Chabter 9 Other Percentage Taxes Generally, vat is imposed on every sale, barter, or exchange of goods or services and on importations. However there are instances where the same does not apply because the transaction is subject to Other Percentage Taxes (OPT) under Sections 116 to 127 of the Tax Code, as amended. As discussed in Chapter 7, a “transaction” that is subject to vat is no longer subject to percentage tax. Consequently, if the “transaction” is subject to Percentage tax, it is no longer subject to vat. Nonetheless, other percentage taxes as well as value added tax may be imposed together with excise tax. Percentage tax is a tax imposed on sale, barter or exchange of goods, or sale of services based upon gross sales, value in money of receipts derived by the manufacturer, producer, or seller measured by certain percentage of the gross selling price or receipts. The Percentage taxes are provided in the Tax Code under Sections 116 to 127, as amended. KINDS OF PERCENTAGE TAXES: 4) Tax on person exempt from value-added tax (Sec. 116); 2) Percentage tax on domestic carriers and keepers of garages (Sec. 117); 3) Percentage tax on international carriers (Sec. 118); 4) Tax on franchises (Sec. 119); ; : 5) Tax on overseas dispatch, message or conversation originating from Philippines (Sec. 120); - 6) Tax on banks and non-bank financial intermediaries (Sec. 121); 7) Tax on other non-bank financial intermediaries (Sec. 122); 8) Tax on life insurance premiums (Sec. 123); 9) Tax on agents of foreign insurance companies (Sec. 124); 10) Amusement taxes (Sec. w ie 4 1 ings (Sec. 126); ani . 2) ix See ‘or exchange of shares of stock listed and traded through the local stock exchange (Sec. 127). 355Pereeatage Ti oF SSRIS - TAX ON PERSONS EXEMPT FROM VALUE-ADDED TAX Section 116 of the Tax Code, as amended by CREATE Law provides: ‘Any person whose sales or receipis are exempt under Section 109(1)(CC) ofthe Tax Code from the payment of value added tax AND who is not a VAT-registered person shall pay a tax equivalent to three percent (3%) of his gross quarterly sales or receipts: Provided, that cooperatives, shall be exempt from the three percent (3%) {gross receipts tax herein imposed: Provided, further, that effective July 1, 2020 until June 30, 2023, the rate shall be one percent (1%). PERSONS LIABLE: 1) Persons, who are not VAT-registered, who sell goods, properties or services, whose annual gross sales and/or receipts do not exceed three million pesos (Php3,000,000.00) and are exempt from value- added tax (VAT) under Section 109(1)(CC) of the National Internal Revenue Code, as amended by Republic Act (RA) No. 11534 (CREATE Law). 2) Persons who lease residential units where the monthly rental per unit exceeds fifteen thousand pesos (Php15,000.00) but the aggregate of such rentals of the lessor during the year does not exceed three million pesos (Php3,000,000.00) EXEMPT PERSON (CREATE Law; RR 4-2021): 1) Cooperatives 2) Self-employed individuals and professionals availing of the 8% tax on gross sales and/or receipts and other non-operating income. REQUISITES: ; To following are the requirements be subjected to Percentage Tax under this Section of the Tax Code as amended under RA 11534 (CREATE Act): 4) Not VAT registered person 2) The annual gross sales oF receipts do not exceed 3,000,000; and 3) Not exempt from vat under Section 409(1)(A) to 109(1)(88) of the Tax Code, as amended. 356Cvreentute Th A twee wi treeulage Lies exceeding the vat threshold ig NOT Gi Ses. andlor: receipt ax under this Section of the Tax cy 1a tially Subject to Peranage of the activities or transact + the taxpayer i ir to 109(1)(BB), as menace exempt from vat intense Ost yercentage tax under thig by HD CREATE Law, She is not sb Eales andor receipts, such ac ea f08cesS of tho amount of ess marine fO0d products in they eri20e4 I the sale of agricultural or ercentage tx under this savin anal Sale. To be subjected to be subject to other percent org , the taxpayer r * tage te H ‘payer must not also domestic common carrier ei a iinet Sections 117 to 127, such as a ransport of passengers by land. TAX BASE: Sale of goods i" : Gross. Sale of services sales + Gross receipts FORMULA: Tax base (gross sales Mutiply: ares sete Pos * Prior to July 1, 2020 3% = From July 1, 2020 to June 30, 2023 (CREATE law) 1% = Beginning June 30, 2023 (CREATE law) 