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National Taxes in the Philippines

Capital Gains Tax – is a tax imposed on the
gains presumed to have been realized by the
seller from the sale, exchange, or other
disposition of capital assets located in the
Philippines, including pacto de retro sales and
other forms of conditional sale.
Documentary Stamp Tax – is a tax on
documents, instruments, loan agreements and
papers evidencing the acceptance,
assignment, sale or transfer of an obligation,
rights, or property incident thereto. Examples
of documentary stamp tax are those that are
charged on bank promissory notes, deed of
sale, and deed of assignment on transfer of
shares of corporate stock ownership.
Donor’s Tax – is a tax on a donation or gift,
and is imposed on the gratuitous transfer of
property between two or more persons who
are living at the time of the transfer. Donor’s
tax is based on a graduated schedule of tax
Estate Tax – is a tax on the right of the
deceased person to transmit his/her estate to
his/her lawful heirs and beneficiaries at the
time of death and on certain transfers which
are made by law as equivalent to testamentary
disposition. Estate tax is also based on a
graduated schedule of tax rate.
Income Tax – is a tax on all yearly profits
arising from property, profession, trades or
offices or as a tax on a person’s income,
emoluments, profits and the like. Selfemployed individuals and corporate taxpayers
pay quarterly income taxes from 1st quarter to
3rd quarter. And instead of filing quarterly
income tax on the fourth quarter, they file and
pay their annual income tax return for the
taxable year. Individual income tax is based on
graduated schedule of tax rate, while
corporate income tax in based on a fixed rate
prescribe by the tax law or special law.
Percentage Tax – is a business tax imposed
on persons or entities who sell or lease goods,
properties or services in the course of trade or
business whose gross annual sales or receipts
do not exceed the amount required to register
as VAT-registered taxpayers. Percentage
taxes are usually based on a fixed rate. They

are usually paid monthly by businesses or
professionals. However, some special
industries and transactions pay percentage tax
on a quarterly basis.
Value Added Tax – is a business tax imposed
and collected from the seller in the course of
trade or business on every sale of properties
(real or personal) lease of goods or properties
(real or personal) or vendors of services. It is
an indirect tax, thus, it can be passed on to the
buyer, causing this to increase the prices of
most goods and services bought and paid by
consumers. VAT returns are usually filed and
paid monthly and quarterly.
Excise Tax – is a tax imposed on goods
manufactured or produced in the Philippines
for domestic sale or consumption or any other
disposition. It is also imposed on things that
are imported.
Withholding Tax on Compensation – is the
tax withheld from individuals receiving purely
compensation income. This tax is what
employers withheld in their employees’
compensation income and remit to the
government through the BIR or authorized
accrediting agent.
Expanded Withholding Tax – is a kind of
withholding tax which is prescribed only for
certain payors and is creditable against the
income tax due of the payee for the taxable
quarter year. Examples of the expanded
withholding taxes are those that are withheld
on rental income and professional income.
Final Withholding Tax – is a kind of
withholding tax which is prescribed only for
certain payors and is not creditable against the
income tax due of the payee for the taxable
year. Income Tax withheld constitutes the full
and final payment of the Income Tax due from
the payee on the said income. An example of
final withholding tax is the tax withheld by
banks on the interest income earned on bank
Withholding Tax on Government Money
Payments – is the withholding tax withheld by
government offices and instrumentalities,
including government-owned or -controlled
corporations and local government units,
before making any payments to private

as amended. within the province. Certain Products – an annual fixed tax for every truck. creeks. van or any vehicle used by manufacturers. and others of similar nature. or operators of theaters. cigars and cigarettes. engaged in or doing business in the Philippines. sand. Fees for Sealing and Licensing of Weights and Measures – fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan of the municipality or city. cinemas. circuses. Professional Tax – an annual professional tax on each person engaged in the exercise or practice of his profession requiring government examination. as defined under the National Internal Revenue Code. boxing stadia. barter. in the case of cities and Thirty thousand pesos (P30. donation. Amusement Tax – tax collected from the proprietors. or realized. at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt. dealers or retailers in the delivery or distribution of distilled spirits. and other quarry resources. Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers. within its territorial jurisdiction. soft drinks. Service Fees or Charges – fees or charges that may be collected by the barangays for . fishery privileges to erect fish corrals.000.individuals. e. Community tax is also imposed on every corporation no matter how created or organized. lakes. certificates. as amended. cards. Local Taxes in the Philippines Tax on Transfer of Real Property Ownership – tax imposed on the sale. concert halls. and other products as may be determined by the sangguniang panlalawigan. leaflets. at a rate not exceeding one percent (1%) on such gross sales or receipts. Fishery Rentals. partnerships and/or associations. Tax on Business of Printing and Publication – tax on the business of persons engaged in the printing and/or publication of books. or on any other mode of transferring ownership or title of real property.00) or less. This is usually what businesses pay to get their Business Mayor’s Permit. producers. corporations. handbills. oysters. Tax on Business – taxes imposed by cities. earth. receipts. or consumers. Gravel and Other Quarry Resources – tax imposed on ordinary stones. rivers.000. fees or charges imposed by the municipality/city to grantees of fishery privileges in the municipal/city waters. or who is required by law to file an income tax return.. Fees and Charges – rentals. wholesalers. Community Tax – tax levied by cities or municipalities to every inhabitant of the Philippines eighteen (18) years of age or over who has been regularly employed on a wage or salary basis for at least thirty (30) consecutive working days during any calendar year.00) or more. mussels or other aquatic beds or bangus fry areas and others as mentioned in the local government code. gravel. whether directly or indirectly. lessees. Taxes that may be levied by the barangays on stores or retailers with fixed business establishments with gross sales of receipts of the preceding calendar year of Fifty thousand pesos (P50. Tax on Sand. to sales outlets. or who owns real property with an aggregate assessed value of One thousand pesos (P1. Take note that the rates may vary among cities and municipalities. Franchise Tax – tax on businesses enjoying a franchise. whether domestic or resident foreign.00) or less.000. posters.g. in the case of municipalities. or Retailers in. extracted from public lands or from the beds of seas. streams. or who is engaged in business or occupation. pamphlets. municipalities on businesses before they will be issued a business license or permit to start operations based on the schedule of rates prescribed by the local government code. fermented liquors. and other places of amusement. Dealers. as amended. and other public waters within its territorial jurisdiction. Wholesalers of.

services rendered in connection with the regulations or the use of barangay-owned properties or service facilities. . Barangay Clearance – a reasonable fee collected by barangays upon issuance of barangay clearance – a document required for many government transactions. such as palay. or tobacco dryers. such as when applying for business permit with the city or municipality. copra.