TAXATION

FAR EASTERN UNIVERSITY – MANILA

OTHER PERCENTAGE TAXES (401)
A. Sec. 116- Tax on Persons Exempt from VAT under Section 109 (bb)
1. Persons subject to tax
a. Persons whose annual sales or receipts does not exceed P3,000,000
b. Person who are not VAT registered (Sec. 109 (bb))

2. Tax base
a. Gross monthly sales or receipts
1)Seller of goods
Gross sales
2)Seller of services
Gross receipts

3. Tax rate
a. The tax rate is 3%

4. Optional VAT registration

a. Persons subject to the above tax may apply for registration as VAT subject persons not later than ten (10) days before the beginning of the
taxable quarter

5. Cancellation of VAT Registration

a. Any person exempt from VAT under Sec. 109 (1) (bb) who elects to register under the VAT system shall not be allowed to cancel his
registration for the next three (3) years

5. Person exempt from gross receipt tax

a. Cooperatives are exempt from the 3% gross receipts tax imposed under sec. 116
• However, cooperatives who transact business with their members and non-members and with accumulated reserves and undivided net
savings of more than P10,000,000 shall be subject to the percentage tax on all sales of goods and/or other services to non-members.

b. Fees, per diems, allowances and other income received by corporate directors whether employee or not employee.

c. Marginal income earners.

1) Marginal income earners shall refer to those individual whose business do not realize gross sales or receipts exceeding P100,000 in any 12-
month period.

d. VAT-registered persons regardless of level of sales.

e. VAT-registrablepersons.

B. Sec. 117 – Percentage Tax on Domestic Carriers and Keepers of Garage (Common Carrier’s Tax)
1. Common carrier defined
Persons, corporations, firms or associations engaged in the business of carrying or transporting passenger or goods or both, by land, water, or air,
for compensation, offering their services to the public and shall include transportation contractors.

2. Persons subject to common carrier’s tax

a. Cars for rent or hire driven by the lessee
b. Transportation contractors, including persons who transport passenger for hire
c. Other domestic carriers by land for the transport of passengers
d. Keepers of garage (garage is a closed shelter for automobiles; a business establishment where automobiles are repaired, stored, maintained,
tuned-up, cared etc.)

3. Other common carriers subject to 3% percentage tax

a. Taxicabs
b. Cars for hire owned by rent-a-car companies
c. Tourist buses used for the transport of passengers

4. Persons not subject to the 3% common carrier’s tax

a. Owners of banca
b. Owners of animal-drawn two-wheeled vehicle

5. Tax base
a. Actual quarterly gross receipts
b. minimum quarterly gross receipt

Minimum Quarterly Gross Receipts Manila and other cities Provinces

1. Jeepney for hire P2,400 P1,200
2. Public Utility Bus
Not exceeding 30 passengers P3,600 P3,600
Exceeding 30 but not exceeding 50 passengers P6,000 P6,000
Exceeding 50 passengers P7,200 P7,200
3. Taxis P3,600 P2,400

4. Other Percentage tax Page 1 of 15

 4. Car for hire with chauffeur P3,000 P3,000
5. Car for hire without chauffeur P1,800 P1,800

• whichever is higher between a. and b. above.

6. Tax rate
a. The tax rate is 3%.

7. Exemption from local taxes

a. The gross receipts of common carriers derived from their incoming and outgoing freight shall not be subject to the local taxes imposed under
R.A. No. 7160, otherwise known as the Local Government Code of 1991.

8. Transportation contractors and common carriers subject to VAT

a. Transportation contractors on their transport of goods or cargoes.
b. Persons who transport goods or cargoes for hire.
c. Other domestic carriers by land relative to their transport of goods or cargoes.
d. Common carrier by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines to another place in
the Philippines

9. RMC 70-2015 (Transportation Network Companies)

a. Transportation Network Companies (TNC)

TNC is a pool of land transportation vehicles whose accessibility to the riding public is facilitated through the use of common point of contract
which may be in the form of text, telephone, and/or cellular calls, email, mobile applications or by other means.

The vehicle used in transporting passengers and/or goods in the TNC may be owned by other people and/or entities other than the TNC, and
shall be referred herein as “Partners”.

• 3% common carrier tax

TNCs/Partner with valid “Certificate of Public Convenience (CPC)” engaged in the transport of passengers are subject to 3% common
carrier tax under Section 117 of the Tax Code.

• 12% VAT or 3% OPT

TNCs/Partner without valid CPC are classified as land transportation contractor subject to either 12% VAT or 3% OPT under Section 116
of the Tax Code.

C. Sec. 118 – Percentage Tax on International Carriers (Air and Shipping)

1. Persons subject to tax

a. International air carriers doing business in the Philippines
b. International shipping carriers doing business in the Philippines

2. Tax base
a. Monthly gross receipts

3. Gross Receipts Defined (Revenue Regulation 11-2011)

Gross receipts shall include, but shall not be limited to, the total amount of money or its equivalent representing the contract,
freight/cargo fees, mail fees, deposit applied as payments, advanced payments and other service charges and fees actually
or constructively received during the taxable quarter from cargoes and or mails, originating from the Philippines in a
continuous and uninterrupted flight, irrespective of the place of sale or issue and the place of payment of the passage
documents.

Notes:
-The common carrier’s tax herein do not apply to off-line international carriers having a branch/office or sales agent in the
Philippines which sells passage documents for a compensation or commission to cover off-line flights or voyage of its principal or head office, or for
other airlines or sea carriers covering flights or voyages originating from the Philippine ports or off-line flights or voyages. (RR 15-2013). These
entities may be subject to VAT.

-Income from International transport operations involving the transport of passengers, goods and cargoes from foreign country to the
Philippines (incoming flights) are income derived from services rendered outside the Philippines, hence exempt from business
taxes due to lack of tax jurisdiction (RMC 46-2008)
4. Tax Rate
a. The tax rate is 3%

(RR 15-2013) The transport of passengers by international carriers doing business in the Philippines shall be exempt from
value-added tax (VAT) pursuant to Sections 109(1)(S) of the NIRC, as amended by RA No. 10378. The transport of cargo by

4. Other Percentage Tax Page 2 of 15

 international carriers doing business in the Philippines shall be exempt from VATpursuant to Sections 109(1)(E) of the NIRC, as
amended by RA No. 10378, as the same is subject to Common Carrier's Tax (Percentage Tax on International Carriers) under Section 118 of
the N1RC, as amended. International carriers exempt under Sections 109(1)(S) and 109(1)(E) of the NIRC, as amended, shall not be allowed
to register for VAT purposes.

