Types of business taxes

The three (3) major types of business taxes in the Philippines are:
1. Value-Added tax (VAT)
2. Other percentage tax (OPT)
3. Excise taxes

Value-added tax (12%) is a tax added by every seller to the purchase price or cost
in the sale or lease of goods, property or services in the ordinary course of trade or
business including the importation of goods into the Philippines, whether for
personal or business use. VAT is imposed on:
● VAT on sale of goods or properties
● VAT on importation of goods
● VAT on sale of services and use or lease of properties.

*Indirect tax because it can be transferred to another

Other percentage tax is a tax imposed on sale, barter, exchange or importation of

goods or sale of services based upon gross sales, value in money of receipts,
derived by the manufacturer, producer, importer or seller measured by certain
percentage of the gross selling price or receipts.
Excise taxes on the other hand is a tax imposed on goods manufactured or
imported under the category classified as either "sin products" or "non-essential
goods" under the Tax Code. Types of excise tax are:
● Specific tax - based on weight, volume, capacity or any other physical unit
of measurement of the goods.
● Ad valorem taxes - taxes based on the selling price or other specified value
of the goods. (Normally on sin products or non essential goods)

Nature, characteristics and basis of value-added tax

The Value-Added Tax has its characteristics such as:

1. It is an indirect tax thus, the amount of tax may be shifted or passed on to
the buyer, transferee or lessee.
 2. It is a business tax levied on the value-added on certain goods, properties
and services in the domestic market and/or importer of goods.
3. It is imposed on the value-added in each stage of production and
distribution process. (From manufacturing to wholesaler there is 12%,
from wholesaler to the retailer 12%, from retailer to consumer another
12% VAT)
4. The party directly liable for the payment of the tax is the seller, importer
or the service provider; however, the burden of the tax may be shifted or
passed on to the consumers.

The law that governs the implementation of VAT is RA 9337. Under this law, a
single rate equivalent to 12% is based on the following:

NATURE OF TRANSACTION TAX BASE

a) Sale of goods or properties ● Gross Selling Price

b) Sale of services ● Gross Receipts

c) Importation ● Total Landed Cost (BIR vs

Receipt)

d) Dealers in securities ● Gross Income

VAT exempt transactions

Section 109 of NIRC as amended under RA 10963 also known as the Tax Reform
for Acceleration and Inclusion (TRAIN) Law, provided the following VAT exempt
transactions:
A. Sale or importation of the following:
● Sale of agricultural and marine food products in their original state
● Livestock and poultry products for human consumption. (not including pets)
● Breeding stock and genetic materials.
○ products considered in their original state:
○ products which undergone simple processes of preparation or
preservation ( freezing, drying, salting roasting, etc)
 ○ polished or husked rice
○ corn grits
○ raw cane sugar and molasses
○ ordinary salt
○ copra

B. Sale or importation of the following:

● Fertilizers
● Seeds, seedlings and fingerlings
● Fish, prawn, livestock and poultry feeds
● Ingredients used in the manufacture of finished feeds (except specialty
feeds)

C. Importation of personal and household effects belonging to the: EXCEPT

CARS
● Residents of the Philippines returning from abroad
● Nonresident citizens coming to settle in the Philippines

D. Importation of professional instruments and implements, tools of trade,

occupation or employment, wearing apparels, domestic animals and personal
household effects
E. Services subject to percentage tax
F. Services by agricultural contract growers and milling for others of palay into
rice, corn into corn grits and sugar cane into raw sugar.
G. Medical, dental, hospital and veterinary services except those rendered by
professionals.
H. Educational services rendered by private and government educational
institutions duly accredited by DepEd, CHED & TESDA.
I. Services rendered by individuals pursuant to an employee-employer
relationship: SUBJECT TO INCOME TAX
J. Services rendered by regional or area headquarters established in the
Philippines.
K. Transactions exempt under international agreements to which the Philippines is
a signatory.
L. Sale by agricultural cooperatives duly registered with CDA to its members and
non-members.
M. Gross receipts from lending activities by credit or multi-purpose cooperatives
(tax exempt).
N. Sales by non-agricultural, non-electric and non-credit cooperatives registered
with CDA provided that share capital contribution of each member does not
exceed P15,000.
O. Export sales by persons who are not VAT registered.
P. Sale of real property:
Before January 1, 2021:

○ the sale of real properties not primarily held for sale to customers or
held for lease in the ordinary course of trade or business shall be
subject to VAT being a transaction incidental to the taxpayer's main
business.
○ real property utilized for "low-cost housing" under RA 7279
○ Real properties utilized for "socialized housing"
○ Real properties primarily held for sale to customers or held for lease
in the ordinary course of trade or business provided the
RESIDENTIAL LOT is valued not more than P1,500,000 while
HOUSE & LOT is valued not more than P2,500,000.

Beginning January 1, 2021, the VAT exemption shall only apply to the following:

○ Sale of real properties not primarily held for sale to customers or held
for lease in the ordinary course of trade or business.
○ Sale of real property utilized for socialized housing under RA 7279 as
amended
○ Sale of House & Lot and other residential dwellings with selling price
of not more than P2,000,000.

Q. Lease of residential units with monthly rental not exceeding P15,000.

R. Sale,importation, printing or publication of books and any newspaper,
magazine which appears at regular intervals with fixed prices (TRAIN Law)
S. Transport of passengers by international carriers doing business in the
Philippines. TRANSPORT OF CARGO IS NOT EXEMPTED
T. Sale, importation or lease of passenger or cargo vessels and aircraft.
U. Importation of fuel, goods and supplies by persons engaged in international
shipping or air transport operations.
V. Services of banks, non-bank financial intermediaries performing quasi-
banking functions such as money changers pawnshops.
W. Sale or lease of goods and services to Senior Citizens and PWDs.
X. Transfer of property pursuant to Sec 40 of the Tax Code
Y. Association dues, membership fees and other assessments and charges
collected on purely reimbursement basis by homeowners associations and
condominium corporations.
Z. Sale of gold to the BSP
AA. Sale of drugs and medicines prescribed for diabetes, high cholesterol and
hypertension beginning January 1, 2019.
Amended by CREATE Law as follows: Sale or importation of prescription drugs
and medicines for:
● Diabetes, high cholesterol and hypertension beginning January 1, 2020
● Cancer, mental illness, tuberculosis and kidney diseases beginning January
1, 2021

New provision under the CREATE Law

BB. Sale or importation of the following beginning January 1, 2021 to December
31, 2023:
● Capital equipment, spare parts and raw materials necessary for the
production of the personal protective equipment (PPE)
● All drugs, vaccine and medical devises for treatment of COVID-19
 ● Drugs for the treatment of COVID-19 approved by the FDA.

Sources of output and input taxes

Sources of output VAT of seller of goods or properties may come from the
following:
Seller of Goods:
1. Actual sale (cash and on account).
2. Transactions deemed sales.
Ex: Consigned good that exceeds 60 days)
■ Transfer, use or consumption not in the course of business of
goods or properties – withdrawal of goods from his business for
his personal use
■ Distribution or transfer to creditors in payment of debt
Ex: You owe creditor 100k but you don’t have money so instead you send a
product (dacion en pago) worth of 100k
■ Distribution or transfer to shareholders or investors share in the
profits of VAT registered person.
■ Consignment of goods if actual sales is not made within 60
days following the date such goods were consigned
■ Retirement from a cessation of business.
3. Zero rated sales
Included in computation of Gross sales but not included in computation for Output
Tax
■ Export sales
■ Sales to persons or entities deemed “tax-exempt” under Special
Law or International Agreement – SBMA, PEZA, ADB and
IRRI

Seller of Services, Lessor of Goods or Properties

■ Gross Receipt - the total amount of money representing the
contract price, compensation, service fee, rental computed as
follows:
○ Cash received (actually & constructively) P xxx
 ○ Advance payments xxx
○ Materials charged for services xxx
○ Gross Receipts P xxx

