Income Tax Computation: Allowable Deductions to Business Income

Deductible Representation and Entertainment Expense

i. Seller of goods (0.5% of net sales)
ii. Seller of services (1% of gross receipts)
iii. If the seller is engaged in both sale of goods and services, then, specific identification or segregation has to be made, otherwise, the dominant figure for the principal operation would overrule the other.

Deductible Charitable Contributions

i. Donations to BIR accredited donee institutions properly documented with Certificate of Donations and other papers, are 100% deductible
ii. Donations to gov't priority projects certified by NEDA are 100% deductible
iii. Other donations are subject to the ff. limitations:
     Individual taxpayer - 10% of taxable income before such charitable contribution
     Corporate taxpayer -  5% of taxable income before such charitable contribution

Limitation on Deductible Interest Expense

Interest expense deduction shall be reduced by 33% of the interest income subjected to final withholding tax.

Depreciation Expense

Table of Estimated Useful Life of Property Plant and Equipment
Source: COA