3% Percentage tax due Prk OPTION TO REGISTER UNDER THE VAT: SYSTEM Persons subject to the above tax shall have the option to apply for vat registration not later than ten (10) days before the beginning of the taxable quarter (optional vat registration is discussed in Chapter 7). Any person under this section who elects to register under the vat system shall ot be allowed to cancel his registration for a period of three (3) years. ‘Summary Rules [__ Annual Gross Sales/Receiots, | More than PSM Generally subject to OPT under Seo. en ee | 416. However, ifthe taxpayer opted to register under the vat system, it shall be irevocable for 3 consecutive yeas. LL 357Percentage Tees VAT Threshold for Married Individuals For purposes of the threshold of P3M, t i be considered separate taxpayers. However, the Sereeaen| nine babes taxpayer shall apply. For instance, if a professional, aside from the practice of his profession(s), also derives revenue from other line: ‘ business which are otherwise subject to VAT, the same shall be combin a for purposes of determining whether the threshold has been ree Thus, the VAT-exempt sales shall not be included in determining the threshold. (Sec. 3, RR 16-2011). the ILLUSTRATION 1: Determine the correct business tax of the following: 1. Meat dealer with annual gross sales of P2,000,000 = None. Exempt from business tax under Sec. 109(1)(A) regardless of the | amount of gross sales. 2. Dealer of pouttry feeds with annual gross sales of P8,000,000 =. None. Exempt from business tax under Sec. 109(1)(B) regardless of the amount of gross sales. 3, Dealer of specialty feeds with annual gross sales of: (a)P2.5M; (b)P2.5M and vat registered; (c)P5M = A: Percentage tax under Sec. 116 = B Vat because the taxpayer is vat registered and the item sold is not vat exempt under the Tax Code. = C Vatbecause the taxpayer's annual gross sales exceeded the vat threshold and the item sold is not vat exempt under ‘the Tax Code. 4, Restaurant operator with annual gross sales of (2)P2.6M; (b)P2.5M and vat registered; (c)P5M = Same answers with #3. 5. Taxi operator ' domestic common = Percentage tax under Sec. 117 (common carrier's tax on cari) regardless of the amount of gross receipts To be subjected 4 Percentage tax under Sec. 116, the transaction shall not be i - roentage tax under Sec. 117 to 127 and ‘shall not be exempt from vat Un ‘Sec. 109(A) fo 109(AA). oe i eee 258Cecentage Tats 6. CPA practitioner whos . 88 a and Vat registered, topey S08 receipts amounted to: (P2544 (0)P2.5M | "A Percentage ta B Vatbcaie the anne Se. 116 Vat because nats Val registered © Pelt at tenet | eee aider tne Tax Code. _ a ILLUSTRATION 2 (Corporate Taxpayer) CASE A ABC Trading Corporation (none, k the year 2021 were proud “i oe ' a trader of electronic products. Data for Gross receipts 1,800,000 Purchases on account from vat supoli 200, lies Payments made ovat suppers “jono00 Purchases on account from non-vat suppliers 200,000 Payments made to non-vat suppliers 80,000 Operating expenses 400,000 Question 1: What is the applicable business tax andthe amount du forthe year? Answer: * Applicable business tax. 1% OPT on val exempt sales under Section’ 116 because: ‘ a) The taxpayer is not vat registered; + b) The transactions nota vat-exempt transaction; + c) The amount of sales is $ P3M; + d) The transaction isnot subject to OPT under Sections 117 to 127 = Amount of business tax due. P18,000 computed as P1.8M x 1% Question 2: : : 7 ‘Assuming ABC opted to register under the vat system, what is the applicable business tax and the amount due for the year? Answer: Mae "Applicable business tax: 12% VAT (optional vat registration) = Amount of business tax due: P72,000 Output vat (P1.8M x 12%) 216,000 Input vat (P1.2M x 12%) (144,000) Vat Payable P72,000_ 359f ‘ercentage Tages * CASEB Omega Corporation (non-vat registered entity) is engaged in trading consumer products, It generated total sales of P3,200,000 forthe taxable year. Question: What is the applicable business tax and the amount due for the year? Answer: = Applicable business tax: 12% VAT; (gross sales > 3,000,000) = Amount of business tax due: 384,000 computed as P3.2M x 12% still liable to 12% vat NOTE: Although Omega is a ron-vat registered entity itis Decause the sales exceeded the vat threshold of P3M (under TRAIN Lau). Fowaver, as 2 consequence of ifs faire