Recently, Revenue Notification Circular 36-2024 issued by the Bureau of Internal Revenue (BIR) has significant ramifications for businesses. Let’s take a closer look at the highlights:

1. MCIT Clarity: The circular sheds light on the computation of MCIT for the taxable year 2023. This is crucial information for companies aiming to align with tax regulations.
2. Corporate Recovery and Tax Incentives: Republic Act No. 11534, also known as the Corporate Recovery and Tax Incentive Act, introduces amendments affecting tax liability. De Castro highlights the need for corporate counseling to provide feedback and make adjustments as appropriate.
3. MCIT Defined: Under the Philippine National Income Revenue Code (NIRC), MCIT is an instrument that mandates companies to pay the minimum income tax, regardless of their net income. This provision is a safeguard against tax avoidance techniques.

The Corporate Restructuring and Corporate Tax Act had a significant impact on MCIT rates. Let’s break it down:

• From July 1, 2020, through June 30, 2023, the MCIT was set at one percent (1%).
• However, effective July 1, 2023, the MCIT rate reverted to the original two percent (2%) based on a company’s gross revenue.

De Castro Consulting takes a closer look at how the Minimum Corporate Income Tax (MCIT) is calculated:

1. Average monthly income: To calculate MCIT, companies must divide their gross income by 12 months to obtain a monthly gross income
2. Rate Application:
   • The MCIT rate for the period January 1, 2023, through January 30, 2023, was 1%.
   • From 1 July 2023 to 31 December 2023, the MCIT rate is 2%.

This number corresponds to the taxable period and provides a simple method for determining MCIT payments. Recall that MCIT ensures that businesses contribute minimal amounts of money to support the government and pay for essential services.