The basis of the 12% output VAT on actual sales shall be as follows:
■ Sale of goods - Gross Selling price
■ Sale of services - Gross Receipts
■ Sale by a dealer in securities - Gross income
■ Sale of real properties - the highest
amount among - Selling Price vs FMV provided by
city/municipal assessor and the zonal value provided
by the Commissioner of Internal Revenue (CIR)

KINDS/SOURCES of INPUT TAX

1. Local purchases of goods or properties other than capital goods
2. Local purchases of services
3. Importation of goods or properties other than capital goods (because
capital goods’ INPUT TAX is computed separately and applies with
amortization).
4. Local purchases or importation of capital goods (Depreciable properties
that the useful life is for more than one year)
5. Presumptive input tax (Transactions in the farm. Transactions covered
by persons or firms engaged in processing sardines, mackerel and milk,
refined sugar, cooking oil and packed noodles)
6. Transitional input tax (Company has changes its registration from NON
VAT Registered to VAT Registered)
7. Standard input vat (CREATE Law)

The following advances are not subject to VAT

● A loan to the lessor from the lessee
● An option money (When somebody is selling his property as if it is a
reservation. I will give you 50k so don’t sell it until this day, if I didn’t
buy it then you can have the money) for the property
● A security deposit to insure faithful performance of obligations of the
lessee to the lessor
Capital goods - are depreciable properties in which the useful life is more than one
(1) year.
Purchases or importation of capital goods, the aggregate acquisition cost (net of
VAT) in a calendar month exceeds P1 million regardless of the acquisition cost
shall be amortized using the formula:
● Amount Deductible = Input Tax / Amortization period

Transitional Input Tax

● Taxpayers who became VAT registered persons (previously non-VAT)
shall be entitled to a transitional input tax rate of 2% computed as
follows:
○ Beginning inventory xxx
○ Rate 2%
○ Total xxx
○ Actual Input VAT on beginning inventory xxx
○ Transitional Input tax (higher amount) xxx

Presumptive Input Tax

Covered are persons or firms engaged in:
■ Processing of sardines, mackerel and milk
■ Manufacturing refined sugar, cooking oil and packed noodle-
based instant meals
■ Amount is computed as follows:

Purchases of primary agricultural products P xxx

Tax rate 4%
Presumptive Input Tax P xxx
Standard Input Tax
● Beginning January 1, 2021, the VAT withholding system shall shift from
final to a creditable VAT system wherein the payor shall be considered
the withholding agent. The 5% withholding VAT shall be remitted within
10 days from the close of the month the withholding was made.
Computation of VAT payable on local purchases and importation of capital
goods.

Computation of VAT-Input tax on importation may be done in two (2) ways:

1. In general based on the total value used by the BOC in determining the
tariff and customs duties, plus customs duties, excise taxes, if any and
other legitimate charges prior to removal of goods from the customs
custody. The formula to determine the VAT on importation is shown
below:

Customs duties is ad valorem (based on value):

PARTICULARS AMOUNT
Dutiable value P xxx
Customs duties xxx
Excise tax xxx
Other charges w/in BOC xxx
Tax base P xxx
Rate 12%
VAT on Importation P xxx

2. Another way of determining VAT on importation is Customs duties is specific

(based on quantity or volume) :

PARTICULARS AMOUNT
Invoice amount P xxx
Customs duties xxx
Freight xxx
Insurance (Importation) xxx
Other charges within BOC xxx
Landed cost P xxx
Excise tax xxx
Total P xxx
Rate 12%
VAT on Importation P xxx

Computation of the value-added tax payable

The corresponding liability on value-added tax is generally computed based on the

guide formula below:
■ Total output VAT - P xxx
■ Less: Input VAT - xxx
■ Total - xxx
■ Less: Previous advance payments - xx
■ VAT payable - P xxx