to register under the vat system, it cannot pass to customers the applicable output vat and is not eniitled to input vat credit. SELF-EMPLOYED/PROFESSIONAL (SEP) under the TRAIN Law able taxes of a Self-employed and/or Professional is The applic ur other textbook, “Income Taxation”. also extensively discussed ino is defined under RA10963 (TRAIN Law) as “a sole rts income earned from ks for, how the work is Is whose income Is loyer Self-employed is proprietor or an independent contractor who repot self-employment. He/she controls who he/she wor done and when it is done. It includes professional: derived purely from the practice of profession and not under an emp! — employee relationship”. Professional is defined under RA10963 (TRAIN Law) as a “person formally certified by a professional body belonging to a specific profession by virtue of having completed a required course of studies and/or practice, whose competence can usually be measured against an established set of standards. It also refers to a person who engages in some art or sport for money, as a means of livelihood, rather than as a hobby. It includes but is not limited to professional entertainers, professional athletes, directors, producers, insurance agents, insurance adjusters, management and technical consultants, bookkeeping agents, and other recipients ©! professional, promotional and talent fees”.a FORRES rene | | L *reenlag C Ties ‘SEP is subject both to income tax and business tax. as follows: ea) ‘i wilh Gross Salos andior Recoips and other non-operating income ee OLA MMee Cake Applicable Taxes Income Tax; Graduated Tax Rate Business Tax: OPT under Sec, 116" Applicable Taxes Income Tax. Graduated Tax Rate | Business Tax: Value Added Tax | OR (at SEP’s option) 8% tax on gross salesireceipts and other Operating income in excess of P250,0001N LIEU of the graduated income tax rale and the | Per Tax under Sec. 116" NV jonvat registered Provided, the SEP is (1)non-vat registered; (2)not engaged in val exempt-salesttransaction(s), (3)not subject to other OPT other than Sec. 116 “**Provided, the SEP is (1)not engaged in vat exempt-sales/transaction(s) or (2)not subject to other OPT Individual Taxpayer eamning Compensation income'+ Sel-Employed andlor Professional with Gross Sales and/or Receipls and other non-operating income NOT EXCEEDING THE VAT THRESHOLD + NVR (eLearn Compensation Income Compensation Income Subject to graduated tax rate Subject fo graduated fax rate Income as S.E.P.; Income Tax: Graduated Tax Rate Business Tax: Value Added Tax Income as S.E.P.: Income Tax: Graduated Tax Rate Business Tax: OPT under Sec. 116" OR (at SEP’s option) 8% tax on gross sales/receipts and other operating income IN LIEU of the graduated t income tax rate and the Percentage Tax under a FBO Tam gross salesTecepis I nt appicable 10 “ined income eamers 361L ‘tresibife Tegees OPTION to be taxed at 8% The option by a Sélf-employed and/or Professional (SEP) to be taxed at 8% in lieu of the graduated income tax rate and Percentage Tax under Section 116 of the Tax Code is not automatic. The following are the requisites: 4. The taxpayer is non-vat registered. 2. The taxpayer is vat exempt under Section 109(CC) of the Tax Code, as amended. Hence, the reason for vat exemption is simply because the annual gross sales and/or receipts did not exceed the vat threshold of P3,000,000. Therefore, persons exempt from vat due to reason(s) other than having gross sales and/or receipts not exceeding the vat threshold such as those exempt under Section 109(A) to 109(BB) are not covered under Section 116 (refer to Chapter 8 for vat exempt sales). 3. The taxpayer is not subject to other percentage taxes other than Sec. 116 4. The SEP shall signify his/her intention to be taxed at 8% rate. Unless the taxpayer signifies in the at Quarter Return of the taxable year the intention to elect the 8% income tax,.the taxpayer shall be considered as having availed of the graduated rates under Section 24(A) of the Tax Code, as amended, and such election shall be irrevocable. Provided that, at any time during a given taxable year, a taxpayer's gross sales or receipts ‘exceeded the VAT Threshold (P3,000,000), he/she shall automatically be subjected to the graduated rates under Section 24(A)(2)(a). of the Tax Code,, as amended, with the following rules/guidelines: * The taxpayer