D. Sec. 119 – Tax on Franchises

1. Persons subject to tax
a. Franchises on radio/or television broadcasting companies whose annual gross receipts of the preceding year does not exceed P10,000,000
b. Franchises on gas and water utilities

2. Tax base
a. Gross receipts derived from the business covered by the law granting the franchise

3. Tax rates
a. Franchise on radio and/or TV broadcasting – 3% or pay VAT at their option
b. Franchise on gas and water utilities – 2%
c. Franchise Tax on PAGCOR - 5%

Excerpt from RMC 33-2013: PAGCOR is subject to a franchise tax of five percent (5%) of the gross revenue or earnings it derives from its
operations and licensing of gambling casinos, gaming clubs and other similar recreation or amusement places, gaming pools, and other related
operations.

4. Optional VAT registration

a. Radio and TV broadcasting companies whose annual gross receipts of the preceding year does not exceed P10,000,000 shall have the option
to be registered within 10 days before the beginning of the calendar quarter as VAT taxpayer and pay VAT thereon
b. Once the option is exercised, it shall not be revoked

5. Franchise grantees subject to VAT

a. Telephone and telegraph
b. Radio and/or television broadcasting
c. Toll road operations
d. All other franchisees, other than those covered by Sec. 119 of the Tax Code, regardless of how their franchise may have been granted

Summary of Business Taxes for Franchise Grantees

Grantor Type of Franchise Business Tax
1. Government Radio/TV Broadcasting Co. 3%OPT or 12% VAT if VAT reg. or if gross receipts >P10M for
the preceding year
Gas and water utilities 2% OPT regardless of gross receipts
PAGCOR 5% OPT on gross revenue or earnings (PD 1869/RMC 22-2013)
All other types of franchises 12% VAT or 3% OPT if non-vat reg. and gross receipts <
P3,000,000
2. Private Co.’s All type of franchises 12% VAT or 3% OPT if non-vat reg. and gross receipts
<P3,000,000

E. Sec. 120 – Tax on Overseas Dispatch, Message or Conversation Originating from the Philippines
1. Persons subject to tax
a. The tax imposed shall be payable by the person paying for the services rendered and shall be paid to the person rendering the services

2. Persons exempt to tax

a. Philippine government
b. Embassies or consular offices of a foreign government (Diplomatic services)
c. International organizations
d. News services

3. Tax base
a. Amount paid for the services rendered

4. Tax rate
a. The tax rate is 10%.

5. Examples of communication facilities

a. Telephone
b. Telegraph
c. Telewriter exchange
d. Wireless and other communication equipment services

F. Sec. 121 – Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-banking Functions

1. Persons subject to the tax

4. Other Percentage Tax Page 3 of 15

 a. Banks
b. Non-bank financial intermediaries performing quasi-banking functions.

2. Definition of terms
a. Bank
The term “bank” means every banking institution, as defined in Sec. 2 of R.A. No. 337, as amended, otherwise known as the The General
Banking Act. A bank may either be a commercial bank, a thrift bank, a development bank, a rural bank or a specialized government bank.

b. Non-bank financial intermediary defined

The term “non-bank financial intermediary” means a financial intermediary, as defined in Sec. 2 (D) (c) of R.A. No. 337, as amended,
otherwise known as The general Banking Act, authorized by the BangkoSentralngPilipinas (BSP) to perform quasi-banking activities.

c. Quasi-Banking Activities
The term “quasi-banking activities” means borrowing funds from twenty (20) or more personal or corporate lenders at any time, through the
issuance, endorsement, or acceptance of debt instruments of any kind other than deposits from the borrower’s account, or through the issuance
of certificates of assignment or similar instruments, with recourse, or repurchase agreement for purposes of relending or purchasing receivables
and other similar obligation: Provided however, that commercial, industrial and other non-financial companies, which borrow funds through
any of these means for the limited purpose of financing their own needs or the needs of their agents or dealers, shall not be considered as
performing quasi-banking functions.

3. Tax base and tax rates

Tax base Tax rates
Gross receipts on interest, commissions and discounts from lending activities; income from
financial leasing:
Remaining maturity period of instrument is 5 years or less (not in excess of 5 years) 5%

Remaining maturity period of instrument is more than 5 years (in excess of 5 years) 1%
Dividends and equity shares in net income of subsidiaries 0%
Royalties, rentals of property, real or personal, profits from exchange and all other items treated as gross
7%
income under the Tax Code
Net trading gains within the taxable year on foreign currency, debt securities, derivatives and other
7%
similar financial instrument

4. In case maturity is shortened through pre-termination

a. In case the maturity period is shortened thru pre-termination, the maturity period shall be reckoned to end as of the date of pre-termination for
purposes of classifying the transaction and applying the correct rate of tax accordingly.

G. Sec. 122 – Tax on Finance Companies/Tax on Other Non-Bank Financial Intermediaries (Gross Receipts Tax)
1. Persons subject to tax

a. Non-bank financial intermediaries

2. Tax base and tax rates

Tax base Tax rates
Gross receipts derived from interest, commissions, discounts and all other items treated as gross income under the Tax
5%
Code (From Others)
Interest, commissions and discounts from lending activities, as well as income from financial leasing:
(From Lending)
Remaining maturity of instrument is 5 years or less 5%
Remaining maturity of instrument is more than 5 years 1%

3. In case maturity is shortened through pre-termination

a. In case the maturity period is shortened thru pre-termination, the maturity period shall be reckoned to end as of the date of pre-termination for
purposes of classifying the transaction and applying the correct rate of tax accordingly.

H. Sec. 123 – Tax on Life Insurance Premiums

1. Persons subject to tax

a. Person, company or corporation (Domestic or Resident Foreign Corporation) (except purely cooperative companies or associations) doing life
insurance business of any sort in the Philippines

b. Cooperative companies or associations are such as are conducted by the members thereof with the money collected from among themselves
and solely for their own protection and not for profit.

2. Tax base
a. Total premiums collected, whether such premiums are paid in money, notes, credits or any substitutes for money

4. Other Percentage Tax Page 4 of 15

3. Tax rate
a. The tax rate is 2%

4. The following premiums are EXEMPTED FROM TAX

a. Premiums refunded within six (6) months after payment on account of rejection of risk or returned for other reason to a person insured;
b. Reinsurance premiums where the tax has previously been paid;
c. Premiums collected or received by any branch of a domestic corporation, firm or association doing business outside the Philippines on account of any life
insurance of a non-resident insured, if any tax on such premium is imposed by a foreign country where the branch is established;
d. Premiums collected or received on account of any reinsurance, if the insured, in case of personal insurance resides outside the Philippines, if any
tax on such premiums is imposed by a foreign country where the original insurance has been issued or perfected;
e. Portion of the premiums collected or received by the insurance companies on variable contracts, in excess of the amounts necessary to insure the
lives of the variable contract owners.
f. Premium collected by a purely cooperative company or association.

5. Persons subject to VAT

a. Non-life insurance companies including surety, fidelity, indemnity and bonding companies are subject to VAT
b. Pre-need companies
c. Health Maintenance Organizations (HMOs).

