NATURE OF BUSINESS

Business – trade or commercial activities which are

“regularly engaged in” as means of livelihood or with a
POV of obtaining profit.

FUNDAMENTAL CONSIDERATIONS
1. Related to trade, profession, or business (TPB)
2. Occurred within the PH
3. Not exempted by law from business tax.

CHARACTERISTICS OF TAXABLE BUSINESS

TRANSACTIONS
1. Regular Transactions
- Performing habitual, systematic, continuous,
and regular income generating activities.
- Casual or personal economic activity is not
considered business.
- RULE OF REGULARITY, determines whether or
not an economic transaction is subject to
business tax.
- [GR] commercial activities engaged into by
dealers of goods or services are subject to
business tax.
- [Exceptions to the rule of regularity] (a) sale of
services by a NRFP, (b) sale of goods by NRFP.
They are subject to VAT w/o regard to the rule
of regularity.
2. Incidental Transactions
- Only accompanying transactions but not the
major part of the business activities.
- Incidental transactions subject to business
taxes:
(a) Sale of Scrap Materials
(b) Sale of ordinary assets used in business
other than inventory.
(c) Transactions deemed sales [not actual sales
and are irregular in nature]
3. Transactions Pursued by Profit or Nonprofit Entity
- If the entity failed to secure Certificate of Tax
Exemption, or failed to renew the said
Certificate within the prescribed period, it can
be subject to business and income taxes.
- “failure to renew the Tax Exemption Ruling
shall be deemed revocation thereof upon the
expiration of the 3-year period”