OTHER PERCENTAGE

TAXES

Prof. Jeanefer Reyes CPA, MPA

1. TAX ON PERSONS EXEMPT FROM VAT (NON-VAT under Sec 116)
TRANSACTIONS SUBJECT: Sale, lease of goods or properties, or
performance of services.
RATE AND BASE: 3% of gross selling price or gross receipts
Requisites:
1. The gross annual sales or receipts do not exceed P 3 million;
AND
2. Must not be a VAT registered taxpayer.

Exemption from 3% Non-VAT

3. Self-employed individuals and professionals whose annual
gross sales/receipts and other non-operating income do not
exceed P3 million and who opted for 8% income tax option.
4. Cooperatives
 COMMON CARRIERS’ TAX: Domestic Carriers
Who are subject?
1. Cars for rent or hire driven by the lessee;
2. Transportation contractors on land, including persons who
transport passengers for hire;
3. Other domestic carriers by land for transport of passengers,
except owners of bancas and owners of animal-drawn two-
wheeled vehicles; and
4. Keepers of garages.

 RATE AND BASE: 3% of gross receipts

 Transport Network Vehicle Service (GRAB)
Status GRAB/Partner
With CPC (franchise) 3% CCT
Without CPC 12% VAT or 3% non-VAT
COMMON CARRIERS TAX: INTERNATIONAL CARRIERS
 Who are subject? International air carriers and international
shipping carriers doing business in the Philippines.
 Rule on international carriers:
Business Tax Passengers Cargoes
Value-Added Tax Exempt Exempt
Common Carriers Tax Exempt 3% on outgoing

 Rate and Base: 3% of gross receipts

 Gross receipts shall include, but shall not be limited to, the
total amount of money or its equivalent representing the
contract, freight/cargo fees, mail fees, deposits applied as
payments, advance payments and other service charges
and fees actually or constructively received during the
taxable quarter from cargo and/or mail, originating from the
Philippines in a continuous and uninterrupted flight,
irrespective of the place of sale or issue and the place of
payment of the passage documents.
4. FRANCHISE TAX
 Who are subject? Franchise holders of:
1. Radio and/or television broadcasting companies whose annual gross receipts
of the preceding year do not exceed P10 million - 3%
2. Gas and water utilities - 2%
 All other franchise holders shall pay the VAT. The radio and television
broadcasting companies shall have an option to be registered as a value-added
taxpayer and pay the tax due thereon.
 Once this option is exercised, it becomes irrevocable.
5. TAX ON AGENTS OF FOREIGN INSURANCE COMPANY
Tax Rate and Tax Base:
1. 4% of the total premium collected shall be imposed upon every fire, marine
or miscellaneous insurance agent authorized under the Insurance Code to
procure policies or insurance as he may have previously been legally authorized
to transact on risks located in the Philippines for companies not authorized to
transact business in the Philippines.
2. 5% on premiums paid shall also be imposed on owners of property who obtain
insurance directly with foreign insurance companies.
 This tax shall not apply to reinsurance premiums.
5. BANKS AND NON-BANK FINANCIAL INTERMEDIARIES PERFORMING
QUASI-BANKING FUNCTIONS
Tax Base – Gross Receipts derived from sources within the Philippines
Tax Rates:
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 such receipts are derived:
Maturity period is 5 years or less 5%
Maturity period is more than 5 years 1%
b. On dividends and equity shares in the net income of subsidiaries 0%
c. On royalties, rentals of property, real or personal, profit from exchange and all other items treated as gross income under 7%
Sec 32 of the Code
d. On net trading gains within the taxable year on foreign currency, debt securities, derivatives and other similar financial 7%
instruments

