Preferential Tax

Question 1

REGISTERED BUSINESS ENTERPRISE
- activity → included in SIPP
- must submit Annual Benefit Report (ABR)
- ✗ non-technical services (support, financial, retail)

KINDS OF RBEs
1. Export Enterprise
2. Domestic Market Enterprise

Answer 1

Yes

Question 2

EXPORT ENTERPRISE
- ? of total production → engaged in manufacturing, assembling, processing (e.g. IT activities and BPO)
(1) to foreign clients
(2) to fellow export enterprise (!!!)

Answer 2

70%

Question 3

CREATE INCENTIVES
- effective starting from registration. True or False?
- granted by DTI. True or False?

Answer 3

False, False
- from actual start of commercial operation
- by FIRB

Question 4

RBE INCENTIVE
- ITH of 7 years. True or False?
- 5% SCIT based on Taxable Income. True or False?
- 5% SCIT → 2% go to LGU, 3% go to national gov’t. True or False?

Answer 4

False, False, True
- ITH = 4 to 7 years → income (from registered activity)
- 5% SCIT = based on gross profit (from registered activity)

Question 5

Enhanced Deductions (TRRIPLEDD)
- requisites → to filipino, directly related to activity

TRRIPLEDD
- Training → 100%. True or False?
- R&D → 50%. True or False?
- Reinvestment → 50%. True or False?
- Input → 50%. True or False?
- Power → 50%. True or False?
- Labor → 20%. True or False?

R&D → local
Input → domestic

Answer 5

• Training → 100%
• R&D → 100%
• Reinvestment → max 50%
• Input → 50%
• Power → 50%
• Labor → 50%

Question 6

Reinvestment Allowance
- reinvest undistributed profits
- by wholesaler. True or False?
- within 3 years from reinvestment. True or False?

Answer 6

False, False
- by manufacturer
- within 5 years

Question 7

Enhanced Deductions (TRRIPLEDD)
- requisites → to filipino, directly related to activity

TRRIPLEDD
- Enhanced NOLCO → 5 years (from loss in first 3 years)
- Depreciation - Buildings → 10%. True or False?
- Depreciation - Machine → 10%. True or False?

Answer 7

True, False
- Buildings → 10%
- Machine → 20%

mas nauna B kaysa M

Question 8

DUTY FREE IMPORTATION
- import → because insufficient in quantity domestically
- must be directly and exclusively used
- must be approved by IPA
- within 5 years → ✗ sale
- Penalty = 2x amount of duty

Answer 8

Yes

Question 9

NCR
- Tier 1 = 6 years. True or False?
- Tier 2 = 5 years. True or False?
- Tier 3 = 4 years. True or False?

Answer 9

NCR
- Tier 1 = 4 years
- Tier 2 = 5 years
- Tier 3 = 6 years

Tier 1 pinakamababa

Question 10

Metropolitan Areas
- Tier 1 = 4 years. True or False?
- Tier 2 = 5 years. True or False?
- Tier 3 = 6 years. True or False?

Answer 10

Metropolitan Areas
- Tier 1 = 5 years
- Tier 2 = 6 years
- Tier 3 = 7 years

NCR = 4 to 7
Metropolitan = 5 to 7

Question 11

All Other Areas
- Tier 1 = 6 years. True or False?
- Tier 2 = 7 years. True or False?
- Tier 3 = 8 years. True or False?

Answer 11

All Other Areas
- Tier 1 = 6 years
- Tier 2 = 7 years
- Tier 3 = 7 years

ITH = 4 to 7 years lang

Question 12

BONUS INCENTIVES
- +2 years ITH → recovering from major disaster
- +3 years ITH → relocating from NCR

Answer 12

Yes

Question 13

KINDS OF RBEs
1. Export Enterprise
2. Domestic Market Enterprise

Incentives Available
- EE → ITH + SCIT. True or False?
- DME → ITH + 5 yrs ED. True or False?
- Duty-free Importation → 5 years. True or False?
- VAT zero-rating and Exemption

Answer 13

False, True, True
- EE → ITH + 10 yrs ED or SCIT (✗ simultaneous)
- DME → ITH + 5 yrs ED

SCIT = pang export enterprise lang

Question 14

RENEWABLE ENERGY INCENTIVE
- ITH of 7 years. True or False?
- 5% SCIT based on Gross Profit. True or False?
- Duty-free Importation → 5 years. True or False?
- Enhanced NOLCO of 7 years. True or False?
- Domestic Input → 50% deduction. True or False?

SPECIAL RPT RATE
- RBE → exempt if SCIT (since in lieu of ALL taxes)
- RE → maximum 1.5% of BV (directly and exclusively used)

Answer 14

True, False, False, True, False

ITH
- RBE → 4 to 7 years
- RE → 7 years

SCIT
- RBE → 5% based on Gross Profit
- RE → 10% based on Taxable Income

Duty Free Importation
- RBE → 5 years (as long as meet qualifications)
- RE → first 10 years

Enhanced NOLCO
- RBE → 5 years
- RE → 7 years

Domestic Input
- RBE → 50% deduction (TRRIPLEDD)
- RE → 100% tax credit (VAT + Duty)

TRRIPLEDD = sa RBE lang

Question 15

BARANGAY MICRO BUSINESS ENTERPRISE
- asset → maximum of 100M (excluding land). True or False?
- Certificate of Authority → 2 years validity
(1) within 15 days → deemed approved

Incentives Available
- Income Tax Exemption (from operations)
- Minimum Wage Law Exemption

Answer 15

False
- asset → maximum of 3M (excluding land)

100M pang MSME yon

Question 16

DOUBLE TAXATION REMEDIES

TAX EXEMPTION
- income tax of RA / NRA / FC
- business tax from foreign

TAX CREDIT
- income tax of RC / DC
- transfer tax to foreign

TAX TREATY
- with Tax Treaty Relief Application?
(1) ✓ → use preferential %
(2) ✗ → use regular %

Answer 16

Yes

Question 17

SOLO PARENTS
- death, incapacity, divorce
- criminal conviction, rape (!!!)
- separated / abandoned → for at least 6 months
- OFW → uninterrupted 12 months

SENIOR CITIZEN AND PWD
- SC → at least 60 yrs old

Answer 17

Yes

Question 18

BENEFITS
- Solo Parent → 10% Discount + VAT Exemption. True or False?
- SC and PWD → 10% Discount + VAT Exemption. True or False?

Answer 18

True, False
- Solo Parent = 10%
- SC and PWD = 20%

10 % DISCOUNT + VAT EXEMPTION
- until 6 yrs old
- income → less than 250K annually
- medicines, milk, diapers, micronutrient

20% DISCOUNT + VAT EXEMPTION
- medicines, medical supplies, medical services
- professional fees of physicians / healthcare workers
- transportation fare
- hotels, restaurants, lodging establishments
- funeral

Question 19

ADDITIONAL BENEFITS FOR SC AND PWD

5% DISCOUNT (BASIC OR PRIME COMMODITIES)
- weekly limit → 2500
- condition → at least 4 commodities

MINIMUM 5% DISCOUNT WATER AND ELECTRICITY BILLS
- meters must be registered under their own name
- monthly limit
(1) electricity → 1000 kWh. True or False?
(2) water → 30 m3. True or False?

NOTE : Water and Electricity → for SC ONLY

Answer 19

False, True
- electricity → 100 kWh
- water → 30 m3

Question 20

REMEMBER
- SC + PWD → choose 1 only
- ✗ double discount → choose higher (promo vs SC)

TREATMENT FOR DISCOUNTS
- as OPEX (deducted to GP)
- service charge → also discounted

Answer 20

Yes