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F. Other Percentage Taxes "SEC. 119. Tax on Franchises.

- Any provision of general or special law to the


contrary notwithstanding, there shall be levied, assessed and collected in respect to
Percentage Tax is a business tax imposed on persons or entities who sell or lease all franchises on radio and/or television broadcasting companies whose annual gross
goods , properties or services in the ordinary course of trade or business whose gross receipts of the preceding year does not exceed Ten million pesos (P10,000,000),
annual sales or receipts do not exceed P1.5 million and are not VAT-registered. subject to Section 236 of this Code, a tax of three percent (3%) and on gas and water
utilities, a tax of two percent (2%) on the gross receipts derived from the business
I.Legal Provisions covered by the law granting the franchise: Provided, however, That radio and
a. Rep. Act No. 9238 (amended Sections 116, 117, 119 and 121 of 1997 NIRC) television broadcasting companies referred to in this Section shall have an option to
be registered as a value-added taxpayer and pay the tax due thereon: Provided,
SEC. 13. Section 116 of the same Code, as amended, is hereby further amended to further, That once the option is exercised, said option shall be irrevocable.
read as follows:
"The grantee shall file the return with, and pay the tax due thereon to the
"SEC. 116. Tax on Persons Exempt from Value-Added Tax (VAT). - Any person Commissioner or his duly authorized representative, in accordance with the
whose sales or receipts are exempt under Section 109 (V) of this Code from the provisions of Section 128 of this Code, and the return shall be subject to audit by the
payment of VAT and who is not a VAT-registered person shall pay a tax equivalent to Bureau of Internal Revenue, any provision of any existing law to the contrary
3% of his gross quarterly sales or receipts: Provided, That cooperatives shall be notwithstanding."
exempt from the 3% gross receipts tax herein imposed."
SEC. 16. Section 121 of the same Code, as amended, is hereby further amended to
SEC. 14. Section 117 of the same Code, as amended, is hereby further amended to read as follows:
read as follows:
"SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-
"SEC. 117. Percentage Tax on Domestic Carriers and Keepers of Garages. - Cars for Banking Functions. - There shall be collected a tax on gross receipts derived from
rent or hire driven by the lessee; transportation contractors, including persons who sources within the Philippines by all banks and non-bank financial intermediaries in
transport passengers for hire, and other domestic carriers by land for the transport of accordance with the following schedule:
passengers (except owners of bancas and owners of animal-drawn two wheeled
vehicle), and keepers of garages shall pay a tax equivalent to three percent (3%) of "(a) On interest, commissions and discounts from lending activities as well as income
their quarterly gross receipts. from financial leasing, on the basis of remaining maturities of instruments from which
such receipts are derived:
"The gross receipts of common carriers derived from their incoming and outgoing
freight shall not be subjected to the local taxes imposed under Republic Act No. 7160, Maturity period is five years or less 5%
otherwise known as the Local Government Code of 1991. Maturity period is more than five years 1%

"In computing the percentage tax provided in this Section, the following shall be "(b) On dividends and equity shares and net income of subsidiaries 0%
considered the minimum quarterly gross receipts in each particular case:
"(c) On royalties, rentals of property, real or personal, profits, from exchange and all
"Jeepney for hire - other items treated as gross income under Section 32 of this Code 7%
"1. Manila and other cities P2,400
"2. Provincial 1,200 "(d) On net trading gains within the taxable year on foreign currency, debt securities,
derivatives, and other similar financial instruments 7%
"Public utility bus-
"Not exceeding 30 passengers P3,600 "Provided, however, That in case the maturity period referred to in paragraph (a) is
"Exceeding 30 but not exceeding 50 passengers 6,000 shortened thru pre-termination, then the maturity period shall be reckoned to end as
"Exceeding 50 passengers 7,200 of the date of pre-termination for purposes of classifying the transaction and the
correct rate of tax shall be applied accordingly.