shall be allowed an income tax credit of quarterly payments initially made under the 8% income tax option. = Taxpayer is likewise liable for business tax(es), in addition to income tax. A percentage tax pursuant to Section 116 of the Tax Code, as amended, shall be imposed on the first P3,000,000.00. The excess of the threshold shall be subject to VAT. tion = Percentage tax due on the P3,000,000.00 shall be collected with penalty, if timely paid on the due date immediately following the mont! the threshold was breached.Taees Percent ILLUSTRATION 3 - INDIVIDUAL TAXPAYERs; Puroly SEP: CASE A; Pedi i Pe sme engaged inthe following during 2021 taxable year; Trucking business (Gross a 7 4,600,000), Lease of apartments (monthly rental is 14,500 per unit, annual celpts 1,200,000), Practice of accountancy, gross receipts P900,000. Question. Whats the applicable business tax of Pedro for 20217 Answer: “Applicable business tax. 1% OPT under Section 116 of the Tax Code, as amended , NOTE: If a professional, aside from the practice of his profession, also derives revenue from other lines of business which are otherwise subject to VAT (trucking business and practice of profession with aggregate amount of 2.5M), the same shall be combined for purposes of determining whether the vat threshold of POM has been exceeded. The lease of apartment is exempt from business tax, as discussed in the previous chapter, hence, shall not be included in determining the threshold (Sec. 3, RR 16-2011). CASE B: Pedro is a big time fish dealer. His gross receipts during 2021 taxable year amounted to 5,000,000. Question 1: What is the applicable business tax and the amount due that Pedro should pay for the year? ‘Answer: + Applicable business tax: None, Pedro's engaged in a vat exempt sale NOTE: Under Section 109(A) of the Tax Code, sale of agricultural and marine food products in their original state is exempt from vat (refer also to discussions in Chapter 8) le only to taxpayers who are not subject to vat because their gross sales or receipts do not exceed the vat threshold of PIM. and the transaction is not included in, the list of vat exempt salesitransactions under Sec.109(1)(A) to 409(1)(BB). Since the sale is vat- fexempt under Section 109(1)(A), Pedros likewise ‘exempt from Percentage Tax under Section 116, regardless of the amount. ‘of gross sales and/or receipts. Section 116 of the tax code is applica Although Pedro is exempt from business tax, using the graduated tax rate. 363 he is still subject to income taxPercentage Ti i (bes Question 2: / Assume Ped is also engaged in leas Assume further that his total gross re¢ 1,500,000, whatis the applicable business apotca 4% OPT (from lease of delivery trucks on » Applicable business (ax. under Section 116 of the Tax Code, as amended. His sales as a fish dealer remains to be exempt from business t@X- ing-out ls delivery tucks to other fish deateys veins rom such transaction amounted jy tax and the amount due for the year 20217 NOTE: (a) income from Jease of property (real or per transaction ; fb) Pedro is not a vat registered person Q Pedro's gross receipts | from leasing is not more than the vat threshold (9) Peet isnt engaged in a ranscton subject 0 olher Peerage Tex oer than Section 116 = Business tax due. P15,000 ; (P1,500,000 x 1%) sonal) is not a vat exempt Question 3: ‘Assume the same data in Question #2 except that Pedro opted to be taxed at 8%. How much is the amount of business fax that Pedro should pay under Section 116? * Answer: None NOTE: The 8% tax is in LIEU of income and business tax under Section 416. The 8% tax is computed as folows: Gross receipts Less: ‘Amount subject to 8% tax 1,250,000 Tax rate 8% 8% Tax. 100,000 (2) ‘This amount represents two taxes, income fax in lieu ofthe graduated income tax table and business tax under Section 116. Question 4: ‘Assume the same data in Question #2 except that Pedro is vat registered, what should be the applicable business tax and the amount due that he should pay for the year? = Answer: Applicable business tax. 12% vat (from lease of delivery trucks only) Business tax due: P180,000 computed as = P1,500,000 x 12% NOTE: I the SEP is vat registered, the option tobe taxed at 8% 18 not applicable. provided under TRAIN Law, the option to be taxed at 8% is available ony to taxpayen \who are (a)non-VAT registered; and (b)iable for 3% percentage tax under Section 1160 the NIRC. As such, the following shall have no other option than fo be taxed usitd graduated rates (or inome tx) and Vat or OPT ater than Section 116 (or buSheS tax). (1)VAT-egistered taxpayers; and (2) those liable for OPT under Tite V of the NIRC (See. 117 to Sec. 127). 