In case the maturity period is shortened thru pretermination, then the maturity
period shall be reckoned to end as of the date of pretermination for purposes of
classifying the transaction and the correct rate of tax shall be applied accordingly.
8. TAX ON OVERSEAS DISPATCH, MESSAGE, OR CONVERSATION (OVERSEAS
COMMUNICATIONS TAX)
RATE AND BASE: 10% of the amount paid upon every overseas dispatched,
message or conversation transmitted from the Philippines (outgoing) by telephone,
telegraph, telewriter exchange, wireless and other communications equipment
services.
Exemptions – This tax shall not apply to:
1. Government
2. Diplomatic services
3. International organizations
4. News services
5. Time for filing – The person rendering services shall collect and pay the tax
within 20 days after the end of each quarter.
9. AMUSEMENT TAX
The following amusement places shall be subject to the corresponding tax rates
based on gross receipts:
10% Place for boxing exhibitions
15% Place for professional basketball games
18% Cockpits, cabarets, night or day clubs
30% Jai-Alai and race tracks
Boxing exhibitions where World or Oriental Championships in any division is at
stake shall be exempt from amusement tax, if -
1. one of the contenders is a citizen of the Philippines; and
2. said exhibitions are promoted by
(a) citizens of the Philippines or
(b)(b) by a corporation or association at least 60% of the capital of which is owned
by such citizens.
10. TAX ON WINNINGS
Persons subject: Any person who –
1. Wins in horse races.
2. Owns a winning race horse, based on the prize.

Tax Rate and Tax Base:

a. Winner in horse races . . . . . . . . 10%

But if from:
Double, forecast, quinella and trifecta bets - 4%
BASE: Actual amount of winnings or dividends on every ticket after deducting the
cost of ticket.

b. Owner of winning horse - 10% of the prize

FILING AND PAYMENT– The operator, manager or person in charge of horse races
shall file and pay within 20 days from the date the tax was deducted and withheld.
11. STOCK TRANSACTION TAX
Tax Base: Gross selling price
On the sale, barter, exchange or other disposition of shares listed and traded thru a local stock
exchange, other than by a dealer in securities- 6/10 of 1%
Filing and payment – Within 5 banking days from the date of collection.
On the sale, barter, exchange or other disposition thru initial public offering of shares of stock in a
closely-held corporation, in accordance with the proportion of the shares sold, bartered, exchanged or
otherwise disposed of to the total outstanding shares of stock after the listing in the local stock
exchange, as follows:
Up to 25% . . . . . . . . . . . . 4%
Over 25% but not over 33 1/3 . 2%
Over 33 1/3 % . . . . . . . . . . 1%
a. Closely held corporation – a corporation at least 50% in value of outstanding capital stock or at
least 50% of the total combined voting power of all classes of stock entitled to vote is owned directly
or indirectly by or for not more than 20 individuals.
b. Initial public offering – refers to the public offering of shares of stock made for the first time in the
Local Stock Exchange.
c. Primary offering – refers to the original sale made to the investing public by the issuer corporation
of its unissued shares of stock.
d. Secondary offering – refers to an offer for sale to the investing public by the existing shareholders
of their securities which is conducted during an IPO or a follow-on/follow-through offering.
e. Follow-on/Follow-through offering of shares – refers to an offering of shares to the investing public
subsequent to an IPO.
Filing and payment
Primary Offering - The corporate issuer shall file the return and pay the
corresponding tax to the RDO which has jurisdiction over said corporate issuer
within thirty (30) days from the date of listing of the shares of stock in
the Local Stock Exchange. The return shall be accompanied with a copy of the
instrument of sale.
 

Secondary Offering – within five (5) banking days from the date of collection
thereof and to submit on Mondays of each week to the secretary of the Local Stock
Exchange, of which he is a member, a true and complete return, which shall
contain a declaration, that he made under the penalties of perjury, of all the
transactions effected through him during the preceding week and of taxes collected
by him and turned over to the concerned RDO.
 