6. Insurance and Reinsurance commissions

a. Insurance and reinsurance commissions, whether life or non-life, are subject to VAT

7. Other items subject to the premium tax (RMC No. 49-2010)

a. Premium on Health and Accident Insurance, whether received by a life or non-life insurance company
b. Re-issuance fees, reinstatement fees, renewal fees as well as penalties paid to the life insurance company which are incidental to or in
connection with the insurance policy contracts issued
c Investment income realized from the investment of funds obtained from others allowed and approved by the Insurance Commission.

8. Items earned by life insurance company subject to VAT or percentage tax as the case may be (RMC No. 49-2010)
a. Insurance and reinsurance commissions, whether life or non-life
b. Management fees
c. Rental income
d. Other income earned which can be pursued independently of the insurance business activities

9. Investment income realized from the investment of premiums earned

The interest income earned by the life insurance companies from investing the premiums received in marketable securities, bonds and other
financial instruments is considered exempt from further imposition of business tax since the premiums which have been the source of the funds
invested had already been subject to the premium tax (RMC No. 49-2010).

I. Sec. 124 – Tax on Agents of Foreign Insurance Companies

1. Persons subject to tax (Non-resident Foreign Corporation)

a. Every fire, marine or miscellaneous insurance agent authorized under the Insurance Code to procure policies of insurance on risks located in
the Philippines (Agents of foreign insurance companies – fire/marine or miscellaneous agent)

2. Tax base
a. Total premiums collected

3. Tax rate
a. 4% (equal to twice the tax imposed in Section 123 of NIRC)
4. Direct insurance with foreign insurance companies
a. In all cases where owners of property obtain insurance directly with foreign companies, they shall pay the tax of 5% on premiums paid
(owners of property who obtain insurance directly with foreign companies)

5. Persons Liable:
a. Agents of Non-resident Foreign Corporation engaged in insurance business; and
b. Owners of property directly obtaining insurance to non-resident foreign corporation engaged in insurance business.

6. Agents of Non-resident Foreign Corporation engaged in insurance business

a. Premiums Collected x 4% = Premiums Tax

7. Owners of property directly obtaining insurance to Non-resident Foreign Corporation engaged in insurance companies
a. Premium Payments x 5% = Premiums Tax

J. Sec. 125 – Amusement Taxes

1. Persons subject to tax
Proprietor, operator or lessee of:
a. Cockpits
b. Cabarets, night and day club

4. Other Percentage Tax Page 5 of 15

 c. Boxing exhibitions
d. Professional basketball games
e. Jai-alai and racetracks

2. Tax base and tax rates

Transactions Tax base Tax rates

Boxing exhibitions Gross receipts 10%
Professional basketball games Gross receipts 15%
Cockpits Gross receipts 18%
Cabarets, night and day club Gross receipts 18%
Jai-alai and racetracks Gross receipts 30%

• Note: The term “cabaret, nights and day clubs” includes videoke bars, karaoke bars, karaoke televisions, karaoke boxes and
music lounge. (RMC No. 18-2010)

• Exempt boxing exhibition

Boxing exhibitions wherein World or Oriental Championships in any division is at stake shall be exempt from amusement tax
provided that at least one of the contender is a citizen of Philippines, and said exhibitions are promoted by citizen’s of the Philippines or
by a corporations or associations at least 60% of the capital is owned by such citizens.

• 15% tax on professional basketball games in lieu of all other percentage taxes
The 15% tax on professional basketball games shall be in lieu of all other percentage taxes of whatever nature and description.

• 30% tax and other taxes imposed even if no amount is charged

The 30% tax in the case of jai-alai and racetracks of their gross receipts is irrespective of whether or not any amount is charged for
admission.

3. Meaning of gross receipts

For the purpose of amusement tax, the term “gross receipts” embraces all the receipts of the proprietor, lessee, or operator of the amusement
place. Said gross receipts also include income from television, radio and motion picture right, if any.

4. Collection of tax
a. Tax on winnings shall be deducted from the “dividends” corresponding to each winning ticket or the “prize” of each winning racehorse.
b. Tax on winnings shall be withheld by the operator, manager or person in charge of the horse races before paying the dividends or prizes.

5. Remittance of tax to BIR

a. The operator, manager or person in charge of horse races shall remit the taxes to the BIR within 20 days from the date the tax was deducted
and withheld.

K. Sec. 126 – Tax on Winnings

1. Persons subject to tax
a. Every person who wins in horse races
b. Winning from double, forecast/quinella and trifecta bets
c. Owners of winning race horses

2. Tax base and tax rates

Transactions Tax base Tax rates
Actual amount paid for every winning ticket after deducting the cost of
Person who wins in horse races 10%
the ticket
Actual amount paid for every winning ticket after deducting the cost of
Double, forecast/quinella and trifecta bets 4%
the ticket
Owners of winning race horses Prize 10%
Double- horses must win the two consecutive races.
Forecast- horses must finish 1st and 2nd in either order.
Quinella – a bet where at least the first two finisher must be picked in either order.
Trifecta- horses must finish 1st, 2nd, and 3rd in exact order.

3. Persons Liable:
a. Owners of the winning horse; and
b. Bettor in a horse race or jai-alai

“Owners” of the winning horse:

Prize/ Winnings xxx
Multiply by: 10%
Tax on Winnings xxx

4. Other Percentage Tax Page 6 of 15

 “Bettor” in a horse race or jai-alai:
Gross winnings (Ordinary Winnings) xxx
Less: Cost of the winning tickets (xxx)
xxx
Multiply by: 10%
Tax on Winnings xxx

Gross winnings (Special Winnings)- Double, Forecast, Quinella, Trifecta xxx

Less: Cost of the winning tickets (xxx)
xxx
Multiply by: 4%
Tax on Winnings xxx
.
4. Collection of tax
a. Tax on winnings shall be deducted from the “dividends” corresponding to each winning ticket or the “prize” of each winning racehorse.
b. Tax on winnings shall be withheld by the operator, manager or person in charge of the horse races before paying the dividends or prizes.

5. Remittance of tax to BIR

a. The operator, manager or person in charge of horse races shall remit the taxes to the BIR within 20 days from the date the tax was deducted
and withheld.

L. Sec. 127 (A) – Tax on Sale, Barter, or Exchange of Shares of Stock Listed and Traded Through the Local Stock Exchange
1. Summary
SUMMARY RULE ON SALE OF SHARES OF STOCK
Seller Place of sale Issuer Tax applicable
Dealer in Securities N/A N/A VAT and Basic income tax
Not Dealer in Securities Within LSE N/A Percentage tax
Not Dealer in Securities Outside LSE Domestic corporation Capital gains tax
Not Dealer in Securities N/A Foreign corporation Basic income tax
.
RR 16-2012 prescribes the tax treatment of sales, barters, exchanges or other dispositions of shares of stock of publicly-listed companies
whose public ownership levels fall below the mandatory Minimum Public Ownership (MPO) level

All publicly-listed companies are required, at all times, to maintain a minimum percentage of listed securities held by the public (or “public
float”) of the higher rate of 10% of the publicly-listed companies’ issued and outstanding shares, exclusive of any treasury shares or at such
percentage as may be prescribed by the Securities and Exchange Commission (SEC) or Philippine Stock Exchange (PSE).