364Lire ealage Tawes CASE C: Pedro is a taxi operator, His gross receipts during the taxable year amounted to 5,000,000, Question: Whats the applicable business tax andthe amount duo forthe year? Answer: Applicable business tax: 3% Common Carrier's Tax under Section 117. NOTE: As explained in Caso B #4, the option to be taxed at 8% is not applicable to Pedro as a taxi operator because he is taxable under Section 117 of the Tax Code. | addition to Section 117, Pedro is also liable to income tax using the graduated tax rate, ILLUSTRATION 4 (SEP earning mixed income): Pedro (non-vat registered) is self-employed involved in trading electronic products and a Parse Professor of May Pag-asa College, Data forthe taxable year were provided as lows: Compensation income 800,000 Gross sales 2,800,000 Purchases on account from vat suppliers (net) 1,200,000 Payments made to vat suppliers 800,000 Purchases on account from non-vat suppliers 200,000 Payments made to non-vat suppliers 80,000 Operating expenses 1,200,000 Question 1: What is the applicable business tax and the amount due that Pedro should Pay for the year? Answer: = Applicable business tax: 1% OPT under Section 116 = — Amount of business tax due: P84,000 computed as 22,800,000 x 3%. NOTE: The compensation income is not subject to a business tax. Question 2: Assume the same data in Question #1 except that Pedro opted to be taxed at 8%. How much is the amount of business fax that Pedro should pay under Section 116? -* "Answer: None NOTE: The 8% tax is in LIEU of income and business tax under Section 116. This amount represents two taxes, income tax in lieu of the graduated income tax table and business tax under Section 116. The P250,000 deduction —_ presented in Illustration 2, Case B, Question #3 is not applicable to SEP earning ‘mixed income. 3652, 7 trcenlide Tare wane he vat threshold during the year): fiioner. She indicated her intention to be -vat registered CPA practtionef. her in taxed at Aerial " ‘natty income tax return. ae 8s a were as follows; January to September, 3,000,000; October to ILLUSTRATION 5 (SEP exceeded t Question 1: 4 How much should be her total business tax for the year? ‘Answer: P150,000 computed as follows: Jan.to Sept: Percentage Tax under Sec. 116, (PSM x 174) anoao PIM x 12% 120,000 Oct to Dec.: VAT, PIM x ae Total business tax Question 2: When should Ana register under the vat system? ‘Answer: Not later than November 30, 2021 (RR 13-2018) NOTE: > The taxpayer shall be allowed an income tax credit of quarterly payments initaly made under the 8% income tax option. > Taxpayer is likewise liable for business tax(es), in addition to income tax. A percentage tax pursuant to Section 116 of the Tax Code, as amended, shall be inpeed on the first P3,000,000.00. The excess of the threshold shall be subject to | | | | > Percentage tax due on the P3,000,000.00 shall be collected without penalty, i time pai on the due date immediately following the month the threshold was reached.—— Vercentaye Tages aoe PERCENTAGE ta; CARRIERS AND KEEPERS oF GARAGES een Cars for rent oF hite driven by the tos fonder ite, and other domestic cattiors ty land for the transport of passeng Issengers (except $. two wheeled veil) an hcayea ou ofbarcas and canes of anime percent (3%) oftheir quarter oi rea Shall pay a tax equivalent to three The gro: n ia a fees 7 peaeercacies cated {rom their incoming and outgoing '¢ local taxes imposed c 7160, othenvise known as the Local Government Code oot, an Percentage Tax under this Section of the Tax Code is also known as 3% common carriers tax (CCT), which gross receipts of operators of: ) shall apply to the quarterly Cars for rent (rent-a-car business) + Cars for hire driven by the lessee * Transportation contractors including those who transport passengers such as tourist buses for hire Other domestic carriers by land for transport of passengers; and * Keepers of garages TAX RATE AND BASIS: 3% OF GROSS RECEIPTS. Common carriers tax (CCT) under this provision pertains to percentage taxes of domestic common