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DEFINITION: CORPORATION
Section 22 (B), Tax Code
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DEFINITION: CORPORATION
'General professional partnerships' are
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.
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DEFINITION: CORPORATION
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DEFINITION: CORPORATION
Partnerships no matter how created or
organized. Registered or unregistered
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DEFINITION: CORPORATION
Joint Venture
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DEFINITION: CORPORATION
Joint Emergency Operation is a Joint Venture.
FACTS:
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DEFINITION: CORPORATION
2. The purpose of the agreement was to allow
the companies to economize in overhead
expenses.
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DEFINITION: CORPORATION
4. Each corporation then prepared its own income tax
return from the fifty percent (50%) gross receipts and
expenditures, assets and liabilities and paid the
corresponding income taxes thereon separately.
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DEFINITION: CORPORATION
DECISION:
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DEFINITION: CORPORATION
When the Tax Code includes "partnerships"
among the entities subject to the tax on
corporations, it must refer to organizations
which are not necessarily partnerships in the
technical sense of the term, and that
furthermore, said law defined the term
"corporation" as including partnerships no
matter how created or organized,
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DEFINITION: CORPORATION
thereby indicating that "a joint venture need not be
undertaken in any of the standard forms, or in
conformity with the usual requirements of the law
on partnerships, in order that one could be
deemed constituted for purposes of the tax on
corporations"; that besides, said section 84 (b)
provides that the term "corporation" includes "joint
accounts" (cuentas en participacion) and
"associations", none of which has a legal
personality independent of that of its members. xxx
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DEFINITION: CORPORATION
What was actually done in this case was that,
although no legal personality may have been
created by the Joint Emergency Operation,
nevertheless, said Joint Emergency Operation,
joint venture, or joint management operated
the business affairs of the two companies as
though they constituted a single entity,
company or partnership, thereby obtaining
substantial economy and profits in the
operation.
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DEFINITION: CORPORATION
Essential factors to constitute a “joint venture”:
(a) each party to the venture must make a contribution, not necessarily of
capital, but by way of services, skill, knowledge, material or money;
(c) there must be a joint proprietary interest and right of mutual control over
the subject matter of the enterprise;
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DEFINITION: CORPORATION
Associations
FACTS:
A number of local insurance firms formed
themselves a “pool” to facilitate the handling of
business with a nonresident foreign reinsurance
company.
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DEFINITION: CORPORATION
ISSUE: Whether or not the pool of machinery insurers was a
partnership taxable as a corporation.
DECISION:
“(1) The pool has a common fund, consisting of money and other valuables
that are deposited in the name and credit of the pool. This common fund
pays for the administration and operation expenses of the pool.
(2) The pool functions through an executive board, which resembles the
board of directors of a corporation, composed of one representative for each
of the ceding companies.
(3) True, the pool itself is not a reinsurer and does not issue any insurance
policy; however, its work is indispensable, beneficial and economically useful
to the business of the ceding companies and Munich, because without it they
would not have received their premiums. The ceding companies share "in the
business ceded to the pool" and in the "expenses" according to a "Rules of
Distribution" annexed to the Pool Agreement. Profit motive or business is,
therefore, the primordial reason for the pool's formation.
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DEFINITION: CORPORATION
The fact that the pool does not retain any profit or
income does not obliterate an antecedent fact, that of
the pool being used in the transaction of business for
profit. It is apparent, and petitioners admit, that their
association or coaction was indispensable [to] the
transaction of the business. . . If together they have
conducted business, profit must have been the object as,
indeed, profit was earned. Though the profit was
apportioned among the members, this is only a matter of
consequence, as it implies that profit actually resulted.
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TYPES OF CORPORATIONS
Domestic Corporation- a corporation organized
under the laws of the Republic of the Philippines
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TYPES OF CORPORATIONS
• Resident Foreign Corporation- a foreign corporation that is
engaged in or doing business in the Philippines.