Publicly-listed companies which are non-compliant with the Capital Gain Tax
MPO (Tax Base - Net Capital Gain: Tax rate 15%)
Publicly- listed companies which are compliant with the Percentage tax(Stock transaction tax)
MPO (6/10 of 1% of the gross selling price or gross value in money of the shares of
stock).
.
2. Taxes imposed herein shall not apply to the following:
a. Dealers in securities provided that, they shall be subject to Value-Added Tax (VAT) on the basis of their gross receipts and Income Tax from
their sale or exchange of securities.
b. Investors in shares of stock in a mutual fund company in connection with the gains realized by said investor upon redemption of said shares
of stock in a mutual fund company pursuant to Section 32(B)(7)(h) of the NIRC; and
c. All other persons, whether natural or juridical, who are specifically exempt from national internal revenue taxes under existing investment
incentives and other special laws.

3. Transfer of shares of stocks

a. The transfers of shares of stocks under Section 2(B) of the Regulations are subject to DST imposed under Section 175 of the NIRC, as
amended, as implemented by RR No. 13-2004, upon execution of the deed transferring ownership or rights thereto, or upon delivery,
assignment or indorsement of such shares in favor of another. No transfer of shares of stock shall be recorded unless DST thereon has been
duly paid for in accordance with Section 200 of the NIRC, as amended.

b. No sale, exchange, transfer or similar transaction intended to convey ownership of, or title to any share of stock shall be registered in the
books of the corporation unless the receipts of payment of the taxes herein imposed in the instances herein specified and the Certificate
Authorizing Registration (CAR) and/or Tax Clearance Certificate (TCL) under pertinent RR and issuances are filed with and recorded by the
stock transfer agent or secretary of the corporation. It shall be the duty of the aforesaid persons to inform the BIR any case of non-payment of
tax.

M. Sec. 127 (B) – Tax on Shares of Stock in Closely Held Corporation Sold or Exchanged Through Initial Public Offering
1. Person subject to tax

4. Other Percentage Tax Page 7 of 15

 a. Issuing corporation in initial public offering
b. Seller in secondary offering

2. Tax base
a. Gross selling price or gross value in money

3. Tax Proportion shares sold, bartered, exchanged, etc. to total outstanding shares after the listing in the local stock exchange rates

Ratio/Proportion Percentage Tax

Shares sold, bartered, exchanged = Up to 25%
4%
Total outstanding shares = Over 25% but not over 33 1/3%
2%
= Over 33 1/3%
1%
4. Definition of terms
“Initial Public Offering (IPO)”refers to a public offering of shares of stock made for the first time in the Local Stock Exchange.

“Primary Offering” refers to the original sale made to the investing public by the issuer corporation of its unissued Shares of Stock.

“Secondary Offering”refers to an offer for sale to the investing public by the existing shareholders of their securities which is conducted during
an IPO or a follow-on/follow-through offering.

“Follow-on/Follow-through Offering of Shares” refers to an offering of shares to the investing public subsequent to an IPO.
A follow-on follow-through transaction by the issuing corporation is not subject to both income tax and business tax but subject to applicable
documentary stamp taxes.

Notes:
1. A follow-on follow through transaction by the issuing corporationis not subject to both income tax and business tax. Nonetheless, it is
subject to applicable documentary stamp tax.
2. A follow-on follow-through transaction by a shareholder is subject to stock transaction tax under section 127 (A) of the tax code of 6/10
of 1% of gross selling price or gross value in money of the shares of stock sold.

5. Determination of the persons liable to pay the tax

a. Primary Offering. — The tax herein imposed shall be paid by the issuer corporation with respect to the Shares of Stock corresponding to
the Primary Offering.
b. Secondary Offering. — The tax herein imposed shall be paid by the selling shareholder(s) with respect to the Shares of Stock
corresponding to the Secondary Offering.
6. Payment of tax
a. In case of primary offering – The corporate issuer shall file the return and pay the tax within 30 days from the date of listing of the shares
in the local stock exchange
b. In case of secondary offering – The stock broker shall collect the tax and remit the same to BIR within 5 banking days from the date of
collection

7. Gain not subject to capital gains tax and regular income tax
a. Any gain derived from the sale, barter or exchange or other disposition of shares of stock under Sec. 127 shall be exempt from capital gains
tax and from the regular individual and corporate income tax

8. Not deductible for income tax purposes

a. The tax paid on initial public offering and secondary offering shall not be deductible for income tax purposes.

Returns and Payments of Percentage Taxes

A. Monthly Percentage Tax Return – (RR No. 4-2002)
1. The Monthly Percentage Tax Returns of taxpayers, whether large or non-large, shall be filed, and taxes paid, not later than 20th day following
the end of each month.
2. With respect to taxpayers enrolled with the Electronic Filing and Payment System (EFPS), the deadline for e-filling the Monthly Percentage
Tax and e-paying the tax due thereon shall be :
Group A – 25 days following the end of the month
Group B – 24 days following the end of the month
Group C – 23 days following the end of the month
Group D – 22 days following the end of the month
Group E – 21 days following the end of the month

B. Payment of Certain Percentage Taxes

Section Percentage tax Due Date
- In general 20 days from the end of the month
Sec. 120 Tax on overseas dispatch, message or conversation 20 days after the end of the quarter
Sec. 125 Amusement taxes 20 days after the end of the quarter
Sec. 126 Taxes on winnings 20 days after the tax was withheld and deducted
Sec. 127 Taxes on sales, barter or exchange of shares of stock 5 banking days from the date of collection
listed and traded through the local stock exchange
Taxes on public offerings initial public offering (IPO) 30 days from the date of listing of the shares in the local
stock exchange
Secondary public offering 5 banking days from the date of collection

4. Other Percentage Tax Page 8 of 15

Frequency of Percentage Tax reporting
Percentage taxpayer Frequency of
reporting
Persons whose gross annual sales or receipts do not exceed P3,000,000 and who are non-VAT registered Monthly
Domestic carriers and keepers of garage Monthly
Operators of international air and shipping carriers Monthly
Franchise grantees of gas and water Monthly
Franchise grantees of radio and television below the P10 million threshold and who are non-VAT registered Monthly
Banks, quasi-banks and non-bank financial intermediaries Monthly
Life insurance companies Monthly
Agents of foreign insurance Monthly
Franchise grantees of telephone or telegraph for messages transmitted outside the Philippines Quarterly
Proprietors, lessees or operators of cockpits, cabarets, night or day club, boxing exhibitions, professional basketball games, jai-alai and Quarterly
race track