Computation of VAT Payable on Mixed Transactions

TRANSACTIONS AMOUNT
Output VAT P xxx
Less: Input VAT
Directly attributed to vatable transactions ( xxx)
Not directly attributed (mixed transaction)
(Taxable sales - private/Total sales) X Input tax ( xxx)
(Taxable sales - govt/Total sales) X Input tax ( xxx)
(Exempt sales/Total sales) X Input tax -
Balance P xxx
Less: 5% withholding VAT on sales made to government ( xxx)
VAT Payable P xxx
Sales by Agricultural, Non-Agricultural and Electric Cooperatives

Sales by agricultural cooperatives duly registered with the Cooperative

Development Authority (CDA) as well as sale of their produce, whether in its
original state or processed form to non-members, importation of direct farm inputs,
machineries and equipment, including spare parts thereof, to be used directly and
exclusively in the production and/or processing of their product. The following
chart shows Cooperatives' transactions to members and non-members :
A. Sales by Agricultural Cooperatives

PARTICULARS SALE TO SALE TO NON-

MEMBERS MEMBERS
Sale of cooperative's own produce Exempt Exempt
(processed or original state)
Other than own produce (from Exempt VAT
Traders)

B. Gross receipts by Credit or Multi-purpose cooperatives

PARTICULARS FROM MEMBERS FROM NON-

MEMBERS
From Lending activities Exempt Exempt
From non-lending activities VAT VAT

C. Gross Receipts / Sales by

PARTICULARS From MEMBERS From NON-

MEMBERS
Electric cooperatives VAT VAT
Agricultural cooperatives Exempt Exempt
Lending activities of Cooperatives Exempt Exempt
Non-agricultural, non-electric, non-
lending & multi-purpose cooperative:
 ■ contribution per member < Exempt Exempt
P15,000

■ contribution per member > VAT VAT

P15,000

Lease of Residential Units

● Lease of residential unit with a monthly rental per unit not exceeding
P15,000 regardless of the amount of aggregated rentals received by the
lessor during the year.
● Lease of residential unit where the monthly rental per unit exceeds
P15,000 but the aggregated of such rentals of the lessor during the year
do not exceed P3,000,000 shall likewise be exempt from VAT but
however shall be subject to Percentage Tax as follows:
○ Prior to July 1, 2021 : 3%
○ From July 1, 2021 to June 30, 2023 : 1%
○ Beginning July 1, 2023 : 3%

Filing and payment of quarterly and annual VAT.

Every person liable to pay the value-added tax under the Tax Code shall file a
"quarterly" return of the amount of his gross sales or receipts within 25 days
following the close of each taxable prescribed for each taxpayer.
The place of filing of VAT returns in case payment is involved.
○ a duly accredited agent bank (AABs) located in the revenue
district office where such taxpayer is required to register. In the
absence of the AABs, the retun should be filed with any of the
following:
■ RDOfficer
■ Collection Agent
■ Duly authorized Treasurer of the city/municipality
where such taxpayer is registered.

The place of filing of VAT returns in case NO payment is involved.

○ should be filed with the RDOfficer/ Large taxpayer District
Office Large Taxpayer Assistance Office
○ Collection Agent
○ Duly authorized Treasurer of the city/municipality where such
taxpayer is registered.
Excise Tax

In addition to the value-added tax imposed is Excise Tax which is also known as
tax on the production, sale or consumption of a commodity and is imposed on:

 Goods manufactured or produced in the Philippines for domestic sale or

consumption

 Goods imported

 Certain services provided under the TRAIN Law

Types of Excise Tax

 Specific tax - tax imposed which is based on weight or volume capacity or

any physical unit of measurement.

 Ad Valorem Tax – tax imposed which is based on selling price or other

specified value of the goods.