Taxis -
"1. Manila and other cities P3,600 "Provided, finally, That the generally accepted accounting principles as may be
"2. Provincial 2,400 prescribed by the Bangko Sentral ng Pilipinas for the bank or non-bank financial
intermediary performing quasi-banking functions shall likewise be the basis for the
SEC. 15. Section 119 of the same Code, as amended, is hereby further amended to calculation of gross receipts.
read as follows:
"Nothing in this Code shall preclude the Commissioner from imposing the same tax
herein provided on persons performing similar banking activities."
II. 3% Percentage Taxes
b. Rev. Regs. No. 9-2004 a. Tax on Persons Exempt from VAT (Section 116)
c. Sections 116-128, NIRC b. Amendments of Section 116 under Rep. Act No. 10963 (TRAIN) on Increase
in Threshold to P3M.
OTHER PERCENTAGE TAXES
SEC. 116. Tax on Persons Exempt from VAT. - Any person whose sales or receipts
(As Last Amended by RA Nos. 8761, 9010, 9238, 9337 & 10001) are exempt under Section 109(BB) of this Code from the payment of VAT and who is
not a VAT-registered person shall pay a tax equivalent to 3% of his gross quarterly
SEC. 128. Returns and Payment of Percentage Taxes. - sales or receipts: Provided, That cooperatives, and beginning January 1, 2019, self-
employed and professionals with total gross sales and/or gross receipts not
(A) Returns of Gross Sales, Receipts or Earnings and Payment of Tax. - exceeding P500,000 shall be exempt from the 3% gross receipts tax herein imposed.

(1) Persons Liable to Pay Percentage Taxes. - Every person subject to the III. Distinct Percentage Taxes
percentage taxes imposed under this Title shall file a quarterly return of the amount of a. Common Carriers Tax
his gross sales, receipts or earnings and pay the tax due thereon within twenty-five 1. Domestic Section 117
(25) days after the end of each taxable quarter: Provided, That in the case of a person
whose VAT registration is cancelled and who becomes liable to the tax imposed in SEC. 117. Percentage Tax on Domestic Carriers and Keepers of Garages. - Cars for
Section 116 of this Code, the tax shall accrue from the date of cancellation and shall rent or hire driven by the lessee, transportation contractors, including persons who
be paid in accordance with the provisions of this Section. transport passengers for hire, and other domestic carriers by land, for the transport of
passengers [except owners of bancas] and owners of animal-drawn two wheeled
(2) Person Retiring from Business. - Any person retiring from a business subject to vehicle), and keepers of garages shall pay a tax equivalent to 3% of their quarterly
percentage tax shall notify the nearest internal revenue officer, file his return and pay gross receipts.
the tax due thereon within twenty (20) days after closing his business.
The gross receipts of common carriers derived from their incoming and outgoing
(3) Exceptions. - The Commissioner may, by rules and regulations, prescribe: freight shall not be subjected to the local taxes imposed under Republic Act No.
7160, otherwise known as the Local Government Code of 1991.
(a) The time for filing the return at intervals other than the time prescribed in the
preceding paragraphs for a particular class or classes of taxpayers after considering In computing the percentage tax provided in this Section, the following shall be
such factors as volume of sales, financial condition, adequate measures of security, considered the minimum quarterly gross receipts in each particular case:
and such other relevant information required to be submitted under the pertinent
provisions of this Code; and Jeepney for hire -
1. Manila and other Cities P 2,400
(b) The manner and time of payment of percentage taxes other than as hereinabove 2. Provincial 1,200
prescribed, including a scheme of tax prepayment.