C. Quarterly Percentage tax:

1. BIR Form 2551 Q- Quarterly Percentage Tax Return (In triplicate copies)
2. Manual filing or Filing through EFPS – not later than the 20th day following the end of the quarter

D. Consolidated return of large taxpayers

Large taxpayers shall file a consolidated return and pay the tax accordingly(RR 2-2002, as amended under RR 17-2010):

1. As to tax payments
Percentage tax P200,000 per quarter (preceding year)
VAT P200,000 per quarter (preceding year)
Excise Tax P1,000,000 per year (preceding year)
Income tax P1,000,000 per year (preceding year)
Documentary stamp tax P1,000,000 per year (aggregate annual)
Withholding taxes (all types) P1,000,000 per year (annual)

2. As to financial condition
Gross sales/receipts P1,000,000,000 per year (preceding year)
Net worth P300,000,000 at the close of each calendar or fiscal year (close of each year)
Gross purchases P800,000,000 per year (preceding year)
Per S.E.C lists Top corporations as listed and published by the Securities and Exchange Commission
E. Person whose VAT registration is cancelled
In the case of a person whose VAT registration is cancelled and who becomes liable to the 3% tax on VAT-exempt persons, the tax shall accrue
from the date of cancellation and shall be paid within 20 days after the end of each taxable month

F. Person retiring from a business

Any person retiring from a business subject to percentage tax shall notify the nearest internal revenue officer, file his return and pay the tax due
thereon within 20 days after closing his business

G. Withholding of Percentage Tax

Bureaus, offices and instrumentalities of the government, including government owned and controlled corporations as well as subsidiaries,
provinces, cities and municipalities making any money to private payment individuals, corporations , partnerships and or associations are
required to deduct and withhold the three (3%)taxes due from the payees on account of such money payments.

1. Bureaus, offices and instrumentalities of the Government including government-owned or controlled corporations as well as their subsidiaries,
provinces, cities and municipalities making any money payments to private individuals, corporations, partnership and/or associations are
required to deduct and withhold other percentage taxes
2. Any person, natural or juridical, with respect to his/its purchase in the course of trade or business from non-VAT taxpayers subject to the 3%
percentage tax under Section 116 of the Tax Code shall be subject to a percentage tax withholding at source at a rate of 3% based on the
payee’s or (sellers) sales/receipts. The withholding shall be done if the taxpayer-payee opts to remit his percentage tax through withholding
by filing “ Notice of Availment of the Option to Pay the Tax Through the Withholding Process”

H. Commissioner of Internal Revenue may prescribe a minimum amount of gross receipts

The Commissioner of Internal Revenue may prescribe a minimum amount of gross receipts under the following cases:
1. When a taxpayer fails to issue receipts or invoices
2. When no return is filed
3. When there is reason to believe that the books of accounts or other records do not correctly reflect the transactions made or to be made in
return

I. Place of Filing the Return and Payment of the Percentage Tax

1. Authorized agent bank
2. Revenue District Officer
3. Duly authorized Treasurer of the city or municipality where the business or principal place of business is located, as the case may be
Note: A person liable to percentage tax ( except large taxpayers) may, at his option, file a separate return for each branch or place of business, or
a consolidated return for all branches or places of business

4. Other Percentage Tax Page 9 of 15

 Exercises

A. Determine which of the following transactions are subject to VAT, 3% percentage tax on VAT-exempt persons or neither VAT nor 3% percentage
tax on VAT-exempt persons.
1. Sale of VAT-subject goods by a not VAT-registered seller and whose gross annual sales do not exceed P3,000,000.
2. Services rendered. Service provider is VAT-registered and whose gross annual receipts exceed P3,000,000.
3. Sale of VAT-subject goods by a VAT-registered seller and whose gross annual sales do not exceed P3,000,000.
4. Sale of dried fish (VAT exempt transaction) by a not VAT-registered seller, gross annual sales exceed P3,000,000.
5. Sale of fresh tomatoes(VAT exempt transaction) by a VAT-registered seller, gross annual sales exceed P3,000,000.
6. Sale of fresh tomatoes(VAT exempt transaction) by a not VAT-registered seller, gross annual sales do not exceed P3,000,000.
7. VAT-registered seller of both VAT-subject goods and VAT-exempt goods (optionally registered VAT-exempt sales).

B. Determine which of the following transactions are subject to VAT, 3% common carrier’s tax or neither VAT nor 3% common carrier’s tax.
1. Transport of passengers by land by a VAT-registered domestic common carrier.
2. Transport of passengers by land by a not VAT-registered domestic common carrier.
3. Transport of passengers by land by a not VAT-registered domestic common carrier, whose gross annual sales exceed
P3,000,000.
4. Transport of goods and cargoes by land by a VAT-registered domestic common carrier.
5. Transport of goods and cargoes by land by a not VAT-registered domestic common carrier.
6. Transport of passengers, goods and cargoes by sea by a VAT-registered domestic common carrier.
7. Transport of passengers, goods and cargoes by air by a VAT-registered domestic common carrier.
8. Transport of passengers, goods and cargoes by calesa (two wheeled animal drawn vehicle).
9. Transport of passengers, goods and cargoes by banca.

C. Determine which of the following shall be subject to the common carrier’s tax on international carriers.
1. Fees received by Cathay Pacific on freight and cargo originating from the Philippines. Passage documents were sold in
Singapore. Cathay Pacific is an airline maintaining flight operations to and from the Philippines,
2. Fees received by Malaysian Airlines on freight and cargo originating from Japan. Passage documents were sold in the
Philippines. Malaysian Airlines is an airline maintaining flight operations to and from the Philippines.
3. Gross receipts received by Singapore Airlines from the sale of tickets to passengers originating from the Philippines. Passage
documents were sold in the Philippines. Singapore Airlines is an airline maintaining flight operations to and from the
Philippines.
4. Gross receipts from sale of tickets by an agent of British Airways, an airline with no flight operations to and from the
Philippines, for transport of passenger from Singapore to London.
5. Gross receipts from sale of passage documents by an agent of British Airways, an airline with no flight operations to and from
the Philippines, for transport of goods and cargo from Singapore to London.

