Domestic corporations pay the regular corporate income tax (RCIT) of 25% of net taxable income — 20% for smaller corporations under the CREATE Act — and, from the fourth year of operations, whichever is higher between that and the 2% minimum corporate income tax (MCIT) on gross income. Enter your figures to see both sides of that test.
How the computation works
- 25% RCIT on net taxable income (CREATE Act, RA 11534); 20% if the corporation’s net taxable income is not more than ₱5M and total assets are not more than ₱100M, excluding land.
- 2% MCIT on gross income — the rate reverted to 2% effective July 1, 2023 (it was temporarily 1% from July 2020 under CREATE; RMC 69-2023).
- MCIT timing: imposed beginning with the fourth taxable year following the year business operations commenced. New corporations pay regular tax only for their first three years.
- Pay the higher; when the MCIT exceeds the regular tax (typical for low-margin or loss-making companies), the excess is credited against the regular tax for the three immediately succeeding taxable years.
Worked example: net taxable income ₱4M with the 20% rate → RCIT ₱800,000; gross income ₱10M → MCIT ₱200,000. Regular tax is higher, so ₱800,000 is due. A loss year (taxable income ₱0) with the same gross income pays the ₱200,000 MCIT instead — with ₱200,000 creditable against regular tax in the next three years.
What this calculator does not cover
- Registered business enterprises under CREATE MORE incentives — special rates (5% GIE/SCIT, 20% EDR) follow their own regimes, not the regular 25%/20%.
- Non-resident foreign corporations (25% on Philippine-source income, subject to treaty rates) and proprietorships/partnerships taxed as corporations nuances.
- Improperly accumulated profits tax (10% on undistributed earnings without business reason) and dividends/distributions — the 10% final withholding tax on cash dividends to individuals is a stockholder-level tax.
- Sole proprietors and freelancers are not corporations — they use individual rates; the income tax calculator covers them.
Want the full picture?
Our corporate income tax guide explains the CREATE rate thresholds, how taxable income is built, the MCIT floor in depth, and how dividends are taxed — with worked examples.
Read the Corporate Income Tax GuideRunning a VAT-registered business?
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What is the corporate income tax rate in the Philippines?
25% of net taxable income under the CREATE Act (RA 11534). Domestic corporations with net taxable income of not more than ₱5 million AND total assets of not more than ₱100 million (excluding land) pay a reduced 20%.
What is the MCIT and when does it apply?
The Minimum Corporate Income Tax is 2% of gross income, effective July 1, 2023 (it was temporarily 1% from July 2020 to June 2023 under CREATE). It applies to domestic and resident foreign corporations beginning with the fourth taxable year following the year business operations commenced — you pay whichever is higher between the MCIT and the regular tax.
What counts as gross income for the MCIT?
Gross income from business operations: gross sales or receipts less sales returns, discounts, and cost of sales. For a service business there is generally no cost of sales, so the MCIT base is close to gross receipts. The 2% is computed on this base, not on net profit.
What happens when the MCIT is higher than the regular tax?
You pay the MCIT. The excess of the MCIT over the regular corporate income tax is carried forward and credited against the regular tax for the three immediately succeeding taxable years — so it pre-pays future income tax rather than being lost.
Does MCIT apply to a corporation with a net loss?
Yes, once the corporation is in its fourth taxable year (or beyond) of operations. A net loss means the regular tax is zero, so the 2% MCIT on gross income governs — this is exactly the situation the floor was designed for.
Are dividends taxed on top of corporate income tax?
Cash or property dividends from a domestic corporation paid to an individual stockholder are subject to a 10% final withholding tax. The corporation’s own income was already taxed at 25%/20% — the 10% is the stockholder’s tax on the after-tax profits distributed.
This calculator provides planning estimates based on the National Internal Revenue Code as amended by the CREATE Act (RA 11534) and BIR RMC 69-2023. It is not tax advice — for filing, consult the BIR or a qualified tax professional.