Public utility bus -
(4) Determination of Correct Sales or Receipts. - When it is found that a person has
failed to issue receipts or invoices, or when no return is filed, or when there is reason Not exceeding 30 passengers P 3,600
to believe that the books of accounts or other records do not correctly reflect the Exceeding 30 but not exceeding 50 passengers 6,000
declarations made or to be made in a return required to be filed under the provisions Exceeding 50 passengers 7,200
of this Code, the Commissioner, after taking into account the sales, receipts or other
taxable base of other persons engaged in similar businesses under similar situations Taxis -
or circumstances, or after considering other relevant information may prescribe a 1. Manila and other Cities P 3,600
minimum amount of such gross receipts, sales and taxable base and such amount so 2. Provincial 2,400
prescribed shall be prima facie correct for purposes of determining the internal
revenue tax liabilities of such person. Car for hire (with chauffer) P 3,000
Car for hire (without chauffer) 1,800
(B) Where to File. - Except as the Commissioner otherwise permits, every person
liable to the percentage tax under this Title may, at his option, file a separate return
for each branch or place of business, or a consolidated return for all branches or 2. International Section 118
places of business with the authorized agent bank, Revenue District Officer, 3. Amendments under Rep. Act No. 10378
Collection Agent or duly authorized Treasurer of the city or municipality where said
business or principal place of business is located, as the case may be. SEC. 118 Percentage Tax on International Carriers. -
enjoying privileges, exemptions and immunities which the Government of the
(A) International air carriers doing business in the Philippines on their gross receipts Philippines is committed to recognize pursuant to an international agreement; and
derived from transport of cargo from the Philippines to another country shall pay a
tax of 3% of their quarterly gross receipts. (4) News Services. - Amounts paid for messages from any newspaper, press
association, radio or television newspaper, broadcasting agency, or newstickers
(B) International shipping carriers doing business in the Philippines on their gross services, to any other newspaper, press association, radio or television newspaper
receipts derived from transport of cargo from the Philippines to another country broadcasting agency, or newsticker service or to a bona fide correspondent, which
shall pay a tax equivalent to 3% of their quarterly gross receipts. messages deal exclusively with the collection of news items for, or the dissemination
of news item through, public press, radio or television broadcasting or a newsticker
b. Tax on Franchises Section 119 service furnishing a general news service similar to that of the public press.

SEC. 119. Tax on Franchises. - Any provision of general or special law to the contrary d. Banks and Non-Bank Financial Intermediaries Performing Quasi-
notwithstanding, there shall be levied, assessed and collected in respect to all Banking Functions
franchises on radio and/or television broadcasting companies whose annual 1. Section 121
gross receipts of the preceding year do not exceed P10,000, subject to Section 236
of this Code, a tax of 3% and on gas and water utilities, a tax of 2% on the gross SEC. 121. Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-
receipts derived from the business covered by the law granting the franchise: Banking Functions. - There shall be collected a tax on a gross receipt derived from
Provided, however, That radio and television broadcasting companies referred to in sources within the Philippines by all banks and non-bank financial intermediaries in
this Section shall have an option to be registered as a value-added taxpayer and pay accordance with the following schedule:
the tax due thereon: Provided, further, That once the option is exercised, said option
shall not be irrevocable. (a) On interest, commissions and discounts from lending activities as well as income
from financial leasing, on the basis of remaining maturities of instruments from which
The grantee shall file the return with, and pay the tax due thereon to the such receipts are derived:
Commissioner or his duly authorized representative, in accordance with the
provisions of Section 128 of this Code, and the return shall be subject to audit by the Maturity period is five years or less 5%
Bureau of Internal Revenue, any provision of any existing law to the contrary Maturity period is more than five years 1%
notwithstanding.
(b) On dividends and equity shares and net income of subsidiaries
c. Overseas Communication Tax Section 120 0%
(c) On royalties, rentals of property, real or personal, profits, from exchange and all
SEC. 120. Tax on Overseas Dispatch, Message or Conversation Originating from the other items treated as gross income under Section 32 of this Code 7%
Philippines. - (d) On net trading gains within the taxable year on foreign currency, debt securities,
derivatives, and other similar financial instruments 7%
(A) Persons Liable. - There shall be collected upon every overseas dispatch,
message or conversation transmitted from the Philippines by telephone, telegraph, Provided, however, That in case the maturity period referred to in paragraph (a) is
telewriter exchange, wireless and other communication equipment service, a tax of shortened thru pre-termination, then the maturity period shall be reckoned to end as
10% on the amount paid for such services. The tax imposed in this Section shall be of the date of pre-termination for purposes of classifying the transaction and the
payable by the person paying for the services rendered and shall be paid to the correct rate of tax shall be applied accordingly.
person rendering the services who is required to collect and pay the tax within 20
days after the end of each quarter. Provided, finally, That the generally accepted accounting principles (GAAP) as may
be prescribed by the BSP for the bank or non-bank financial intermediary performing
(B) Exemptions. - The tax imposed by this Section shall not apply to: quasi-banking functions shall likewise be the basis for the calculation of gross
receipts.
