PERCENTAGE TAX (Sec.

116-128) i) Proprietor, lessee or operator of cockpits,

Percentage tax is a business tax imposed on persons or
entities/transactions:
1. Who sell or lease goods, properties or services in
the course of trade or business and are exempt
from value-added tax (VAT) under Section 109 (w)
of the National Internal Revenue Code, as
amended, whose gross annual sales and/or
receipts do not exceed Php 1,919,500 and who are
not VAT-registered; and
2. Engaged in the following industries/ transactions:
a) Cars for rent or hire driven by the lessee,
transportation contractors, including persons
who transport passengers for hire, and other
domestic carriers of passengers by land
(except owners of animal-drawn two-wheeled
vehicle) and keepers of garages
b) International air/shipping carriers doing
business in the Philippines on their gross
receipts derived from transport of cargo from
the Philippines to
another country
cabarets, night or day clubs, boxing
exhibitions, professional basketball games, Jai-
Alai and racetracks,
including videoke bars, karaoke bars,
karaoke televisions, karaoke boxes and music
lounges
j) Winnings in horse races
k) Sale, barter or exchange of shares of stock
listed and traded through the local stock
exchange or through initial public offering
Who are required to file Percentage Tax Returns
monthly?
Every person/entity subject to percentage tax as
enumerated in items 1, 2.a, 2.b, 2.c, 2.e, 2.f, 2.g and 2.h
above
Who are required to file Percentage Tax Returns
quarterly?
Operator, manager or person in charge of:
cockpits,

c) Franchise grantees of cabarets, day or night clubs, videoke bars, karaoke

bars, karaoke televisions, karaoke boxes and music
radio and/or television broadcasting whose lounges
gross annual receipts for the
preceding year do not exceed Php boxing exhibitions
10,000,000.00 and did not opt to
register as VAT taxpayers
professional basketball games
gas and water utilities
Jai-alai and race tracks
d) Overseas dispatch, message or conversation
transmitted from the Philippines, except those Telephone and communication companies on their
transmitted by the Philippine government, any overseas dispatch, message or conversation
embassy originating and transmitted from the Philippines.
and consular offices of a foreign
government, public international organizations
enjoying exemptions pursuant to an
international agreement and new DOCUMENTARY STAMP TAX
messages to a bona fide correspondent
furnishing general news service
Documentary Stamp Tax is a tax on documents,
instruments, loan agreements and papers evidencing
e) Banks and non-bank financial intermediaries the acceptance, assignment, sale or transfer of an
performing quasi-banking functions obligation, right or property incident thereto.

f) Other non-bank financial intermediaries 1) Who are required to file Documentary Stamp Tax
(including pawnshops) Declaration Return?

g) Person, company or corporation (except purely a) In case of constructive affixture of documentary

