporate Dividend) – 15%, AS LONG AS the country in which the nonresident foreign corporation is domiciled allows a tax credit for taxes “deemed paid” in the Philippines equivalent to 15%
- 15% represents the difference between the regular income tax of 30% on corporations and the 15% tax on dividends - If the country within which the NRFC is domiciled does NOT allow a tax credit, a final withholding tax at the rate of 30% is imposed on the dividendsreceived from a domestic corporation. [In other words, the dividends are subject to the third kind of tax: Final Tax on [Other] Gross Income from sources within the Philippines.] 3. Final Tax on [Other] Gross Income from sources within the Philippines 30% of the gross income received from all sources within the Philippines, such as interests, dividends, rents, royalties, salaries, premiums (except reinsurance premiums), annuities, emoluments or other fixed or determinable annual, periodic or casual gains, profits and income, and capital gains EXCEPT capital gains resulting from the sale of shares of stock of a domestic corporation not listed and traded through a local stock exchange, held as a capital asset. G. Special Types of Corporations A. Special Type of Domestic Corporations 1. Proprietary Educational Institutions and Hospitals (Non-profit) Tax Rate and Base – 10% on net income (except on income subject to capital gains tax and passive income subject to final tax) within and without the Philippines NOTE: If gross income from unrelated trade or business or other activity exceeds 50% of total gross income derived from all sources, the tax rate of 30% shall be imposed on the entire taxable income. - Unrelated trade, business or other activity any trade, business or other activity, the conduct of which is not substantially related to the exercise or performance by such educational institution or hospital of its primary purpose or function. - Proprietary educational institution any private school maintained and administered by private individuals or groups with an issued permit to operate from the DECS, CHED or TESDA. 2. Depository Banks (Foreign Currency Deposit Units) [Sec. 27(D)(3) as amended by RA 9294 (2004)] Coverage of the Rule – ONLY income derived by a depository bank under the expanded foreign currency deposit system from foreign currency transactions with: - nonresidents, - offshore banking units in the Philippines, - local commercial banks including branches of foreign banks that may be authorized by the BangkoSentralngPilipinas (BSP) to transact business with foreign currency deposit system units and - other depository banks under the expanded foreign currency deposit system Tax Rate: Exempt from all taxes, except net income from such transactions as may be specified by the Secretary of Finance, upon recommendation by the Monetary Board to be subject to the regular income tax payable by banks - EXCEPTION: Interest income from foreign currency loans granted by such depository banks under said expanded system to residents other than offshore units in the Philippines or other depository banks under the expanded system shall be subject to a final tax at the rate of 10%. B. Special Types of Resident Foreign Corporations 1. International Carriers Tax Rate and Base – 2.5% on Gross Philippine Billings (GPB) What is GPB? - In the case of International Air Carriers, GPB refers to the amount of: gross revenue derived from carriage of persons, excess baggage, cargo and mail originating from the Philippines in a continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the ticket or passage document gross revenue from tickets revalidated, exchanged and/or indorsed to another international airline if the passenger boards a plane in a port or point in the Philippines for flights which originate from the Philippines, but transshipment of passenger takes place at any port outside
the Philippines on another airline, the gross revenue consisting of only the aliquot portion of the cost of the ticket corresponding to the leg flown from the Philippines to the point of transshipment [RR 15-2002] Air Canada vs. CIR (CTA Case No. 6572) – Air Canada is a foreign corporation with authority to operate as an off-line carrier. The CTA held that the Air Canada is subject to income tax as a resident foreign corporation. In order that a foreign corporation may be regarded as doing business, there must be continuity of conduct and intention to establish business, such as the appointment of a local agent. A foreign airline company selling tickets in the Philippines through their local agents shall be considered as resident foreign corporation engaged in trade or business in the country. The absence of flight operations within the Philippine territory cannot alter the fact that the income received was derived from activities within the Philippines. The test of taxability is the source, and the source is that activity which produced the income. - In the case of International Shipping, GPB means: gross revenue whether for passenger, cargo or mail originating from the Philippines up to final destination,regardless of the place of sale or payments of the passage or freight documents. 2. Offshore Banking Units authorized by the BangkoSentralngPilipinas (BSP) [Sec. 28(A)(4) as amended by RA 9294 (2004)] Coverage of the Rule – ONLY income derived by offshore banking units from foreign currency transactions with: - nonresidents, - other offshore banking units - local commercial banks including branches of foreign banks that may be authorized by the BangkoSentralngPilipinas (BSP) to transact business with offshore banking units Tax Rate: Exempt from all taxes, except net income from such transactions as may be specified by the Secretary of Finance, upon recommendation by the Monetary Board to be subject to the regular income tax payable by banks - EXCEPTION: Interest income derived from foreign currency loans granted to residents other than offshore banking units or local commercial banks, including local branches of foreign banks that may be authorized by the BSP to transact business with offshore banking units, shall be subject only to a final tax at the rate of 10%. 3. Resident Depository Bank (Foreign Currency Deposit Units) [Sec. 28(D)(7)(b) as amended by RA 9294 (2004)] Coverage of the Rule – ONLY income derived by a depository bank under the expanded foreign currency deposit system from foreign currency transactions with: - nonresidents, - offshore banking units in the Philippines, - local commercial banks including branches of foreign banks that may be authorized by the BangkoSentralngPilipinas (BSP) to transact business with foreign currency deposit system units and - other depository banks under the expanded foreign currency deposit system Tax Rate: Exempt from all taxes, except net income from such transactions as may be specified by the Secretary of Finance, upon recommendation by the Monetary Board to be subject to the regular income tax payable by banks - EXCEPTION: Interest income from foreign currency loans granted by such depository banks under said expanded system to residents other than offshore units in the Philippines or other depository banks under the expanded system shall be subject to a final tax at the rate of 10%. 4. Regional or Area Headquarters and Regional Operating Headquarters of Multinational Companies Regional or area headquarters – not subject to income tax - Regional or area headquarters a branch established in the Philippines by multinational companies and which headquarters do not earn or derive income from the Philippines and which act as supervisory, communications and coordinating center for their affiliates, subsidiaries, or branches in the Asia-Pacific Region and other foreign markets.
Regional operating headquarters – 10% of their taxable income - a branch established in the Philippines by multinational companies which are engaged in any of the following services: 1. general administration and planning 2. business planning and coordination 3. sourcing and procurement of raw materials and components 4. corporate finance advisory services 5. marketing control and sales promotion 6. training and personnel management 7. logistic services 8. research and development services and product development 9. technical support and maintenance 10. data processing and communications, and 11. business development. C. Special Types of Non-resident Foreign Corporations 1. Non-resident cinematographic film owners, lessors or distributors – 25% of gross income from all sources within the Philippines 2. Nonresident Owner or Lessor of Vessels Chartered by Philippine Nationals – 4.5% of gross rentals, lease or charter fees from leases or charters to Filipino citizens or corporations, as approved by the Maritime Authority 3. Nonresident Owner or Lessor of Aircraft, Machineries and Other Equipment – 7.5% of gross rentals or fees