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TYPES OF CORPORATIONS
• Provided, however, That the phrase "doing
business “ shall not be deemed to include mere
investment as a shareholder by a foreign entity
in domestic corporations duly registered to do
business, and/or the exercise of rights as such
investor; nor having a nominee director or
officer to represent its interests in such
corporation; nor appointing a representative or
distributor domiciled in the Philippines which
transacts business in its own name and for its
own account
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TYPES OF CORPORATIONS
The following acts shall not be deemed "doing
business" in the Philippines:
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TYPES OF CORPORATIONS
(3) Appointing a representative or distributor
domiciled in the Philippines which transacts
business in the representative's or distributor's
own name and account;
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TYPES OF CORPORATIONS
(5) Maintaining a stock of goods in the
Philippines solely for the purpose of having the
same processed by another entity in the
Philippines;
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TYPES OF CORPORATIONS
(7) Collecting information in the Philippines; and
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TAX BASE
TAX BASE
Resident Foreign
Corporation
(RFC) Income from within
the Philippines
Non Resident
Foreign
Corporation Income from within
(NRFC) the Philippines
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TAX RATES
DOMESTIC and RESIDENT FOREIGN CORPORATIONS
In General
• Regular Corporate Income Tax (RCIT)
– Effective January 1, 2009 – 30% of Taxable Income
(whichever is higher)
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TAX RATES
RESIDENT FOREIGN CORPORATION:
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NOT TAXABLE AS A CORPORATION
General Professional Partnerships (GPPs)
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NOT TAXABLE AS A CORPORATION
WHEREAS, the 3% contractor's tax is based both
on the total contract price received by a principal
contractor and on the portion of such contract
price which is allocated by the said principal
contractor to and received by, a subcontractor;
FACTS:
On January 13, 2010, Aurora and Avida entered into a Joint
Development Agreement (the "JDA") for the formation of a joint
venture for construction purposes whereby Aurora, as registered
owner of the Property, shall contribute the Property to the joint
venture, and Avida, shall contribute project development services to
construct and develop the Property into a residential subdivision (the
"Project") with shared amenities, utilities and facilities to be
developed on the Property.
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NOT TAXABLE AS A CORPORATION
In return for their respective contribution, each
party shall receive their respective allocation of
Saleable House and Lot Units/Saleable Lot Units
from the Project. Aurora shall receive an
allocation of 11% of the saleable House and Lot
Units and 25%of the Saleable Lots of the
Project. Avida shall receive an allocation of 89%
of the Saleable House and Lot Units and 75% of
the Saleable Lots of the Project.
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NOT TAXABLE AS A CORPORATION
RULING:
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NOT TAXABLE AS A CORPORATION
1. The allocation of the saleable units between
Aurora and Avida, which is done effectively in
consideration of their respective contributions,
does not constitute a taxable event, as no income
is actually realized by either Aurora and/or Avida.
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NOT TAXABLE AS A CORPORATION
4. Aurora and/or Avida will only realize income
upon their respective sales of the saleable
units allocated to each of them.
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NOT TAXABLE AS A CORPORATION
REVENUE REGULATIONS NO. 10-2012-
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NOT TAXABLE AS A CORPORATION
Requirements to be considered as a JV for construction:
(4) the Joint Venture itself must likewise be duly licensed as such by
the Philippine Contractors Accreditation Board (PCAB) of the
Department of Trade and Industry (DTI)
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NOT TAXABLE AS A CORPORATION
The tax-exempt joint venture or consortium as
herein defined shall not include those who are
mere suppliers of goods, services or capital to a
construction project.
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INCOME; SOURCES OF INCOME
Income Principle From Sources Within
Interest Where the capital ► If derived within the Philippines.
is employed ► Includes interest on bonds, notes
or other interest bearing
obligations of residents
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INCOME; SOURCES OF INCOME
Income Principle From Sources Within
Services Where service is ► If performed within the
performed Philippines.
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INCOME; SOURCES OF INCOME
Income Principle From Sources Within
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