Manner of Computation

 SPECIFIC TAX = No. of units or measurement X specific tax Rate

 AD VALOREM TAX = No. of units or measurement X Selling Price X Ad

Valorem Tax Rate

Major Classification of Excisable Articles

 Alcohol products

 Tobacco products

 Petroleum products

 Miscellaneous Articles
  Mineral products

 Sweetened Beverages (TRAIN Law)

 Invasive Cosmetic Surgery (TRAIN Law)

Persons Liable to Excise Tax

In general :

 On Domestic or Local Articles

o manufacturer

o producer

o owner

 On Imported Articles

o importer

o owner

o person in possession of articles exempt from excise taxes

Others ( On Indigenous Petroleum)

 Local sale, barter or Transfer

o first buyer, purchaser, transferee

 Exportation

o owner, lessee concessionaire, operator

Time of Payment

 On domestic products - before removal from place of production

  On imported products – before release from the customs’ custody

Tax base, tax rates and computation of percentage tax due

Percentage tax is a tax imposed on sale, barter, exchange or importation of goods
or sale of services based upon gross sales, value in money of receipts derived by
the manufacturer, producer, importer or seller measured by certain percentage of
the gross selling price or receipts.
 any person whose sales or receipts are exempt from VAT under Section 109
of the Tax Code as amended, shall pay a tax equivalent to 3% of his
quarterly gross sales or receipts.
 if the transaction is subject to other percentage tax, it is no longer subject to
VAT
 other percentage taxes as well as value-added tax may be imposed together
with an excise tax.
Who are exempt from the 3% percentage tax.
1. Cooperatives
2. SEPs availing of the 8% tax on gross sales and/or receipts and other non-
operating income
Kinds of Percentage taxes
KINDS of PERCENTAGE TAXES
1. Tax on person exempt from value-added tax.
2. Percentage tax on domestic carriers and keepers of garages (UV EXPRESS).
3. Percentage tax on international carriers
4. Tax on franchises (Implemented in PH)
5. Tax on overseas dispatch, message or conversation originating from the
Philippines.
6. Tax on banks and non-bank financial intermediaries.
 7. Tax on other non-bank financial intermediaries.
8. Tax on life insurance premiums.
9. Tax on agents of foreign insurance companies.
10.Amusement taxes
11.Tax on winnings.
12.Tax on sale, barter or exchange or through initial public offering (IPO)

Tax on Persons Exempt from VAT

Also known as Percentage tax on persons exempt from VAT. Persons liable are:
1. Persons, who are not VAT registered, who sells goods, properties or services
whose annual gross sales and/or receipts do not exceed Php 3 million and are
exempt from VAT.
2. Persons who lease residential properties where monthly rental per unit
exceeds Php 15,000 but the aggregate of such rentals during the year does
not exceed the VAT threshold of Php 3 million.
TRANSITORY PROVISION :
1. Excess Percentage Tax payments
 The excess percentage tax payment as a result of the decrease of tax
rate from 3% to 1% beginning July 1, 2020 and may be carried
forward to the succeeding quarters.
2. From VAT registered to Non-VAT registered
VAT registered taxpayer who opted to register as a non-VAT as a result of the
additional VAT exempt provisions introduced by the CREATE Law shall treat the
resulting excess taxes paid in the following manner:
 Unutilized VAT on local purchase or importation may be carried over
to the succeeding taxable quarters or be charged as part of cost
  Input VAT which are directly attributable to goods now classified as
VAT exempt may be allowed as part of cost.
 For input VAT that cannot be attributed to goods now classified as
VAT exempt, only a ratable portion thereof shall be charged to cost.
Percentage tax on domestic carriers and keepers of garages
Also known as "Common Carriers Tax (CCT)" on common carriers on their
transport of passengers by land.
Common Carriers are referred to persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods, or both by
LAND, WATER & AIR for compensation, offering their services to the public.
Persons Liable:
 Cars for rent/hire driven by the lessee
 Transportation contractors, including persons who transport passengers for
hire
 Other domestic carriers by land for transport of passengers
 Keepers of garages
Persons who are Exempt
 Owners of bancas
 Owners of animal-drawn two wheeled vehicles
Tax Rate
 3% of Actual Gross receipt or Minimum Gross receipt whichever is
HIGHER.
In Summary:
DOMESTIC CARRIER TRANSPORTING BUSINESS TAX

