Minimum Corporate Income Tax Clarified

November 7, 2001 BIR RULING NO. 051-01 Sec. 27 (E) (1) RR 9-98 000-00 A.C. Steel Industries, Inc . Rm. 503, Legaspi Towers 200 Paseo de Roxas Makati City Attention: Mr . Mariano M . Lim President Gentlemen : This refers to your letter dated April 5, 2000 requesting information if you are covered by the Minimum Corporate Income Tax (MCIT) for the taxable year 1999 considering that while you are registered with the Bureau of Internal Revenue on December 29, 1995, you started commercial operations only in January 1999. EDcICT In reply, please be informed that Section 27(E)(1) of the Tax Code of 1997, imposes a minimum corporate income tax (MCIT) of two percent (2%) of the gross income as of the end of the taxable year upon any domestic corporation beginning the fourth (4th) taxable year immediately following the taxable year in which such corporation commenced its business operations. Under Sec. 2.27(E)(5) of Revenue Regulations No. 9-98, it is provided that "For purposes of the MCIT, the taxable year in which the business commenced shall be the year in which the domestic corporation registered with the Bureau of Internal Revenue (BIR)". Accordingly, since you were registered with the BIR on December 29, 1995, your taxable year started on that date and, therefore, shall be covered by the MCIT beginning taxable year 1999. Very truly yours, (SGD.) RENE G. BAEZ Commissioner of Internal Revenue