carriers by land for the transport of passengers only. However, CCT shall not apply to: (1) owners of bancas, and (2) animal drawn two-wheeled vehicles. Likewise, Republic Act No. 7160 (Local Government Code of 1991) provides that gross receipts of common carriers derived from their incoming and outgoing freight shall not be subject to the local taxes. Domestic common carriers by air or sea are subject to vat on their gross receipts from their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines (RR 16- 2008). International flights or shipments of domestic carriers by air or sea shall either be subject to 0% vat (zero rated) or vat exempt, depending on whether the entity is vat registered. Zero-rated vat shall apply only to vat registered domestic carriers while non-vat registered domestic carriers are exempt from value added tax (Refer to Chapter 8). 367Percentage Cee = RMC 70-2015 OMPANIES ig @ pool of land tra TAO ONE en Nt Vol Son on hy pholi at : : ng pu jor cali , mobile applicator wna etn er ahr tee ae Fa ay vehicles usod in ansporing passenger a at mn People adores ote han the TNC, and shal be iness Taxes or TNCs and ‘Parnes eee Sencar vated “Certificate of| oa a oe Oe INSport of user sue OO sak arpa conto Soe 2% VAT or 3% OPT under Sec. 116 of he Tax Code. rime PU EM nc ee 2,400 Jeepney for hire ee ana and ber cies 1,200 2. Provincial Public Utility bus a a. Notexceeding 30 passengers f b. Exceeding 30 but not exceeding 50 passengers 6,000 c. Exceeding 50 passengers 7,200 Taxis 4. Manila and other ciies 3,600 e. Provincial 2,400 Cars fr hire f. With chauffeur 3,000 Without chauffeur 11800 Senate Commitee Report No. 37 (Gated 11 February 2008) suspended the implementation ofthe revised minimum gross receipts under RR No. 9-2007. Consequently, the old minimum gross receipts shown in the table above shall still apply. Art. 1732 (NCC) Section 117 of the Tax Code refers to domestic Common carriers common carriers engaged in the transport of passengers by are —__pets0ns, land, Hence, domestic common carriers by land transporting exerts m= cargoes or goods shal be subject value added taxis eneaged in the Of the 3% common carrier's tax, However, the 3% business of carving Perlentage tax on vat exempt entities based on Section 116 or transporting Shall be applicable if the domestic carrier transporting passengers orgoods SAEOES oF goods is not vat registered and gross receipts do oa by en not exceed the vat threshold of P3,000,000. ‘This rule shall , of ait, for also apply to domestic carriers by air and sea. The 3% cee a oe Carriers tax under this section (Section 117) shall be serioes to the “stnguish from the 3% percentage tax on entities or persons public exempt from vat under Section 116, 368L treentaye Tieees The i ne different applicable business taxes of “domestic” common carriers are shown in Table 9-2 below: MEE RG) ertof___ Business Tax Passengers 3% CCT (See. 117) regardless of gross receipts [_Seods/Cergoes TO Vator Sex NSW ORSPOM & nator. | Passengers |__| VAT or Sec. 116 if GRSP3M™ & not vat reg. Goods/Cargoes +>} VAT or Sec. 116 if GRSPIM* & not vat reg. Int'l flights/shipments of |_| 0% VAT if vat registered, otherwise vat “domestic” carriers exempt NOTE: = Vatis imposed on sale of goods or services rendered inthe Philipines only. As such, tansport of passengers and goods from international fights of domestic common carriers are not subject to vat = Transport operations of common carriers originating abroad is not subject to business taxin the Philippines. ILLUSTRATION 6: a Victory Express is a domestic common carrier by land engaged mainly in the transport of passengers in Luzon areas, Due to the increasing demand to transport goodsleargoes, the company decided to aoquire additonal bus unis exclusively intended fr tis purpose, The company is non-vat registered. The results of operations forthe calendar year 2021 are as follows: Gross receipts - transport of passengers ST Gross receipts — transport of goods ts00000 Purchases - supplies and services f eee Other operating expenses . ee Question 1 What amount should be recognized as common carriers tax? +» Answer: P1,500,000. (P50M x 3%) 369Parentage Teas : it vat? Question 2 What amount should be recognizes to outpul Answor: P1,800,000. (P15M x . argos oxcoods th Val thestoy Ar tort transport of goods of COURS Te 7 aH, However, being