The secretary of the LSE shall reconcile the records of the LSE with the weekly
reports of stockbrokers and in turn transmit to the RDO, on or before the 15th day
of the following month, a consolidated return of all transactions effected during the
preceding month through the LSE.
FILING OF RETURN (BIR FORM NO. 2551Q) AND PAYMENT OF
PERCENTAGE TAXES (except Amusement Tax, Overseas Communication Tax,
Tax on Winnings and Stock Transactions Tax and Initial Public Offerings Tax)
TIME FOR FILING AND PAYMENT - Filing and payment of percentage tax returns
of the following taxpayers should already be on a quarterly basis from the
previous monthly filing and remittance (within 25 days after the end of
quarter):
a.VAT-exempt taxpayers with annual gross sales/receipts not exceeding P3M;
b.Domestic carriers and keepers of garages;
c.International air/shipping carriers;
d.Franchisees of gas or water utilities;
e.Franchisees of radio and/or TV broadcasting with revenues not exceeding
P10M;
f.Franchise grantees sending overseas dispatch,
g.Messages or conversations from the Philippines
h.Proprietors, lessees or operators of cockpits, cabarets, night or day clubs,
boxing exhibitions, professional basketball games, jai-alai and racetracks.
i.Banks, non-bank financial intermediaries and finance companies,
j.Life insurance companies; and
k.Agent of foreign insurance companies.
2. PLACE OF FILING - At his option, the taxpayer may file:
a.a separate return for each branch or place of business, or
b.a consolidated return for all branches or places of business
3. SHORT PERIOD RETURN – Person who retires from business or whose registration
has been cancelled shall file quarterly return and pay the tax due thereon within 25
days from cessation or business operations or from the date of cancellation of
registration, as the case maybe.
PROBLEMS
1. A person had the following sales during the preceding year (assume independent
situations): Indicate whether subject to VAT, 3% Non-VAT, or Exempt from
VAT/Percentage Tax in 2018:
Situation Gross receipts - PY VAT Registered Not VAT Registered
1 P 80,000
2 800,000
3 4,000,000
2. A person had the following gross receipts from rental of real property. Put a
check on the VAT column if subject to VAT, or on the 3% OPT column if subject to
3% Non-VAT.

Situation Type of Property Monthly Rent per Aggregate VAT 3% OPT

unit Annual Rental
1 Commercial Bldg P 12,000 P 2,300,000
2 Residential 14,500 2,900,000
3 Residential 16,000 2,700,000
4 Residential 15,500 3,500,000
5 Residential 14,500 3,500,000
3. A VAT-registered business had the following balances in its books of
accounts during the first quarter of 2018:

Deferred input taxes, December P

10,000
Sales, January 400,000
Purchases, January 300,000
Sales, February 500,000
Purchases, February 450,000
Sales, March 430,000
Purchases, March 350,000
COMPUTE the VAT payable for January, February and March.
SOLUTION:
January Feb March

Output taxes      

Jan (400,000 x 12%) 48,000    

Feb (500,000 x 12%)   60,000  

Mar (400 + 500 + 430) x 12%     159,600

- Input taxes      

Jan (300,000 x 12%) ( 36,000)    

Feb (450,000 x 12%)   (54,000)  

Mar (300 + 450 + 350) x
    (132,000)
12%
Deferred taxes, Dec ( 10,000)   ( 10,000)

Tax paid, Jan     ( 2,000)

Tax paid, Feb ______ ______ ( 6,000)

VAT payable 2,000 6,000 9,600

4. Miss Sexy, an actress, had the following data for the quarter ending
February 2018 (amounts are exclusive of tax):
Receipts from talent fees P4,000,000
Gross receipts from jeepneys (4 units) 1,000,000
Purchases of wardrobes used in films 1,000,000
Purchase of spare parts of jeepneys 40,000
Public relations services for image build-up as an actress 100,000
Salary of driver and assistants 60,000
Insurance premiums for jeepneys 20,000
Rent of office space used both for her occupation
and jeepney business, subject to VAT 400,000

Compute for the VAT payable by Miss Mocha.

4. SOLUTIONS     
Output tax (4,000,000 x 12%)   P 480,000
Less: Input taxes    
Wardrobe (1,000,000 x 12%) P 120,000  
PR (100,000 x 12%) 12,000  
Rent (400,000 x 12%) x 4/5 38,400 170,400
VAT payable   309,600
     
Talent fees (VAT) 4,000,000  
Jeepney (non-VAT) 1,000,000  
Total gross receipts 5,000,000  
 5. Cea Buyo, is a businessman with transactions in the Philippines and
international. His domestic and international transactions during the
period are as follows:
Overseas calls:
Outgoing -
Paid by Cea Boyo P 20,000
Paid by the call receiver 10,000
Incoming -
Paid by Cea Boyo 15,000
Paid by the caller abroad 25,000
Local calls 2,500
Monthly bill 1,100