(1) Government. - Amounts paid for messages transmitted by the Government of the
Republic of the Philippines or any of its political subdivisions or instrumentalities; Nothing in this Code shall preclude the Commissioner from imposing the same tax
herein provided on persons performing similar banking activities.
(2) Diplomatic Services. - Amounts paid for messages transmitted by any embassy
and consular offices of a foreign government; 2. RMC 69-2003 - Clarifying the tax base for purposes of the percentage
(gross receipts ) tax imposed under Sections 121 and 122 of the Tax Code
(3) International Organizations. - Amounts paid for messages transmitted by a 3. China Banking Corporation vs. CA, CTA and CIR, G.R. No. 146749 and
public international organization or any of its agencies based in the Philippines G.R.147938 dated June 10, 2003
xxx position of the Bureau under RMC No. 51-2002 (November 14, 2002) that for Thus, the interest income actually received by the lending bank, both physically and
purposes of the gross receipts tax, the basis of the tax should be the gross amount constructively, is net interest plus the amount withheld as final tax. The concept of a
inclusive of the final withholding tax used in extinguishing the income tax liability of withholding tax on income obviously and necessarily implies that the amount of the
the recipient of the income, to wit: tax withheld comes from the income earned by the taxpayer. Since the amount of the
tax withheld constitutes income earned by the taxpayer, then that amount manifestly
“xxx xxx xxx” forms part of the taxpayer’s gross receipts. Because the amount withheld belongs to
the
“By its nature, a gross receipts tax applies to the entire receipts without deduction, taxpayer, he can transfer its ownership to the government in payment of his tax
exemption or exclusion, unless the law clearly provides otherwise.” liability. The amount withheld indubitably comes from income of the taxpayer, and
thus forms part of his gross receipt.”
“xxx xxx xxx”
“xxx xxx xxx”
“Moreover, when Section 121 of the Tax Code includes “interest” as part of gross
receipts, it refers to the entire interest earned and owned by the bank without any “The gross receipts tax falls not on the final withholding tax, but on the amount of the
deduction. “Interest” means the gross amount paid by the borrower to the lender as interest income withheld as the final tax. What is being taxed is still the interest
consideration for the use of the lender’s money. Section 2(h) of Revenue Regulations income. The law imposes the gross receipts tax on that portion of the interest income
No. 12-80, now Section 2(i) of Revenue Regulations No. 17-84, defines the term that the depository bank withholds and remits to the government. Consequently, the
“interest” as “the amount which a depository bank (borrower) may pay on savings and entire
time deposit in accordance with rates authorized by the Central Bank of the amount of the interest income is taxable and not only the net interest income.
Philippines.” This definition does not allow any deduction. The entire interest paid by Moreover, whenever the legislature excludes a certain tax from gross receipts, the
the depository bank, without legislature states so clearly and unequivocally.”
any deduction, is what forms part of the lending bank’s gross receipts. To illustrate,
assume that the gross amount of the interest income is P100. The lending bank owns “xxx xxx xxx”
this entire P100 since this is the amount the depository bank pays the lending bank
for use of the lender’s money. In its books the depository bank records an interest “In summary, CBC has failed to point to any specific provision of law allowing the
expense of P100 and claims a deduction for interest expense of P100. The 20% final deduction, exemption or exclusion, from its taxable gross receipts, of the amount
withholding tax on this interest income is P20, which the law requires the depository withheld as final tax. Such amount should therefore form part of CBC’s gross receipts
bank to withhold and remit directly to the government. The depository bank withholds in computing the gross receipts tax.”
the final tax in trust for the government which then becomes the owner of the P20.