D. Determine whether the following transactions are subject to franchise tax, VAT or neither franchise tax nor VAT.
1.Gross receipts on sale of air time by franchise grantee of radio and/or television broadcasting, not VAT-registered. Gross
receipts for the past twelve months were P10,000,000.
2. Gross receipts on sale of air time by franchise grantee of radio and/or television broadcasting, VAT-registered. Gross receipts
for the past twelve months were P10,000,000.
3. Gross receipts on sale of air time by franchise grantee of radio and/or television broadcasting, not VAT-registered. Gross
receipts for the past twelve months were P12,000,000.
4. Gross receipts on sale of air time by franchise grantee of radio and/or television broadcasting, VAT-registered. Gross receipts
for the past twelve months were P12,000,000.
5.Rental fees received by a franchise grantee of radio and/or television broadcasting, not VAT- registered, on lease of a
commercial space, P3,000,000.
6.Rental fees received by a franchise grantee of radio and/or television broadcasting, VAT- registered, on lease of a commercial
space, P1,900,000.
7.Rental fees received by a franchise grantee of radio and/or television broadcasting, not VAT- registered, on lease of a
commercial space, P3,000,000.
8. Gross receipts from sale of gas andwater by a franchise grantee of gas and water utilities, not VAT-registered, P3,000,000.
9. Gross receipts from sale of gas and water by a franchise grantee of gas and water utilities, not VAT-registered, P5,000,000.
10. Gross receipts from sale of gas and water by a franchise grantee of gas and water utilities, VAT-registered, P1,000,000.
11.Rental fees received by a franchise grantee of gas and water utilities, not VAT-registered, on lease of a commercial space,
P3,000,000.
12. Rental fees received by a franchise grantee of gas and water utilities, not VAT-registered, on lease of a commercial space,
P3,919,500.
13. Rental fees received by a franchise grantee of gas and water utilities, VAT-registered, on lease of a commercial space,
P3,000,000.

E`. Determine which of the following transactions shall be subject to the overseas communication tax
1. Calls originating from the Philippines paid by the subscriber in the Philippines
2. Calls originating from the Philippines paid by the receiver of the call outside the Philippines
3. Calls coming into the Philippines paid by the receiver of the call in the Philippines
4. Calls coming into the Philippines paid by the caller outside the Philippines
5. Long distance call from Manila to Bicol
6. Local call from Manila to San Pedro, Laguna

4. Other Percentage Tax Page 10 of 15

F. Determine to which business taxes will the following be subject to
1. Premium on Health and Accident Insurance received by a life insurance company that is not VAT-registered.
2. Premium on Health and Accident Insurance received by a non-life insurance company that is VAT-registered.
3.Life Insurance and reinsurance commissions, received by alife insurance company, not VAT registered and its annual
gross receipts do not exceed P3,000,000.
4. Non-life Insurance and reinsurance commissions, received by a life insurance company, not VAT registered its and annual
gross receipts do not exceed P3,000,000.
5.Life insurance and reinsurance commissions, received by a life insurance company, VAT registered, annual gross receipts
do not exceed P3,000,000.
6.Life Insurance and reinsurance commissions, received by alife insurance company, not VAT registered, annual gross
receipts exceed P3,000,000.
7. Interest income earned by a life insurance company from investing the premiums received in marketable securities, bonds
and other financial instruments.
8. Non-life insurance premiums received by a non-life insurance company that is VAT-registered and gross receipts do not
exceed P3,000,000.
9. Non-life insurance premiums received by a non-life insurance company, not VAT-registered, gross receipts exceed
P3,000,000.
10. Non-life insurance premiums received by a non-life insurance company, not VAT-registered, gross receipts do not
exceed P3,000,000.
11. Management fees received by a life insurance company, not VAT registered but its annual gross receipts exceed
P3,000,000.
12. Rental fees received by a life insurance company, not VAT registered and its annual gross receipts do not exceed
P3,000,000.

Additional Notes:

1. Other items subject to the premium tax (RMC No. 49-2010)

a. Premium on Health and Accident Insurance, whether received by a life or non-life insurance company
b. Re-issuance fees, reinstatement fees, renewal fees as well as penalties paid to the life insurance company which are incidental to or in connection
with the insurance policy contracts issued
c Investment income realized from the investment of funds obtained from others allowed and approved by the Insurance Commission.

2. Items earned by life insurance company subject to VAT or percentage tax as the case may be (RMC No. 49-2010)
a. Insurance and reinsurance commissions, whether life or non-life
b. Management fees
c. Rental income
d. Other income earned which can be pursued independently of the insurance business activities

3. Investment income realized from the investment of premiums earned

The interest income earned by the life insurance companies from investing the premiums received in marketable securities, bonds and other
financial instruments is considered exempt from further imposition of business tax since the premiums which have been the source of the funds
invested had already been subject to the premium tax (RMC No. 49-2010).

PROBLEMS

A. Mr. Bam ” lover boy” Apepe, single, owns a store specializing on beauty products. His gross sales in the previous calendar year did not exceed
the VAT threshold amount of P3,000,000. He is not VAT-registered. The following data for last month were as follows:
Gross sales 500,000
Purchases from VAT-registered suppliers 450,000
Purchases from not VAT-registered suppliers 150,000

How much is the percentage tax due and payable?

B. World Transportation Company, a domestic common carrier that transport passenger and cargoes by land, sea and air within the Philippines and
abroad. It had the following data for last month:
On land carriers:
Gross receipts from cargoes (Manila to Quezon) P500,000
Gross receipts from passengers (Manila to Bataan) 700,000
On sea carriers:
Gross receipts from cargoes (Cebu to Samar) 900,000
Gross receipts from passengers (Bohol to Dumaguete) 1,000,000
Gross receipts from cargoes (Zamboanga to Malaysia) 2,000,000
On air carriers:
Gross receipts from cargoes (Ilocos to China) 3,000,000
Gross receipts from passengers (Cagayan toBatanes) 400,000

Operating expenses for last month were P 5,600,000 and are allocated as follows: land carriers,
20%; sea carriers 35% and air carriers, 45%.

Question #1 – How much is the percentage tax?

Question #2 – How much is the output value-added tax?

4. Other Percentage Tax Page 11 of 15

 C. Fly and Fly, an air carrier had the following data:
Cargo fees for cargo originating from the Philippines to Australia, passage documents were
sold, issued and paid in Australia) P5,000,000
Deposits applied as payments for freight fees, for goods originating from the Philippines to Australia 6,000,000
Mail fees for mails originating from India in a continuous and uninterrupted flight to
the Philippines. Passage documents were sold, issued and paid in the Philippines) 4,000,000
Advance payments for cargo originating from the Philippines in a continuous and
uninterrupted flight to Malaysia (passage documents sold in Malaysia) 3,000,000
Other service charges and fees for cargo originating from the Philippines in a continuous and
uninterrupted flight to Malaysia (passage documents sold in Malaysia) 3,000,000
Receipts from sales of tickets to passengers originating from the Philippines in a
continuous and uninterrupted flight to Japan (tickets sold in the Philippines) 3,000,000
Amounts deposited in the bank account of Fly and Fly Air carrier from sales of passage documents for cargo
originating from the Philippines in a continuous and uninterrupted flight to Japan (tickets sold in Japan) 4,000,000

Expenses incurred in the Philippines 7,500,000

Expenses incurred in other countries 9,500,000

Questions:
1.How much is the common carrier’s tax due from the air carrier assuming it is an international carrier doing business in the Philippines?
2. How much is the VAT due from the air carrier assuming it is a domestic air carrier?