cooperative companies or associations) doing stamps, by the persons making, signing, issuing,
life insurance business accepting or transferring documents, instruments, loan
agreements and papers, acceptances, assignments,
h) Fire, marine or miscellaneous agents of foreign sales and conveyances of the obligation, right or
insurance companies property incident thereto wherever the document is
made, signed, issued, accepted or transferred when the
obligation or right arises from Philippine sources or the
property is situated in the Philippines at the same time
such act is done or transaction had;
b) By using the web-based Electronic Documentary
Stamp Tax (eDST) System in the payment/remittance of
its/his/her DST liabilities and the affixture of the
prescribed documentary stamp on taxable documents;
and
c) By Revenue Collection Agent, for remittance of sold
loose documentary stamps.
Note: Wherever one party to the taxable document
enjoys exemption from the tax imposed, the other party
who is not exempt will be the one directly liable to file
Documentary Stamp Tax Declaration and pay the
applicable stamp tax.
2) Where is the Documentary Stamp Tax Declaration
Return filed?
In the Authorized Agent Bank (AAB) within the territorial
jurisdiction of the RDO which has jurisdiction over the
residence or principal place of business of the taxpayer
or where the property is located in case of sale of real
property or where the Collection Agent is assigned. In
places where there is no Authorized Agent Bank, the
return will be filed with the Revenue Collection Officer or
duly authorized City or Municipal Treasurer where the
taxpayer's residence or principal place of business is
located or where the property is located in case of sale
of real property or where the Collection Agent is
assigned.
3) What are the documents/papers not subject to
Documentary Stamp Tax? (sec. 9, RR No. 13-2004)
Policies of insurance or annuities made or
granted by a fraternal or beneficiary society,
order, association or cooperative company,
operated on the lodge system or local
cooperation plan and organized and conducted
solely by the members thereof for the exclusive
benefit of each member and not for profit
Certificates of oaths administered by any
government official in his official capacity or
acknowledgement by any government official in
performance of his official duty
Written appearance in any court by any
government official in his official capacity
Certificates of the administration of oaths to any
person as to the authenticity of any paper
required to be filed in court by any person or
party thereto, whether the proceedings be civil
or criminal
Papers and documents filed in court by or for
the national, provincial, city or municipal
governments
Affidavits of poor persons for the purpose of
proving poverty
Statements and other compulsory information
required of persons or corporations by the rules
and regulations of the national, provincial, city or
municipal government exclusively for statistical
purposes and which are wholly for the use of the
Bureau or office in which they are filed, and not
at the instance or for the use or benefit of the
person filing them
Certified copies and other certificates placed
upon documents, instruments and papers for
the national, provincial, city or municipal
governments made at the instance and for the
sole use of some other branch of the national,
provincial, city or municipal governments
Certificates of the assessed value of lands, not
exceeding P200 in value assessed, furnished by
the provincial, city or municipal Treasurer to
applicants for registration of title to land
Borrowing and lending of securities executed
under the Securities Borrowing and Lending
Program of a registered exchange, or in
accordance with regulations prescribed by the
appropriate regulatory authority: Provided,
however, That any borrowing or lending of
securities agreement as contemplated hereof
shall be duly covered by a master securities
borrowing and lending agreement acceptable to
the appropriate regulatory authority, and which
agreement is duly registered and approved by
the Bureau of Internal Revenue (BIR)
Loan agreements or promissory notes, the
aggregate of which does not exceed Two
hundred fifty thousand pesos (P250,000), or any
such amount as may be determined by the
Secretary of Finance, executed by an individual
for his purchase on installment for his personal
use or that of his family and not for business or
resale, barter or hire of a house, lot, motor
vehicle, appliance or furniture: Provided,
however, That the amount to be set by the
Secretary of Finance shall be in accordance
with a relevant price index but not to exceed ten
percent (10%) of the current amount and shall
remain in force at least for three (3) years
Sale, barter or exchange of shares of stock
listed and traded through the local stock
exchange (R.A 9648)
Assignment or transfer of any mortgage, lease
or policy of insurance, or the renewal or
continuance of any agreement, contract, charter,
or any evidence of obligation or indebtedness, if
there is no change in the maturity date or
remaining period of coverage from that of the
original instrument.
 Fixed income and other securities traded in the
secondary market or through an exchange.
Derivatives: Provided, That for purposes of this
exemption, repurchase agreements and reverse
repurchase agreements shall be treated
similarly as derivatives
Interbranch or interdepartmental advances
within the same legal entity
All forebearances arising from sales or service
contracts including credit card and trade
receivables: Provided, That the exemption be
limited to those executed by the seller or service
provider itself.
Bank deposit accounts without a fixed term or
maturity
All contracts, deeds, documents and
transactions related to the conduct of business
of the Bangko Sentral ng Pilipinas
Transfer of property pursuant to Section 40(C)
(2) of the National Internal Revenue Code of
1997, as amended
Interbank call loans with maturity of not more
than seven (7) days to cover deficiency in
reserves against deposit liabilities, including
those between or among banks and quasi-
banks
4) What are the implications of failure to stamp taxable
documents?
The untaxed document will not be recorded, nor
will it or any copy thereof or any record of
transfer of the same be admitted or used in
evidence in court until the requisite stamp or
stamps have been affixed thereto and cancelled
No notary public or other officer authorized to
administer oaths will add his jurat or
acknowledgment to any document subject to
Documentary Stamp Tax unless the proper
documentary stamps are affixed thereto and
cancelled.
5) What is Electronic Documentary Stamp Tax (eDST)
System? (sec. 5 (1), RR No. 7-2009)
The eDST is a web-based application created for
taxpayers and the BIR that is capable of affixing a
secured documentary stamp on the taxable documents
as defined under the appropriate provisions under Title
VII of the National Internal Revenue Code of 1997, as
amended, thru the use of a computer unit, any laser
printer with at least 1200 dpi resolution, and Internet
Explorer 7.0 It is also capable of providing a 3-layer
watermark on stamps for added security.
6) Is DST Law applicable on Electronic Documents?
(sec. 10, RR No. 13-2004)
The DST rates as imposed under the Code, as amended
by R.A. 9243 shall be applicable on all documents not
otherwise expressly exempted by the said law,
notwithstanding the fact that they are in electronic form.
As provided for by R.A. 8792, otherwise known as the
Electronic Commerce Act, electronic documents are the
functional equivalent of a written document under
existing laws, and the issuance thereof is therefore
tantamount to the issuance of a written document, and
therefore subject to DST.
7) What are the inclusions of a debt instrument? (sec. 5,
RR No. 13-2004)
Debt Instrument shall mean instruments representing
borrowing and lending transaction including but not
limited to:
debentures,
certificates of indebtedness,
due bills,
bonds,
loan agreements, including those signed
abroad wherein the object of the
contract is located or used in the
Philippines,
instruments and securities issued by the
government or any of its
instrumentalities,
deposit substitute debt instruments,
certificates or other evidences of
deposits that are drawing
instrument significantly higher than the
regular savings deposit taking into
consideration the size of the deposit and
the risks involved,
certificates or other evidences of
deposits that are drawing interest and
having a specific maturity date,
promissory notes, whether negotiable or
non-negotiable, except bank
notes issued for circulation.
8) Is any document, transaction or arrangement entered
into under Financial Lease subject to Documentary
Stamp Tax? (RMC No. 46-2014)
Financial lease is akin to a debt rather than a lease. A
nature of an obligation than a lease of personal property.
The mere act of extending credit is already a means of
facilitating an obligation or advancing in behalf of the 3. Petroleum Products (Section 148)
lessee certain property in lieu of cash in exchange for a
definitive amortization to be paid to the lessor with profit 4. Miscellaneous Articles (Section 149-150)
margin included. Section 179 of the NIRC, as amended,
covers all debt instruments. Therefore, being a nature of a. Automobiles (Section 149)
an obligation, any document, transaction or arrangement b. Non-essential Goods (Section 150)
entered into under financial lease is subject to DST
under such Section of the NIRC, as amended.
5. Mineral Products (Sections 151)
EXCISE TAXES
PERSONS LIABLE TO EXCISE TAX:
BASIC CONCEPT:
In General:
Excise Tax is a tax on the production, sale or
a. On Domestic or Local Articles
consumption of a commodity in a country.
Manufacturer
APPLICABILITY:

On goods manufactured or produced in the
Philippines for domestic sale or consumption or
for any other disposition; and
On goods imported.
Producer
Owner or person having possession of articles
removed from the place of production without
the payment of the tax

b. On Imported Articles
TYPES OF EXCISE TAX:

Specific Tax refers to the excise tax imposed which is Importer

based on weight or volume capacity or any other
physical unit of measurement Owner

Person who is found in possession of articles which

are exempt from excise taxes other than
Ad Valorem Tax refers to the excise tax which is those legally entitled to exemption
based on selling price or other specified value of the
goods/articles Others:

MANNER OF COMPUTATION: On Indigenous Petroleum

Specific Tax = No. of Units/other measurements x Local Sale, Barter or Transfer

Specific Tax Rate
- First buyer, purchaser or transferee

Exportation
Ad Valorem Tax = No. of Units/other measurements x
Selling Price of any specific value per unit x Ad Valorem
- Owner, lessee, concessionaire or operator of
Tax Rate
the mining claim
MAJOR CLASSIFICATION OF EXCISABLE
TIME OF PAYMENT:
ARTICLES AND RELATED CODAL SECTION:

In General
1. Alcohol Products (Sections 141-143)

On domestic products
a. Distilled Spirits (Section 141)
b. Wines (Section 142)
c. Fermented Liquors (Section 143) Before removal from the place of production

2. Tobacco Products (Sections 144-146) On imported products

a. Tobacco Products (Section 144) Before release from the customs' custody
b. Cigars & Cigarettes (Section 145)
c. Inspection Fee (Section 146)