a non-vt register ent, Veto Express cana ass an Pet aners fon rensport of gooaseargoos) MMP ‘applicable output vat and isnot entitled to input vat credi m transport of "goods" amounted to ‘as business taxes? follows: Question 3- Assume that Victory's gross receipts fror 1,500,000 only, What amount should be recognized * Answer 1,545,000 under Section 116 computed as Common carriers tax under Sec. 117; (50M x 3%) Px 0,008 3% OPT under Sec, 116; (P1.5M x 3%) 5 000 Total business taxes - 1,545,000 ILLUSTRATION 7: . Philippine Air, a vat registered domestic air carrier provided the following data for the current taxable year: Gross receipts — transport of passengers 50,000,000 Gross receipts transport of goods 10,000,000 20,000,000 Purchases (supplies net of vat) Question 1: How much is the applicable business tax due assuming the revenues were derived from its domestic operations? +» Answer: P4,800,000 (val) Output vat (P50M + 10M) x 12% 7,200,000 Input vat (P20M x 12%) (2,400,000 Vat Payable 4,800,000 Question 2. How much is the business tax due/(refundable) assuming the revenues were derived from its international operations originating in the Philippines, “+ Answer: Vat refundable of P2,400,000 Output vat (P6OM x 0%) PO Input vat (P20M x 12%) (2,400,000) Vat Payable (Refundable) (2,400,000) Question 3 How much is the business tax due/(refundable) assuming the . ihe in kj . le revenues were derived from is international operations withthe folowing br aa cobalt the Philippines and 50% originating abroad. 9 breakcown; 50% originating in ‘Answer; Vat refundable of P1,200,000 ag Output vat (P6OM x 50% x 0%) Po Input vat (P2OM x 50% x 12% ti Vat Payable (Refundable) ’ f ont Q (P 1,200, 2) The revenues on its fights Originating abroad is not subject to business tax. 370i k Pereetage Tages sstion 4 Same assumption in registered entity. How much Is tha Question #2 except that the company is a non-vat business tax due? “Answer: PO The company is vat a exempt be fo intemational fights of ome ane raged ‘only and the fights pertain PEI : SSaIeIERE RCENTAGE TAX ON INTERNATIONAL CARRIERS (A) International air carriers doi A) roteke eas ried doing; business in the Philippines on their gross Salo ane transport of cargo from the Philippines to another country wee percent (3%) of their quarterly gross recefpts. (B) i je (B) onan shipping carriers doing business in the Philippines on their gross recat ie from transport of cargo from the Philippines to another country ay a fax equivalent to three percent (39%) oftheir quarterly gross receipts. Percentage Tax under this Section is also known as Common Carriers Tax (CCT) on International Carriers. RA10378 implemented under RR 15-2013 provides that international air and shipping carriers shall be subject to common carriers tax at 3% based on gross receipts derived from their transport of goods from Philippines to other countries.. International carriers shall refer to foreign international air carriers and international shipping carriers doing business in the Philippines (resident foreign corporations). “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 ina continuous and uninterrupted flight, Imespective of the a i sale or isst t lace of payment of the passage documents. In cases nee and the isrrippines Billings Tax (2.5% income tax based on GPB) provided for in Section 28(A)(3) of the “NIRC, as amended, is not applicable, the Common Carrier's Tax herein imposed under-Section 118 of the NIRC, as amended, shall still apply.Parcrtage Ties EXEMPTION FROM VALUE ADDED TAX International air carriers and international fabpa persica ara not be subject to 12% value added tax (passengers or rendered i vetgon that vat is applicable only on sale of goes Fr Te the Philippines. International flights or shipmen! in the Philippine; are not considered sale of services renderee 7,6) 3) Intemational carriers exempt from VAT under Section (8) are not allowed to register for VAT purposes. ‘ . i ic ie starting from or Foreign Intemational Carriers without flights/voyags passing through any point in the Philippines (OFF-LINE CARRIER) ‘An offline international cartier having @ branch office or a sales agent in the Philippines which sells passage documents for compensation Se commicion to cover offline flights/voyage of its principal or head office, ot for other airline/sea carrier covering