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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

c. Franchise grantees of

radio and/or television broadcasting whose

gross annual receipts for the preceding year do not
exceed Php 10,000,000.00 and did not opt to register
as VAT taxpayers

gas and water utilities

d. Overseas dispatch, message or conversation transmitted from the Philippines,

except those transmitted by the Philippine government, any embassy and consular
offices of a foreign government, public international organizations enjoying
exemptions pursuant to an international agreement and news messages to a bona
fide correspondent furnishing general news service

e. Banks and non-bank financial intermediaries performing quasi-banking functions

f. Other non-bank financial intermediaries (including pawnshops)

g. Person, company or corporation (except purely cooperative companies or

associations) doing life insurance business

h. Fire, marine or miscellaneous agents of foreign insurance companies

i. Proprietor, lessee or operator of cockpits, 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