INPUT TAX

a. Purchase of equipment worth P1,000,000 and above (exclusive of VAT)

input tax of P120,000 should be amortized over the useful life of the
asset or 5 years, whichever is shorter

Ex. Useful life is 6 years

Jan 1 Equipment 1000000

Input Tax 120000
Cash 1120000

Jan 31 Output Tax xx

Input Tax 2000
VAT Payable xx

MINIMUM CORPORATE INCOME TAX & REGULAR CORPORATE INCOME TAX

a. MCIT will only apply from the fourth year of operation onwards

Ex.

A or B
2010 2011 2012 2013 2013 2014 2015
Sales 10000 12000 15000 17000 1700
0
COGS 5000 5000 5000 9000 6000
Gross Income 5000 7000 10000 8000 1100
0
Operating 2500 2500 2500 2500 1050
Expenses 0
Net Income 2500 4500 7500 5500 500

RCIT 750 1350 2250 1650 150

*Net Income x
30%

MCIT 160 220

*Gross Income x
2%

2013 A B

Income Tax Payable 1650 150

Prepaid Tax 0 70
Cash 1650 220
WITHHOLDING TAX

- Deducted from the salaries of employees

Entry

Employee

Cash