The final tax is the legal liability of the lending bank as recipient of the interest income. “WHEREFORE, the Petition for Review filed by China Banking Corporation in G.R.
The payment of the P20 final tax extinguishes the tax liability of the lending bank. The No. 146749 is DENIED for lack of merit. The Petition for Review filed by the
interest income that the depository bank turns over physically to the lending bank is Commissioner of Internal Revenue in G.R. No. 147938 is GRANTED. The assailed
P80, the net receipt after deducting the P20 final tax. Still, the interest income that decisions and resolutions of the Court of Tax Appeals in CTA Case No. 5405 and
forms part of the lending bank’s gross receipts for purposes of the gross receipts tax those of the Court of Appeals in CA G.R. SP No. 50839 and CA-G.R. SP No. 50790
is P100 because the total amount earned by the lending bank from its passive are SET ASIDE. SO ORDERED.”
investment is P100, not P80. Stated differently, the lending bank paid P20 as final tax
which is 20% of the interest income it e. Other Non-Bank Financial Intermediaries Section 122
received. Logically, the lending bank’s interest income is P100 to arrive at a P20 final
withholding tax. Since what the law includes in gross receipts is the interest income, SEC. 122. Tax on Other Non-Bank Financial Intermediaries. - There shall be collected
then it is P100 and not P80 which forms part of the lending bank’s gross receipts. If a tax of 5% on the gross receipts derived by other non-bank financial intermediaries
the lending bank’s interest income is only P80, then its 20% final withholding tax doing business in the Philippines, from interests, commissions, discounts and all
should only be P16.” other items treated as gross income under this code.: Provided, That interests,
commissions and discounts from lending activities, as well as income from financial
“xxx xxx xxx” leasing, shall be taxed on the basis of the remaining maturities of the instruments
from which such receipts are derived, in accordance with the following schedule:
“Actual receipt of interest income is not limited to physical receipt. Actual receipt may
either be physical receipt or constructive receipt. When the depository bank withholds Maturity period is five years or less 5%
the final tax to pay the tax liability of the lending bank, there is prior to the withholding Maturity period is more than five years 1%
a
constructive receipt by the lending bank of the amount withheld. From the amount Provided, however, That in case the maturity period is shortened thru pre-termination,
constructively received by the lending bank, the depository bank deducts the final then the maturity period shall be reckoned to end as of the date of pre-termination for
withholding tax and remit it to the government for the account of the lending bank.
purposes of classifying the transaction and the correct rate of tax shall be applied SEC. 125. Amusement Taxes. - There shall be collected from the proprietor, lessee or
accordingly. operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional
basketball games, Jai-Alai and racetracks, a tax equivalent to:
Provided, finally, That the GAAP as may be prescribed by the SEC for other non-bank
financial intermediaries shall likewise be the basis for the calculation of gross receipts. (a) 18% in the case of cockpits;

Nothing in this Code shall preclude the Commissioner from imposing the same tax (b) 18% in the case of cabarets, night or day clubs;
herein provided on persons performing similar financing activities.
(c) 10% in the case of boxing exhibitions: Provided, however, That boxing
f. Tax on Life Insurance Premiums Section 123 exhibitions wherein World or Oriental Championships in any division is at stake
shall be exempt from amusement tax: Provided, further, That at least 1 of the
SEC. 123. Tax on Life Insurance Premiums. - There shall be collected from every contenders for World or Oriental Championship is a citizen[s] of the Philippines
person, company or corporation (except purely cooperative companies or and said exhibitions are promoted by a citizen/s of the Philippines or by a
associations) doing life insurance business of any sort in the Philippines a tax of 2% corporation or association at least 60% of the capital of which is owned by such
of the total premium collected, whether such premiums are paid in money, notes, citizens;
credits or any substitute for money; but premiums refunded within 6 months after
payment on account of rejection of risk or returned for other reason to a person (d) 15% in the case of professional basketball games as envisioned in Presidential
insured shall not be included in the taxable receipts; nor shall any tax be paid Decree No. 871: Provided, however, That the tax herein shall be in lieu of all other
upon reinsurance by a company that has already paid the tax; nor upon doing percentage taxes of whatever nature and description; and
business outside the Philippines on account of any life insurance of the insured
who is a nonresident, if any tax on such premium is imposed by the foreign country (e) 30% in the case of Jai-Alai and racetracks - of their gross receipts,
where the branch is established nor upon premiums collected or received on account irrespective, of whether or not any amount is charged for admission.
