Corporate - Significant developments

Last reviewed - 30 June 2022

Amendments to Section 27(B) of the Tax Code

On 10 December 2021, the President approved Republic Act No. 11635 amending the income taxation of proprietary educational institutions and hospitals that are non-profit.

Under Section 3 thereof, the following institutions shall be covered by the preferential corporate income tax (CIT) rate of 10%, provided that the rate of 1% shall apply beginning 1 July 2020 until 30 June 2023, as imposed under Section 27(B) of the Tax Code, as amended:

  • Proprietary educational institutions.
  • Hospitals that are non-profit.
  • Non-stock, non-profit educational institutions whose net income or assets accrue/inure to or benefit any member or specific person.

After 30 June 2023, the rate shall revert to the preferential CIT rate of 10%. 

Regular CIT of 25% shall be imposed on the entire taxable income of the above-mentioned institutions if their gross income from unrelated trade, business, or other activity exceeds 50% of the total gross income they derived from all sources.