The Corporate Tax Act sets the national corporate-tax rules for taxpayers, taxable income, calculation of income, tax rates, returns, payment, refunds, and special rules for domestic and foreign corporations. Companies, tax teams, investors, and researchers consult it when identifying who is liable for corporate tax and where the statutory calculation framework begins. This article covers selected core provisions of the Act and does not cover local corporate taxes, tax treaties, transfer-pricing practice, forms, or transaction-specific tax advice.
Taxpayers and Corporate Categories
The opening chapters define the taxpayer and divide corporations into categories that drive later rules. Articles 1, 2, 3, 4, 4-2, and 4-4 are the main provisions for identifying who is inside the Act.
Article 1 states that the Act provides matters necessary for taxpayers, the scope of taxable income and related amounts, calculation of tax, returns, payment, refunds, and proper performance of corporate-tax obligations. Article 2 defines core terms used throughout the Act, including Domestic Corporation, Foreign Corporation, Public Corporation, Ordinary Corporation, Cooperative, Public Interest Corporation, Association or Foundation without Juridical Personality, Corporation Subject to Corporation Tax, and Business Year.
Article 3 treats an Association or Foundation without Juridical Personality that has a representative or administrator as a corporation for purposes of the Act, except for specified provisions. Article 4 imposes corporate-tax obligations on Domestic Corporations, subject to special rules for Public Interest Corporations and associations without juridical personality, and provides that Public Corporations are not liable for corporate tax. Article 4(3) imposes corporate-tax obligations on Foreign Corporations when they have Domestic Source Income under Article 138(1) or fall within other categories stated in that paragraph.
Article 4-2 applies the Act to trustees of corporation-taxable trusts by treating each trust's trust assets, liabilities, income, and expenses as belonging to a separate person for many provisions. Article 4-4 contains a rule for corporation-taxable trusts with multiple trustees, treating the relevant trust assets and liabilities of the trustees as belonging to one person and making the trustee that presides over trust affairs the taxpayer for that trust.
Scope of Taxable Income
The Act next states which income is taxed for domestic and foreign corporations. Articles 5, 6, 6-2, 6-3, 6-4, 7, 8, and 9 are the main scope provisions before the detailed computation rules begin.
Article 5 provides the basic rule for Domestic Corporations: corporate tax on income for each business year is imposed on income for each business year. Article 6 excludes, for Domestic Corporations that are Public Interest Corporations or associations without juridical personality, income other than income arising from profit-making business from corporate tax on income for each business year. Article 7 imposes corporate tax on retirement pension reserve amounts for Domestic Corporations conducting retirement pension business, in addition to tax under Article 5 and related minimum-tax provisions.
Article 6-2 imposes corporate tax on the International Minimum Tax Amount for Domestic Corporations that are constituent entities of specified multinational enterprise groups. Article 6-3 imposes tax on the International Minimum Tax Residual Amount, and Article 6-4 imposes tax on the Domestic Minimum Tax Amount, each under the conditions stated in those articles. These provisions sit alongside the ordinary income-tax base and should be read with the definitions and calculation provisions in the later minimum-tax chapters.
Article 8 provides the basic scope rule for Foreign Corporations. Corporate tax on income for each business year is imposed on income connected with Domestic Source Income according to the categories of Foreign Corporations listed in Article 141. Article 9 separately imposes corporate tax on retirement pension reserve amounts for Foreign Corporations conducting the retirement pension business described there.
Calculating Income and Deductions
The computation chapter explains how taxable income is built from gross profits, deductible expenses, losses, and accounting standards. Articles 11, 13, 22, 23, 25, 37, 55, 57, and 59 are common starting points for reading corporate-tax calculations.
Article 11 states the principle of taxation of the substantive recipient of income: where a person who appears legally to receive revenue from assets or a business is merely nominal and another corporation enjoys the revenue, the revenue is treated as belonging to the corporation that enjoys it. Article 13 defines Business Year as the period used as the unit for calculating corporate property, profits, and losses, subject to the rules in that article.
Article 22 is the central income-computation rule for Domestic Corporations. Article 22(1) states that income for each business year is the amount remaining after deducting deductible expenses from gross profits for that business year. Article 22(2) defines amounts included in gross profits by reference to revenue from asset sales, asset transfers, services, and other transactions other than capital transactions, except as otherwise provided. Article 22(3) defines deductible expenses by reference to costs of sales, selling and administrative expenses, and losses, except as otherwise provided. Article 22(4) states that those revenues and expenses are calculated in accordance with generally accepted accounting standards, except as otherwise provided.
Article 23 excludes certain dividends and similar amounts from gross profits under the conditions stated in that article. Article 25 states that asset valuation gains are not included in gross profits except as otherwise provided. Article 37 restricts deduction of donations, Article 55 restricts deductions for expenses and losses connected with concealed or disguised facts, Article 57 provides loss carryforward rules, and Article 59 addresses deduction of losses in cases involving debt forgiveness and corporate reorganization events.
Tax Rates, Credits, and Domestic Returns
After taxable income is computed, the Act applies rates, credits, and return rules. Articles 66, 68, 69, 71, 72, 74, 76, 77, 78, and 79 are the main domestic-corporation provisions for rate and filing structure.
Article 66 sets the tax rate for corporate tax on income for each business year of a Domestic Corporation, with special rates and additions for categories listed in that article. Article 68 provides a credit for income tax amounts imposed on interest, dividends, and other listed amounts received by a Domestic Corporation. Article 69 provides a foreign tax credit for foreign corporate tax amounts, subject to the detailed limitation and documentation rules in that article.
Article 71 requires an Ordinary Corporation that is a Domestic Corporation to file an interim return in specified cases based on the prior business year's tax amount. Article 72 allows an interim return based on provisional settlement if the corporation prepares a provisional calculation for the interim period and states the required matters. Article 74 requires a Domestic Corporation to file a final return for each business year stating taxable income, tax amount, credits, and other listed matters.
Article 76 requires payment of tax stated in an interim return by the interim return deadline. Article 77 requires payment of tax stated in a final return by the final return deadline. Article 78 provides refund rules where an interim or final return states refundable income-tax or foreign-tax credit amounts, and Article 79 provides refund rules for excess interim payments.
Foreign Corporations and Domestic Source Income
Foreign-corporation rules appear in a separate part of the Act and do not simply copy the domestic-corporation rules. Articles 138, 141, 142, 143, 144-2, 144-4, 144-6, 144-8, 144-9, and 144-13 are key entry points.
Article 138 lists Domestic Source Income for Foreign Corporations. Article 141 divides Foreign Corporations into categories for calculating the tax base, including Foreign Corporations with a Permanent Establishment and Foreign Corporations without one. Article 142 provides rules for calculating income attributable to a Permanent Establishment, applying domestic computation concepts with necessary adjustments.
Article 143 states the tax rate for corporate tax on income of a Foreign Corporation for each business year, according to the categories specified there. Article 144-2 provides foreign-tax credit rules for Foreign Corporations, and Article 144-4 requires interim returns for specified Foreign Corporations. Article 144-6 requires final returns for Foreign Corporations, with the required items differing according to the relevant category.
Article 144-8 requires payment of tax stated in an interim return by the statutory deadline, and Article 144-9 requires payment of tax stated in a final return by the statutory deadline. Article 144-13 provides refund rules for excess interim payments for Foreign Corporations, corresponding to the domestic-corporation refund structure but within the foreign-corporation part of the Act.