of any reinsurance , if the insured, in case of personal insurance, resides outside
the Philippines, if any tax on such premiums is imposed by the foreign country For the purpose of the amusement tax, the term 'gross receipts' embraces all the
where the original insurance has been issued or perfected; nor upon that portion of receipts of the proprietor, lessee or operator of the amusement place. Said
the premiums collected or received by the insurance companies on variable contracts gross receipts also include income from television, radio and motion picture
(as defined in Section 232(2) of Presidential Decree No. 612), in excess of the rights, if any. A person or entity or association conducting any activity subject to the
amounts necessary to insure the lives of the variable contract workers. tax herein imposed shall be similarly liable for said tax with respect to such portion of
the receipts derived by him or it.
'Cooperative companies or associations' are such as are conducted by the
members thereof with the money collected from among themselves and solely for The taxes imposed herein shall be payable at the end of each quarter and it shall
their own protection and not for profit. be the duty of the proprietor, lessee or operator concerned, as well as any party
liable, within 20 days after the end of each quarter, to make a true and complete
g. Tax on Agents of Foreign Insurance Companies Section 124 return of the amount of the gross receipts derived during the preceding quarter
and pay the tax due thereon.
SEC. 124. Tax on Agents of Foreign Insurance Companies. - Every fire, marine or
miscellaneous insurance agent authorized under the Insurance Code to procure i. Tax on Winnings Section 126
policies of insurance as he may have previously been legally authorized to transact
on risks located in the Philippines for companies not authorized to transact SEC. 126. Tax on Winnings. - Every person who wins in horse races shall pay a tax
business in the Philippines shall pay a tax equal to twice the tax imposed in equivalent to 10% of his winnings or 'dividends', the tax to be based on the actual
Section 123: Provided, That the provision of this Section shall not apply to amount paid to him for every winning ticket after deducting the cost of the ticket:
reinsurance: Provided, however, That the provisions of this Section shall not affect Provided, That in the case of winnings from double, forecast/quinella and trifecta
the right of an owner of property to apply for and obtain for himself policies in bets, the tax shall be 4%. In the case of owners of winning race horses, the tax
foreign companies in cases where said owner does not make use of the services of shall be 10% of the prizes.
any agent, company or corporation residing or doing business in the Philippines. In all
cases where owners of property obtain insurance directly with foreign companies, The tax herein prescribed shall be deducted from the 'dividends' corresponding to
it shall be the duty of said owners to report to the Insurance Commissioner and to the each winning ticket or the 'prize' of each winning race horse owner and withheld by
Commissioner each case where insurance has been so effected, and shall pay the the operator, manager or person in charge of the horse races before paying the
tax of 5% on premiums paid, in the manner required by Section 123. dividends or prizes to the persons entitled thereto.

h. Amusement Taxes Section 125 The operator, manager or person in charge of horse races shall, within 20 days from
the date the tax was deducted and withheld in accordance with the second
paragraph hereof, file a true and correct return with the Commissioner in the (2) Family and Partnership Ownerships. - An individual shall be considered as owning
manner or form to be prescribed by the Secretary of Finance, and pay within the the stock owned, directly or indirectly, by or for his family, or by or for his partner. For
same period the total amount of tax so deducted and withheld. purposes of the paragraph, the 'family of an individual' includes only his brothers
and sisters (whether by whole or half-blood), spouse, ancestors and lineal
j. Stock Transaction Tax Section 127 descendants.