D.Luke Daniela franchisee, VAT registered had the following data on revenues and receivables, taxes not included:
Cash revenues from operations granted by the franchise P300,000
Total revenues from operations granted by the franchise not including the cash revenues of P300,000 500,000
Total cash receipts (includes collections of receivables from operations granted by the franchise but not
including the cash revenues of P300,000) 500,000

Cash revenues from operations not granted by the franchise P200,000

Total revenues from operations not granted by the franchise including the cash revenues of P200,000 500,000
Total cash receipts (includes collections of receivables from operations not granted by the franchise
including the cash revenues of P200,000) 700,000

What business tax is due and how much, if he is a franchise grantee of :

1. water and gas utilities.
2. electric utility.
3. PAGCOR.

E. Earl Gavrie made local and overseas calls last month:

Overseas calls:
Originating from the Philippines:
Paid by the Earl Gavriein the Philippines P85,000
Paid by the receiver of the call outside the Philippines 24,000
For calls coming into the Philippines:
Paid by Earl Gavrie 25,000
Paid by callers from abroad 35,000

Local calls, paid by Earl Gavrie:

Long distance 10,000

Question 1 - How much is the value-added tax billed to Earl Gavrie, a person engaged in business?
Question 2 – How much is the percentage tax billed to Earl Gavrie, a person engaged in business?
Question 3 - How much is the value-added tax billed to Earl Gavrie, a field reporter of CNN?
Question 4 – How much is the percentage tax billed to Earl Gavrie, an Ambassador of the USA?

F. Pilipino Bank, a domestic bank had the following data for theprevious month. Compute the percentage tax for the month.

Rentals from personal and real and property, gross of applicable tax P500,000
Royalties, net of applicable tax 372,000
Dividend income from investments in stocks, gross of applicable tax 500,000
Equity shares in the net income of subsidiaries, gross of applicable tax 600,000
Net trading gains within the taxable year on foreign currency, debt securities, derivatives and other similar financial
instruments, gross of applicable tax 500,000
Gross receipts on interest, commissions and discounts from lending activities net of applicable tax, on instruments with
maturities of:
Four years and less 450,000
Seven years 990,000

G. P operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter follow: Gross receipts (cockpit operation)
P800,000; Income from telivision P400,000; Sale of food P40,000

4. Other Percentage Tax Page 12 of 15

Required:
1. How much is the amusement tax due from P?
2. What is the BIR Form Return to be filed?
3. When is the last day for the filing of percentage tax return?
4. Using the above data, except that the restaurant is not owned by P but its owned by another person. B, not VAT registered and whose annual gross
sales never exceeded P3,000,000. The amusement tax due from P is_____
5. Continuing the preceding number, the percentage tax due from B is_____

H. PareX Corporation, a closely-held corporation, has an authorized capital stock of 1,000,000 shares and with par value of Php1.00/share as of
January 15, 2016. Of the 1,000,000 authorized shares, 250,000 shares were subscribed and fully paid up by the following stockholders: Mr.Earl
Garcia, 50,000; Mr. Bam Apepe, 50,000; Mr. GorMacariola, 50,000; Mr.IvanBagayao, 50,000; Ms.Mirasol, 50,000.

In February 2017, PareX Corporation decided to conduct an IPO and offered 250,000 of its unissued shares to the investing public at P2.00 per
share. After the IPO in June 2017, PAReXCorporation’s total issued shares increased from 250,000 to 500,000 shares. At the IPO, one of the
existing stockholders, Ms.Mirasol, decided to sell her entire 50,000 shares to the public at P2.00 per share. Thus, 250,000 shares have been offered
in the primary offering and 50,000 shares in the secondary offering.

Question 1: How much is the percentage tax on the primary offering? P5.000
Question 2: How much is the percentage tax on the secondary offering of Ms.Mirasol’s shares? P4,000
Question 3: How much is the percentage tax due assuming Ms. Mirasolsells her shares at P3.00 per share after the IPO? P750

Tax Treatment of “ Passed on Gross Receipt Tax” Under Section 121 and 122 (RMC 62-2016)

The “passed-on” GRT should form part of the tax base upon which the GRT is based for gross receipt tax purposes, based on the definition of gross
receipts, that is based on actual or constructive receipt of income. Since bank, non-bank financial instermediaries, financing companies and other
financial intermediaries not performing quasi-banking functions doing business in the Philippines are directly liable for GRT on gross receipts
dereived by them from business operations, the “passed-on” GRT shall be considered as receipt of gross income specificied under Section 32 (A) of
the Tax Code.

Passed on GRT: Tax Rate

Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-banking Functions 7%
Tax on Finance Companies/Tax on Other Non-Bank Financial Intermediaries 5%

The “passed-on” GRT are considered as other fees and charges. The classification of passed on GRT as other fees and charges is consistent with the
implementing rules issued by the BSP through BSP Circular No. 370 (Updated Rules Implementing the Truth in Lending Act to Enhance Loan
Transaction Transparency dated July 20, 2011. Pertinent portions of which reads, Finance charge includes interest, fees, service charges, discounts,
and such other charges incident to the extension of credit.

Can the “Passed-on” GRT be claimed by the customer/client/borrower as a deduction for income tax purposes?
• Yes. Passsed on GRT (as other fees) under Section 34 of the Tax Code, subject, however, to the requirements for the deductibility under
Section 2.58.5 of RR No. 2-98, as amended by RR No. 12-2013.

What is the propert tax treatment by Banks and non-bank financial intermediaries on the “passed-on” GRT for income tax purposes?
• Banks and non-bank financial intermediaries can claim the GRT paid as deductible expense for income tax purposes pursuant to Section 34
(C) of the Tax Code subject to the actual remittance of the GRT as provided under Section 128 of the Tax Code.
• On the other hand, the interest charge tohe client-borrower and the the “passed-on” GRT shall be considered as receipt of income as
specified under Section 32 of the Tax Code.

PROBLEM
ABC Bank extended a P2,000,000, 20% per annum short-term loan to Makababa Company and shifted the 5% GRT due on the interest collectible
from Makababa Company for loans extended by ABC Bank to Makababa Company

Required:
1. How much is the gross receipt tax?
2. Assuming the creditor is a non-bank financial intermediary not performing quasi-banking functions, how much is the gross receipt tax?
3. How much should the creditor include in its gross income as as result of the foregoing transaction?
4. How much can the creditor (Bank) claim as deductible expense?
5. How much can Makababa Company claim as deductible expense?

