OTHER PERCENTAGE TAXES (“OPT”)

In lieu of the VAT, OPTs are imposed on the following persons/ transactions:

1. SECTION 116: TAX ON PERSONS EXEMPT FROM VAT

Persons subject a. Non-VAT registered
b. Annual sales or receipts does not exceed < P1,919,500

XPN: Marginal Income Earners

Tax 3% of gross receipts or sales
Optional VAT May apply for registration as VAT-subject persons not later than 10 days before
registration beginning of the taxable quarter
Cancellation of VAT Persons exempt under VAT but elects to be VAT-registered shall not be allowed to
Registration cancel the registration for the next 3 years
Persons exempt from a. Cooperatives
3% GRT XPN: Sales of goods and or services to non-members with accumulated reserves
and undivided net earnings of more than > P10,000,000
b. Fees, per diems, allowance, and other income received by corporate directors of
which they are not employees
c. Marginal Income Earners or self-employed
Gross sales or receipts does not exceed < P100,000 during any 12-month period
d. VAT-Registered, regardless of level of sales
e. Non-exempt from VAT and NOT VAT-Registered but gross annual sales or
receipts exceeds > P1,919,500

2. SECTION 117: COMMON CARRIER’S TAX

- % tax on domestic carriers and keepers of garage

Persons subject a. Cars for rent or for hire driven by the lessee
b. Transportation contractors including persons who transport passengers
c. Domestic carriers by land for passengers
d. Keepers of garage

XPN: Banca owners

Owners of animal-drawn two-wheeled vehicles
Tax 3% of gross sales or receipts from the transport of passengers
HIGHER
of minimum level

Provided the gross sales or receipts > minimum levels provide by law

DOMESTIC CARRIER
Jeep for hire QUARTERLY:
1. Provincial P1,200
2. Manila and other cities P2,400
Public Utility Bus
1. Not exceeding 30 passengers P3,600
2. Exceeding 30 but not exceeding
50 passengers P6,000
3. Exceeding 50 passengers P7,200
Taxis
1. Provincial P2,400
2. Manila and other cities P3,600
Car for hire (w/o chauffeur) P1,800
Car for hire (w/ chauffeur) P3,000

Exemption from local Gross receipts of common carriers derived from incoming and outgoing freight shall not
taxes be subject to the local taxes imposed under the Local Government Code of the
3. SECTION 118: % TAX ON INTERNATIONAL CARRIERS (FOREIGN CARRIERS)
Persons subject International air carriers doing business in the Philippines
International shipping carriers doing business in the Philippines
Tax 3% of gross receipts from the transport of CARGO from Philippines to another country
Off-line international Not subject to 3% common carrier’s tax on international carriers
carrier having
branch/office as a sales
agent in the Philippines

LAND AIR SEA

Passenger 3% OPT VAT VAT
Domestic Carriage
Cargo VAT VAT VAT

International Carriage by: LAND AIR SEA

0% VAT 0% VAT
Passenger x
No OPT No OPT
Domestic Corp
0% VAT 0% VAT
Cargo x
No OPT No OPT

VAT Exempt VAT Exempt

Passenger x
Foreign Corp. No OPT No OPT
Cargo x 3% OPT OPT

4. SECTION 119: FRANCHISE TAX

Persons subject a. Radio and or television broadcasting companies whose annual gross receipts or
sale of the preceding year does not exceed < P10,000,000 and did not choose to
be registered under VAT system
b. Gas and water utilities

Tax Radio or television broadcasting with 3% of gross receipts from the

gross annual receipts < P10,000,000 business covered by the law
granting the franchise
Gas and water utilities 2% of gross receipts derived from the
business covered by the law
granting the franchise
PAGCOR 5% of gross receipts
Electric Utility VATABLE

Optional VAT a. Radio and or television broadcasting companies whose annual gross receipts does
Registration not exceed < P10,000,000 may opt to register as VAT taxpayer within 10 days
before the beginning of the calendar quarter
b. Once exercised, it shall not be revoked

5. SECTION 120: OVERSEAS COMMUNICATIONS TAX

- Originating from the Philippines (International Calls); Domestic Calls – VATABLE
Persons subject a. Payor of the service (person paying for the services rendered)
b. Payee (person/entity rendering the service) collects and remits the tax to the BIR
within 20 days after the end of each quarter
Persons not subject to a. Diplomatic services
tax (DING) b. International organizations
c. News services
– The messages must deal exclusively with the collection or dissemination of news
items
d. Philippine Government
Tax 10% of the amount paid for the service
Examples a. Telephone
b. Telegraph
c. Telewriter exchange
d. Wireless and other communication equipment services