By Land Passengers OPT

By Land Cargo/Goods VAT

By Air Passengers, Goods Cargoes VAT

By Sea Passengers, Goods Cargoes VAT

Percentage tax on international Carriers

Also known as Common Carriers on International Carriers on their transport of
goods and cargoes originating in the Philippines.
Persons Liable:
 International Air carriers
 International Shipping Carriers
Gross receipt shall include, but not limited to, the total amount of money or its
equivalent, representing the contract for:
 freight/cargo fees
 mail fees
 deposits applied as payments
 advance payments
 other service charges and fees actually or constructively received during the
uninterrupted flight.
In Summary
INT'L CARRIER TRANSPORTING BUSINESS TAX APPLICABLE

Passengers originating in the Philippines Exempt

Goods and/or mail originating in the Philippines OPT

Tax on Franchises
Also known as franchise Tax on Franchise grantees.
Persons Liable:
 Franchise on Gas and Water utilities
 Franchise on Radio and/or Television Broadcasting Companies
Requisites for franchises
 Not a VAT registered person
 Annual gross receipts of the preceding year do not exceed Php 10 million.
Tax Rate:
 For Gas and Water - 2%
 For Radio and/or Television broadcasting - 3%
In Summary
ANNUAL GROSS BUSINESS TAX
RECEIPT

More than Php 10 million VAT

prior year

Php 10 million and below VAT or OPT

prior year If taxpayer opted to register under the VAT system,
said option shall be irrevocable
Tax on Overseas Dispatch & Messages originating from the Philippines
Also known as Overseas Communication Tax (OCT) on overseas communication
originating from the Philippines.
Requisites:
 there is an overseas dispatch, message or conversation transmitted from the
Philippines by telephone, telegraph, tele-writer exchange, wireless and other
communication equipment services.
Person Liable:
 the user of the facility
Exempt persons:
 the Philippine Government, political subdivisions or instrumentalities
 Diplomatic services
 International organizations
 News agencies
Tax Rate : 10%

Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi and

Non-Quasi functions
Banks and Non-Bank Performing Quasi-Banking functions
 Also known as Gross receipt Tax (GRT)
 Banking institutions - shall refer to those entities defined under the General
Banking Law of 2000 and shall include :
o universal banks
o commercial banks
o thrift banks (savings & mortgage banks,stock savings and loan
association)
o cooperative banks
 o rural banks
o Islamic banks
o other banks determined by the Monetary Board of the BSP.
 Non-bank Financial Intermediaries - shall refer to persons or entities whose
principal function include the lending, investing or placement of funds or
evidences of indebtedness or equity deposited with them.
 Quasi-banking functions - shall refer to the borrowing of funds from twenty
or more personal or corporate lenders at any one time through the issuance
of debt instruments of any kind, other than deposits.
In Summary : Gross Receipt Tax
Gross receipt or Income derived from:
PARTICULARS TAX
RATE

Interest, commissions and discounts from Lending activities and

Financial leasing :

 remaining maturity period is < 5 years 5%

 remaining maturity period is > 5 years 1%

Dividends and equity share in net income of subsidiaries 0%

Royalties, rentals of property, real or personal, profits from exchange and 7 %

all other items treated as gross income under the Tax Code

Net trading gains within the taxable year on foreign currency, debt 7%
securities, derivative and other similar financial instruments

Banks and Non-Bank NOT Performing Quasi-Banking functions – Pawnshop,

Money changers
In Summary : Gross Receipt Tax
Gross receipt or Income derived from:
PARTICULARS TAX
RATE

