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Mcit and Rcit

A corporate taxpayer started operations in 2018 and reported losses in 2021 but profits in 2022. The minimum corporate income tax (MCIT) will apply in 2022, being the fourth year of operations. However, there was no MCIT due in 2021 as the company reported losses. To calculate the 2022 income tax, the regular corporate income tax is applied to taxable income after deducting any net operating loss carryover from 2021. A small business reported income and expenses in its fifth year. Both the regular corporate income tax and MCIT will be calculated. The regular tax applies the 20% rate to taxable income under 5 million while the 1% rate is used to calculate MCIT based on gross income. The

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Mary Joanne Patolilic
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268 views5 pages

Mcit and Rcit

A corporate taxpayer started operations in 2018 and reported losses in 2021 but profits in 2022. The minimum corporate income tax (MCIT) will apply in 2022, being the fourth year of operations. However, there was no MCIT due in 2021 as the company reported losses. To calculate the 2022 income tax, the regular corporate income tax is applied to taxable income after deducting any net operating loss carryover from 2021. A small business reported income and expenses in its fifth year. Both the regular corporate income tax and MCIT will be calculated. The regular tax applies the 20% rate to taxable income under 5 million while the 1% rate is used to calculate MCIT based on gross income. The

Uploaded by

Mary Joanne Patolilic
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MCIT AND RCIT: BASIC APPLICATION

Illustrative 1

A big corporate taxpayer started operations in 2018. It had the following results of operations
in 2021 and 2022:

The MCIT will commence in 2022 (i.e. 2018 + 4). Since there is no MCIT yet in 2021, the tax
payable for 2021 is nil. Nil means nothing or zero.

The 2022 income tax due of the corporation shall be determined as:

Net Operating Loss Carry-Over. It refers to the portion of your business's excess
allowable deductions over gross income.

To get our RCIT for 2022, imumultiply lang natin yung taxable net income na 100,000 sa
regular CIT for domestic corporations na 25% so we have 25,000 for our RCIT 2022.

For the MCIT po, since Pasok sya dun sa effectivity ng MCIT na July. 1, 2020 – June 30,
2023 for domestic corporations. immultiply lang natin yung total gross income natin na
4,000,000 sa MCIT rate na 1%.

The P40,000 MCIT is the income tax due in 2022. Note that the Dividend income from
domestic corporations is excluded in total gross income because it is exempt from tax.

ANNUAL RCIT AND MCIT: INTEGRATIVE ILLUSTRATION

Integration 1

La-View Corp, a MSME, reported the following on its fifth year of operation:
Withholding tax- a portion of your income is automatically deducted before you
receive it.

5% creditable withholding tax: This is a type of tax that is withheld at the source of
income, meaning that it is deducted from the payment before it reaches you.

The regular income tax and minimum corporate income tax shall be computed as follows:

Ileless natin yng business expense as regular allowable deductions na 3,100,000 to get the
taxable net income which is 50,000.

La-View Corp. is a Micro, Small, and Medium Enterprises and kung makikita natin ay hindi
excess sa 5 million yung taxable income nila so gagamitin natin na tax rate is yung Regular
CIT rate for MSME with less than P5 million taxable income na 20% and

For the MCIT naman, since Pasok siya dun sa effectivity ng MCIT na July. 1, 2020 – June
30, 2023 for domestic corporations, ang gagamitin natin na MCIT rate ay 1 %.

The income tax payable of La-View Corp. shall be computed as follows:


NEXT REPORTER MUNAAA (PRADES, PUGOSA)

QUARTERLY FILING OF INCOME TAX RETURN


Corporations shall file their quarterly income tax returns for the first three quarters of the year
due on or before 60 days from the end of each quarter.

 Corporations must file their income tax returns for the first 3 quarters of the year
within 60 days after each quarter ends. This means they have 2 months to submit the
forms and any associated taxes.

QUARTERLY MCIT
Illustration
Binorongan Inc. had the following quarterly RCIT and MCIT during 2021:
RCIT or MCIT whichever is higher yun yung gagamitin natin as quarterly income tax
FOR THAT QUARTER.

Note:
1. The Excess MCIT prior year is deductible in any of the quarters of the current year
when RCIT is higher than MCIT.1
2. The excess CWT prior year is always deductible in this period.2
3. The balance of the estimated tax payments in prior quarters is the total of the
quarterly payments in the prior quarters.3

To get the estimated tax payments in prior quarter we will subtract total tax credits to the
income tax due of previous quarter.
GROUP 6
ENTREPRENURIAL MANAGEMENT
Leader
Patolilic, Mary Joanne
L.
MEMBERS Ratings (1-10)
Lucis, Julie Pearl 8.5
Mangat, Rica Mae 8
Odita, Michelle 10
Neptuno, Shane Ashlel 10
Prades, Mhelisa Jhoei 10
Pugosa, Kirstin Eunice 10
Rañada, Karen Joy 10

GROUP 6
MANAGERAL ACCOUNTING
Leader
Patolilic, Mary Joanne
L.
Members Ratings (1-10)
Lucis, Julie Pearl 8.5
Mangat, Rica Mae 7
Odita, Michelle 10
Neptuno, Shane Ashlel 10
Prades, Mhelisa Jhoei 10
Pugosa, Kirstin Eunice 10
Rañada, Karen Joy 10

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