1. Stock Transaction Tax (3) Option. - If any person has an option acquire stock, such stock shall be
2. Amendments of Section 127 under Rep. Act No. 10963 (TRAIN) on Increase considered as owned by such person. For purposes of this paragraph, an option to
in rate from ½ of 1% to 6/10 of 1% acquire such an option and each one of a series of options shall be considered as an
3. Tax on IPOs option to acquire such stock.

SEC. 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded (4) Constructive Ownership as Actual Ownership. - Stock constructively owned by
through the Local Stock Exchange or through Initial Public Offering. - reason of the application of paragraph (1) or (3) hereof shall, for purposes of
applying paragraph (1) or (2), be treated as actually owned by such person; but
(A) Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through stock constructively owned by the individual by reason of the application of
the Local Stock Exchange.- There shall be levied, assessed and collected on every paragraph (2) hereof shall not be treated as owned by him for purposes of again
sale, barter, exchange, or other disposition of shares of stock listed and traded applying such paragraph in order to make another the constructive owner of such
through the local stock exchange other than the sale by a dealer in securities, a stock.
tax at the rate 6/10 of 1% of the gross selling price or gross value in money of the
shares of stock sold, bartered, exchanged or otherwise disposed which shall be paid (C) Return on Capital Gains Realized from Sale of Shares of Stocks. -
by the seller or transferor.
(1) Return on Capital Gains Realized from Sale of Shares of Stock Listed and Traded
(B) Tax on Shares of Stock Sold or Exchanged Through Initial Public Offering. - There in the Local Stock Exchange. - It shall be the duty of every stock broker who
shall be levied, assessed and collected on every sale, barter, exchange or other effected the sale subject to the tax imposed herein to collect the tax and remit the
disposition through initial public offering of shares of stock in closely held same to the Bureau of Internal Revenue within 5 banking days from the date of
corporations, as defined herein, a tax at the rates provided hereunder based on the collection thereof and to submit on Mondays of each week to the secretary of the
gross selling price or gross value in money of the shares of stock sold, bartered, stock exchange, of which he is a member, a true and complete return which shall
exchanged or otherwise disposed in accordance with the proportion of shares of stock contain a declaration of all the transactions effected through him during the
sold, bartered, exchanged or otherwise disposed to the total outstanding shares of preceding week and of taxes collected by him and turned over to the Bureau Of
stock after the listing in the local stock exchange: Internal Revenue.

Up to 25% 4% (2) Return on Public Offerings of Shares of Stock. - In case of primary offering, the
Over 25% but not over 33 1/3% 2% corporate issuer shall file the return and pay the corresponding tax within 30 days
Over 33 1/3% 1% from the date of listing of the shares of stock in the local stock exchange. In the
case of secondary offering, the provision of Subsection (C) (1) of this Section shall
The tax herein imposed shall be paid by the issuing corporation in primary offering apply as to the time and manner of the payment of the tax.
or by the seller in secondary offering.
(D) Common Provisions. - any gain derived from the sale, barter, exchange or other
For purposes of this Section, the term 'closely held corporation' means any disposition of shares of stock under this Section shall be exempt from the tax
corporation at least 50% in value of outstanding capital stock or at least 50% of imposed in Sections 24(C), 27(D)(2), 28(A)(8)(c), and 28(B)(5)(c) of this Code and
the total combined voting power of all classes of stock entitled to vote is owned from the regular individual or corporate income tax. Tax paid under this Section
directly or indirectly by or for not more than 20 individuals. shall not be deductible for income tax purposes.

For purposes of determining whether the corporation is a closely held IV. Return & Payment of Percentage Taxes
corporation, insofar as such determination is based on stock ownership, the a. BIR Form 2551M
following rules shall be applied: b. BIR Form 2551Q for Section 120
c. BIR Form 2552 for Section 127
(1) Stock Not Owned by Individuals. - Stock owned directly or indirectly by or for a d. BIR Form 1600 WP for Section 126
corporation, partnership, estate or trust shall be considered as being owned e. BIR Form 1600
proportionately by its shareholders, partners or beneficiaries.