Interest, commissions, discounts, and all other items treated as gross 5%

income under the Tax Code

Interest, commissions and discounts from Lending activities and

Financial Leasing:

 remaining maturity period < 5 years 5%

 remaining maturity period is > 5 years 1%

Tax on Life Insurance Premiums and Agents of Foreign Insurance Companies

Tax on Life Insurance premiums
Also known as Premium Tax.
Tax Rate : 2 %
Premiums exempt from tax:
 premiums refund within 6 months after payment on account of rejection of
risk
 premiums paid upon re-issuance by a company that has already paid the tax
 premiums collected or received by any branch of a domestic corporation,
firm or association doing business outside the Philippines on account of any
life insurance of the insured who is a non-resident.
 premiums collected are received on account of any reinsurance if the insured
resides outside the Philippines.
  portion of the premiums collected or received by the insurance companies in
excess of the amount necessary to insure the lives of the variable contract
workers
 premium collected by a purely cooperative company or association.
Tax on Agents of Foreign Insurance companies
 Also known as premiums Tax on Agents of Nonresident Foreign Insurance
companies
Persons Liable:
 Fire, Marine or miscellaneous Agents of non-resident foreign corporations
engaged in insurance business, and
Tax Rate : 4 %

Amusement taxes
Persons Liable: Proprietor, lessee or operator of
 cockpits
 cabarets
 night or day club
 boxing exhibitions
 professional basketball games
 Jai-Alai
 racetracks
Gross receipts
Embraces all the receipts of the proprietor, lessee or operator of the amusement
place of the following rights:
 from television
 from radio
 motion picture
Tax Rates
 Place for boxing exhibition - 10 % or exempt
 Place for professional basketball games - 15 %
 Cockpits, cabarets, day & night clubs - 18 %
 Jai-Alai and racetracks - 30%
Requisites for exemption of Boxing Exhibition
1. World or Oriental championships is at stake
2. One of the contenders is a citizen of the Philippines
3. Promoted by citizens of the Philippines or by a corporation or association at
least 60% of the capital is owned by such citizen.

Tax on Winnings and Stocks transactions

TAX on WINNINGS
Persons Liable
 owners of the winning horse
 bettor in a horse race or Jai-Alai
Tax Rates
 owner of the winning horse - 10 %
 bettor in a horse race or Jai-Alai
o ordinary winning - 10 %
o special winnings - 4%

TAX ON STOCK TRANSACTIONS

Also known as Stock Transaction Tax (STT). The following are kinds of STT:
1. Tax on sale, barter or exchange of shares of stock listed and traded through
the LSE.
 2. Tax on shares of stock sold or exchanged through IPO (repealed under
Bayanihan Act II , Sept 15, 2020).
Requisites on Stocks listed and traded in LSE:
 seller is not a dealer in securities
 shares sold is listed and traded through the LSE
Tax Rate : 6 /10 of 1 % (.006)

Tax on Shares of Stock Sold or Exchanged through IPO

This section (Section 127 (B)) repealed under the Bayanihan Act II provided the
tax rates based on the gross selling price or gross value in money of the shares of
stock sold, bartered, exchanged or otherwise disposed in accordance with the
proportion of shares of stock sold, bartered, exchanged :
Ratio of shares sold over outstanding shares TAX RATES
 up to 25% 4%
 over 25% but not over 33% 2%
 over 33% 1%
Persons Liable
 Primary offering - Issuing corporation
 Secondary offering - Seller

Return and payments of percentage taxes

Returns of Gross Sales, Receipt or earnings and Payment of Tax
 Persons liable to pay percentage taxes
o every person subject to the percentage taxes imposed under this title
shall file a quarterly return of the amount of his/her gross sales,
receipts or earnings thereon within 25 days after the end of each
taxable quarter.
  Persons retiring from business
o any person retiring from a business subject to percentage tax shall
notify the nearest internal revenue officer, file his/her return and pay
the tax due thereon within 20 days after closing the business.
 Determination of correct sales or receipts
o when it is found that a person failed to issue receipts, no return is
filed, or reasons to believe that the books of accounts do not correctly
reflect the declarations made, the Commissioner may prescribe a
minimum amount of such gross receipts, sales for purposes of
determining the tax liabilities of such taxpayer.
WHERE TO FILE
Every person liable to the percentage tax under this Title may, at his option, file
separate return for each branch or place of business or a consolidated return with
the following:
 Authorized agent bank (AAB)
 Revenue District Officer (RDO)
 Collection Agent
 Authorized Treasurer of city or municipality