RMO 2-2018 (MICRO-Finance)

The following policies and guidelines shall be observed by all concerned in the implementation of RA No. 10693:
1. Microfinance NGOs with duly issued Certificate of Accreditation from the Microfinance NGO Regulatory Council (or “Council”) shall be eligible
to avail of the 2% gross receipt tax on income from microfinance operations in lieu of all national taxes;

2. Preferential tax treatment shall be accorded only to NGOs whose primary purpose is microfinance and only on their microfinance operations
catering to the poor and low-income individuals in alignment with the main goal of the Act to alleviate poverty;

4. Other Percentage Tax Page 13 of 15

3. Certificate of Accreditation issued by the Council shall be an essential requirement for granting the 2% preferential tax treatment of Microfinance
NGOs;

4. The word “Microfinance” shall be included in the corporate and trade name of the Microfinance NGO;

5. The preferential rate of 2% tax based on gross receipts from microfinance operations should only refer to lending activities and insurance
commission which are bundled and forming integral part of the qualified lending activities of the Microfinance NGOs;

6. All other income by the Microfinance NGOs which are not generated from the lending activities and insurance commissions, shall be subject to all
applicable taxes;

7. Duly registered and accredited Microfinance NGOs, as well as their clients, shall be required to have a Taxpayer Identification Number (TIN);

8. Microfinance NGOs already registered with the BIR shall update their registration with the concerned Revenue District Office (RDO) using BIR
Form No. 1905 to reflect their accreditation as Microfinance NGOs;

9. Every Microfinance NGO shall maintain books of accounts and other pertinent records and shall be subject to periodic examination by revenue
enforcement officers of the BIR. In case Microfinance NGO engages in other businesses, it shall maintain separate books of accounts for the same;

10. Every Microfinance NGO shall apply for Authority to Print (ATP) Receipts/Invoices (BIR Form No. 1906). In case Microfinance NGO engages
in other business, it shall apply for ATP for use of the other business.

11. Microfinance NGOs shall use BIR Form No. 2551M (Monthly Percentage Tax Return) in filing and paying the 2% preferential tax rate; and

12. Microfinance NGOs shall be constituted as a withholding agent for the government if they act as an employer and that any of their employees
received compensation income subject to withholding tax on compensation, or if they make payments to individuals or corporations subject to
withholding taxes at source.

Notes:
Tag Microfinance NGO with Certificate of Accreditation from the Council as “Microfinance NGO” to qualify for the two percent (2%) tax based on
its gross receipts from microfinance operations in lieu of all national taxes and shall have the following tax types:
i. Income Tax, for form type purposes only
ii. Percentage Tax
iii. Withholding compensation – if with employee
iv. Withholding expanded – if with payments subject to withholding tax at source

OTHER PERCENTAGE TAXES (SUMMARIZED)

Percentage Tax Tax Basis Tax Rate
Sec. 116 – Tax on persons Gross Monthly Sales or Receipts 3%
exempt from VAT under Sec.
109 (B) (annual gross sales or
receipts do not exceed
P3,000,000)
Sec. 117 – Percentage tax on Actual or Minimum Gross Receipts whichever is higher 3%
domestic carriers and keepers Areas of Business Operations
of garages (Transport of Minimum Quarterly Gross Receipts Manila and other cities Provinces
passengers) – land 1. Jeepney for hire P2,400 P1,200
2. Public Utility Bus
Not exceeding 30 passengers P3,600 P3,600
Exceeding 30 but not exceeding 50 ….passengers
Exceeding 50 passengers P6,000 P6,000
P7,200 P7,200
3. Taxis P3,600 P2,400
4. Car for hire with chauffeur P3,000 P3,000
5. Car for hire without chauffeur P1,800 P1,800
.
Sec. 118 – Percentage tax on Monthly Gross Receipts 3%
International air/shipping
carriers doing business in the
Philippines
Sec. 119 – Tax on franchises Gross Receipts:
Frachises on gas and water utilities 2%
Frachises on Radio and television broadcasting companies whose annual gross receipts of the preceding 3%
year do not exceed P 10,000,000 and did not opt to register as VAT taxpayer Gross Receipts

Except from RMC 33-2013, PAGCOR is subject to a franchise tax.

Gross revenue or earnings 5%
Sec. 120 – Tax on overseas Amount paid for such services ( by the person who used the communication facilities) 10%
dispatch, message or
conversation originating from Exempted from Sec. 120 are:

4. Other Percentage Tax Page 14 of 15

 Percentage Tax Tax Basis Tax Rate
the Philippines 1. Government
2. Diplomatic services
3. International organizations
4. News services
Sec. 121 – Tax on banks and Gross receipts on interest, commissions and discounts from lending activities ; income from financing
non-bank financing leasing:
intermediaries performing
quasi –banking functions
Remaining Maturity period of instrument is 5 years or less (Not in excess of 5 years) 5%
Remaining Maturity period of instrument is More than 5 years (In excess of 5 years) 1%
Dividends and equity shares and net income of subsidiaries 0%
Royalties, rentals of properties, real or personal, profits from exchange and all other items treated as
7%
gross income under Sec. 32 of the Code
Net trading gains within the taxable year on foreign currency, debt securities, derivatives and other
7%
similar financial instruments
Gross receipts derived from interest, discounts, commission and other items of gross income paid to
Sec. 122 – Tax on Finance finance companies and other financial intermediaries not performing quasi banking functions (From 5%
Companies/Other Non-Bank Other Sources)
Financial Intermediaries
Interest, commissions and discounts paid from their loan transactions from finance companies as well as
income from financial leasing: (From Lending)
Remaining Maturity period is 5 years or less 5%
Remaining Maturity period is more than 5 years 1%

Sec. 123 – Tax Life Insurance

Total premiums collected 2%
Companies (except purely
cooperative companies or
associations)

Sec. 124 – Tax on Agents of Total premiums collected/paid

foreign insurance companies
(Fire, marine or miscellaneous 4%
Generally (agents of foreign insurance companies (fire/marine or miscellaneous agent)
insurance): (except
reinsurance premium)
Owners of property obtain insurance directly with foreign insurance companies
5%
Gross receipts
Jai-alai and race track 30%
Cockpits, cabarets, night or day clubs 18%
Sec. 125 – Amusement taxes
Professional basketball games 15%
Boxing exhibitions 10%
Actual amount paid for every winning ticket after deducting the cost of the ticket 10%
Sec. 126 – Tax on winnings Winnings from double, forecast/quinella and trifecta bets 4%
Prize of winning race horse owners 10%
Sec. 127 (A) Every stock
broker who effected a sale,
barter, exchange or other
disposition of shares of stock Gross selling price or gross value in money of shares of stocks sold, bartered, exchanged or otherwise
6/10 of 1 %
listed and traded through the disposed
Local Stock Exchange
(LSE) other than the sale by a
dealer in securities

(B)A corporate
issuer/stock broker, whether
domestic of foreign, engaged
in the sale, barter, exchange or Gross selling price or gross value of in money of shares of stocks sold, bartered, exchanged or otherwise
other disposition through disposed in accordance with the proportion of stocks sold, bartered or exchanged or after listing in the
Initial Public Offering stock exchange
(IPO)/Secondary Public
Offering of shares of stock in
closely held corporations • Up to 25 % 4%

• Over 25% but not over 33 1/3% 2%

• Over 33 1/3 % 1%

4. Other Percentage Tax Page 15 of 15