SOURCE DESTINATION
Phil. Phil. VATABLE
Phil. Abroad 10% OC Tax
Abroad Phil. 0% VAT
6. SECTION 121: TAX ON BANKS AND NON-BANKS FINANCIAL INTERMEDIARIES PERFORMING QUASI-
BANKING FUNCTIONS (“GRT”)
Persons subject a. Banks
b. Non-banks financial intermediaries performing quasi-banking functions
Pawnshops, money changers, money remittances

Tax Gross receipts on interest, commissions and discounts from lending

a. Interest Inc. activities; income from financial leasing
(Loans)
b. Dividend Inc. Remaining maturity period instrument is:
c. Others 5 years or less 5%
More than 5 years 1%
On dividends and equity shares and net income of subsidiaries 0%
On royalties, rentals of property (real or personal), profits from
exchange, and all other items treated as gross income under Section
32 of the Tax Code 7%
On net trading gains within the taxable year on foreign currency, debt
securities, derivatives, and other similar financial instruments 7%

Note: BSP is not a bank nor a non-bank financial intermediary. In the performance
of its proprietary functions, it shall not be subject to the percentage tax.

7. SECTION 122: TAX ON FINANCE COMPANIES

Persons subject a. Finance
b. Other non-banks financial intermediaries not performing quasi-banking functions

Tax On interest, commissions and discounts from lending activities;

a. Interest Inc. income from financial leasing
(Loans)
b. Dividend Inc. Remaining maturity period instrument is:
c. Others 5 years or less 5%
More than 5 years 1%
On gross receipts derived from interest, commissions, discounts, and
all other items treated as gross income under the Tax Code 5%

8. SECTION 123: TAX ON LIFE INSURANCE PREMIUMS (PREMIUM TAX)

Persons subject Any person or entity offering life insurance in the Philippines
XPN: Purely cooperative companies or associations
Tax 2% of gross premiums collected + promissory notes

Gross Premiums includes:

a. Re-insurance fees
b. Reinstatement fees
c. Renewal fees
d. Penalties paid to the insurance company in connection with the insurance
policy
e. Premiums on health and accident insurance
Life Insurance Premiums:
a. Management fee – VAT-able
b. Investment – No VAT, no OPT
c. Life Insurance - OPT
Persons subject to VAT a. Non-life insurance companies including surety, fidelity, indemnity and bonding
companies
XPN: Crop Insurance
b. Pre-need companies
c. Health Maintenance Organizations (HMOs)
9. SECTION 124: TAX ON AGENTS OF FOREIGN INSURANCE COMPANIES
Persons subject a. Every fire, marine, or miscellaneous insurance agent authorized under the
Insurance Code to procure policies of insurance on risks located in the Philippines
for companies not authorized to transact business in the Philippines
b. For owners of property who obtain insurance directly with foreign companies

Tax For fire, marine, or miscellaneous 4% of premiums collected

insurance agent
For owners of property who obtain 5% of premiums paid
insurance directly with foreign
companies

Exemptions Does not apply to reinsurance premiums

10. SECTION 125: AMUSMENT TAXES

Persons subject Proprietor, operator or lessee of:
a. Cockpits;
b. Cabarets, night and day clubs;
c. Boxing exhibitions;
d. Professional basketball games;
e. Jai-alai and race tracks

Tax Boxing 10% of gross receipts

XPN:
1. The world or oriental title is at
Stake
2. One of the contenders is a
Per event
Filipino citizen
3. Is promoted by a Filipino citizen
or corporation/association which
is > 60% owned by Filipinos
Professional basketball games 15% of gross receipts
Cabarets, cockpits, night and day clubs 18% of gross receipts
Includes videoke bars, karaoke bars,
karaoke televisions, karaoke boxes
Per establishment
and music lounge.
Jai-alai 30% of gross receipts
Race Tracks 30% of gross receipts

Gross receipts includes Admission charges, rents, and income from television, radio, and motion picture rights.
Notes: a. If the proprietor or lessee or operator of the amusement place also operates at the
same time within premises, a bar or restaurant, the receipts of the bar or restaurant
shall form part of gross receipts subject to the amusement tax above.
b. If such bar or restaurant in (a) is operated by a third person, the gross receipts
thereof shall be subject either to VAT or to OPT under Section 116.