COMPUTE the following (assume that the amounts do not include the tax):
1. VAT payable
2. Overseas communications tax
 5. SOLUTION

(1) Local calls 2,500 (2) Outgoing call 20,000

Monthly bill 1,100 Rate of tax 10%
Gross receipts 3,600 Overseas communication tax 2,000
Rate 12%
VAT payable 432
6. A businessman operates two separate lines of business - Kainan, a
restaurant (VAT) and La Bamba, a Videoke Bar. In a taxable period, it had
the following data, exclusive of tax:
Sale of services:  
  From operation of Kainan :  
  Cash sales P 350,000
  Accounts receivable 80,000
  Credit card sales 130,000
  From operation of La Bamba:  
  Cash sales 285,000
  Accounts receivable 14,000
  Credit card sales 260,000
Payments for operations of Kainan (70% are to VAT taxpayers)
is P500,000
6.SOLUTI   Kainan Videoke
ON bar
  Cash sales P 350,000 P 285,000
  Credit card sales 130,000 260,000
  Gross receipts 480,000 545,000
  Rate 12% 18%
  Output tax 57,600  
  Less: Input tax (500,000 x 42,000  
70%) x 12%
  Tax payable 15,600 98,100
7. Seal Services is engaged in transport of cargo from Manila to any point of
the Philippines. It has its own ferry boat which transport cargoes and also
passengers. During the month, it had the following gross receipts (tax not
included):
Trucking services:
Manila to Ilocos (vice-versa) P 700,000
Manila to Bicol (vice-versa) 600,000
Ferry boat: Cargo Passenger
Matnog, Sorsogon to Allen, Samar (vice-versa) 250,000 200,000
Tabaco City to Virac, Catanduanes (vice-versa) 200,000 300,000
Payment of expenses to VAT sellers:
Services for repair of transport units 100,000
Purchase of spare parts 300,000
Insurance of transport units 150,000
Other VAT expenses (65% are from VAT sellers) 800,000

REQUIRED:
 COMPUTE for the VAT payable.
 COMPUTE for the percentage tax and VAT payable if the gross receipts
from trucking services are from passenger buses.
1. SOLUTION:
Output tax:
Trucking (700,000 + 600,000) 1,300,000
Ferry boat – to Samar (250,000 + 200,000) 450,000
Ferry boat – to Catanduanes (200,000 + 300,000) 500,000
Gross receipts 2,250,000
Rate of tax 12% 270,000
Input tax:
Payment of expenses (100,000 +300,000+150,000) 550,000
Others (800,000 x 65%) 520,000
Total 1,070,000
Rate of tax 12% 128,400
VAT payable 141,600

2. Percentage tax (1,300,000 x 3%) 39,000

Output tax:
Ferry boat – Samar 450,000
Ferry boat – Catanduanes 500,000
Gross receipts 950,000
Rate of tax 12% 114,000
Input tax (128,400 x 950/2,250) 54,213
VAT payable 59,787

VAT services 950,000

Non-VAT 1,300,000
Total 2,250,000
8. A stockbroker who is not a dealer in securities sold 10,000 shares of
stock of Bago Corporation for P5.50 per share. The shares are listed and
traded in the stock exchange. The cost per share is P4.50 while the par
value is P6.
COMPUTE for the business tax is the sale were made in 2018.
Gross selling price (10,000 x P5.50) 55,000
Rate of tax 6/10%
Stock transaction tax 330
9. A taxpayer had the following data:
Collections during the period:
From revenues of prior periods P 50,000
From revenues of the current period 200,000
From revenues of the succeeding period 30,000

COMPUTE for the percentage tax if the taxpayer is a –

1. Bus operator
2. KTV/Videoke bar
3. Cockpit
4. Place for professional basketball games
5. Place for boxing exhibition
 9. SOLUTION:          
  Carrier’s Tax Nightclub Cockpit Basketbal Boxing
 
l
  Gross receipts 280,000 280,000 280,000 280,000 280,000
  Rate of tax 3% 18% 18% 15% 10%
  Percentage tax 8,400 50,400 50,400 42,000 28,000