11. SECTION 126: WINNINGS (FROM HORSE RACES)

Persons subject a. Persons who win horse races
b. Owners of winning race horses

Tax Winnings in horse races 10% of winnings or “dividends”

Basis: Actual amount paid for every

winning ticket after deducting the cost
of the ticket

Owners of winning race horses 10% of winnings or “dividends”

Winning from double, forecast/quinella,
and trifecta bets in horse races
4% of winnings or “dividends”
Basis: Actual amount paid for every
winning ticket after deducting the cost
of the ticket

Note: The tax shall be withheld by the operator, manager, or person in charge of the horse
races before paying the dividends or prizes.
12. SECTION 127: STOCK TRANSACTION TAX
A. Sale, Barter, or Exchange of Shares Listed and Traded Through the Local Stock Exchange
(SEC.127(A), NIRC)
Persons subject Seller or transferor of shares of stock
Persons not subject a. Dealers in securities
b. Investors in shares of stock in a mutual fund company upon redemption of said
shares of stock in a mutual fund
c. Those specifically exempt from national internal revenue taxes under existing
investment incentives and other special laws
Tax ½ of 1% of the gross selling price

B. Sale or Exchange Through Initial Public Offering (“IPO”) of Shares of Stocks in Closely-Held
Corporations (Sec.127(B), NIRC)
Closely-held At least 50% of the value of the outstanding capital stock or the total combined voting
corporation power of all classes of stock entitled to vote is owned directly or indirectly by not more
than 20 persons
Initial Public Offering 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 IPO
Follow-on/follow- Refers to an offering of shares to the investing public subsequent to an IPO
through offering of
shares

Persons subject Seller or transferor of shares of stock

Tax 4%
2% On the gross selling price or gross value in money of the shares of stocks sold
1%

In accordance with:

Shares sold, bartered, exchanged Up to 25% - 4%

Total outstanding shares of stocks Over 25% but not over 33 ½% - 2%
(after listing in LSE) Over 33 ½% - 1%
Payment of tax 1. In case of primary offering
- The corporate issuer shall file the return, and pay
the corresponding tax within 30 days from the date
of listng of the shares of stock in the local stock
exchange
2. In case of secondary offering
- The stockbroker sho effected the sale shall collect
the tax, and remit the same to the BIR within 5
days from the date of collection

IPO Tax (S.O)

IPO DATE
½ OF 1% GSP
INVESTOR

CORPO
No tax (follow-through offer)
PSE
IPO Tax (P.O)
RETURN AND PAYMENTS OF PERCENTAGE TAXES
Generally, filing and payment of 1. Not later than 20 days after the end of each month
percentage taxes shall be:
XPN: Payment of Certain Percentage
Taxes
Advance other percentage tax
Where to file return
2. For taxpayers who avail of the Electronic Filing and Payment System
(“EFPS”)
a. Monthly Percentage Tax Returns
- Shall be e-filed in a consolidated return
and staggered basis (25A, 24B, 23C,
22D, 21E) days following the end of the
month
- Payment tax due via the EFPS shall be 5
days later than the deadlines for filing
b. Quarterly Percentage Tax Returns
- Shall be e-filed in a consolidated return
and staggered basis according to the
taxpayer’s classification.
- The aggregate percentage taxes due
shall be e-paid within 25 days after the
end of each taxable quarter
Overseas communication tax 20 days after the end of the quarter
Amusement tax 20 days after the end of the quarter
Tax on winnings 20 days after the tax was withheld and
deducted
Stock transaction tax 5 banking days from the date of
collection
30 days from the date of listing of
shares in the local stock exchange
Sale of Sugar Gross annual sales do not exceed <
(Other than “raw cane sugar”) P1,919,500; Not VAT-registered
3% of gross monthly receipts or sales
Shall be paid in advance by the owner
or seller before any warehouse receipt
or quedans are issued, or before the
sugar is withdrawn from any sugar
refinery or mill
Transport of naturally grown 3% on the corresponding value per
and planted timber products cubic meter of the different species of
naturally grown and planted timber
products in accordance with the
schedules issued by the BIR.
Sale of jewelry, gold, and
other metallic minerals to
non-resident individual not
engaged in business in the
Philippines and or non-
resident foreign
corporation
a. Authorized Agent Bank
b. Revenue District Officer
c. Revenue Collection Officer
d. Duly authorized Treasurer of the city or municipality where the
business or principal place of business is located, as the case may
be.