flights/voyage originating from Philippine ports or off-line flights, is not considered _engaged in business as an international air carrier in the Philippines and is, therefore, not subject to Gross Philippine Billings Tax nor to the three percent (3%) common carrier's tax under Section 118(A) of the Tax Code. Off-line flights or voyages refer to flight or voyage operations carried out or maintained by an international carrier between ports or points outside the territorial jurisdiction of the Philippines, without touching a port or point situated in the Philippines, except when in distress or due to force majeure. ILLUSTRATION 8: CASE An international air carrier provided the following data for the current year: Gross receipts - transport of passengers (Philippines to Canada) 12,000,000 Gross receipts — transport of passengers (Canada to Philippines) 8,000,000 Gross receipts ~ transport of goods/cargoes (Philippines to Canada) 6,000,000 Gross receipts - transport of goods/cargoes (Canada to Philippines) 4, ‘000,000 Purchases (supplies net of val) 7,500,000 Other operating expenses 6,000,000 Question 1; How much is the applicable business? “> Answer: P180,000 (PM x 3%) Under the new law (RA10378) as implemented 13, international carriers (resident foreign corporations) Pegs ard ‘common carriers tax On gross receipts from transport of goods/cargoes originating in the Philippines. Prior to the implementation of RA10378, 372Parcentage Tages international carriers al r receipts from the transport of pe ran gotten \getS and goods/cargoes, question 2: What is the applicable income tax rate? hi } Answer: In general, | based on gross Phaser Carriers aro subject to 2.5% income tax “preferential | bilings unless ‘exempt’ or subject to a treatyintomational tax rate" on the basis of tecpocly or copie tax Agreement to which the Philippines is a signatory. Question 3: How much is the i subject a preferential tax rate wes Ou a88uming the International cars neither . exempt “Answer: P450,000 uae Question 4: How much is the income toa preferential tax rate of 1.5% on Gi international agreement? Answer: P270,000 (P18M x 1.5%) tax due assuming the international carrier is subject Oss Philippine Bilings under an existing tax treaty or Question 5: How much is the income tax due assuming the international carrier is exempt from income tax based on reciprocity? . % Answer: PO Sei le ike) - TAX ON FRANCHISES. ‘Any provision of general or special law to the contrary notwithstanding, there shall be levied, assessed and collected in respect to all franchises on radio and/or television broadcasting companies whose annual gross receipts of the preceding year does not exceed Ten million pesos (PhP10,000,009,, subject to Section 236 of this Code, a tax of three percent (3%) and on gas and water utiles, a tax of two percent (2%) on ’ the gross receipts derived from the business covered by the law granting the franchise: Provided, however, That radio and television broadcasting companies referred to-in this Section shall have an option to be registered as a value-added taxpayer and pay the tax du, thereon: Provided, further, That once the option is exercised, said option shall be irrevocable, shall file the return with, and pay the tax due thereon to the ‘er or his duly authorized representative, in accordance with the 28 of this Code, and the retum shall be subject to audit by the any provision of any existing law to the contrary The grante¢ Commissioné provisions of Section 1 Bureau of Internal. Revenue, notwithstanding. 373Percentiye Tae eg ig also known as Franchise der this Section nd collectex Tax. A porebringe ee 3% shall be levied, are proadeasting respect to all “franchisos on radio anti preceding year does not companies” whose annual gross reer vision broadcasting companies exceed P10,000,000. Radio a agistered as a v; referred to in this section shall have an option 10 Pe oe, it shall not taxpayer, provided, thal once the option is revoked. ter utilities at ranted to gas and wal a erst be Ive, ‘assessed and collected on the s ‘ered by the law granting the 1ss COVE e oe be subject to either 12%. value ase may be. A percentage on rate of two percent (2%) gross receipts derived from th franchise. Other franchise holders shi added tax or 3% other percentage tax, as the ¢ FI CS Couey PURE nunca GRANTOR TYPE OF FRANCHISE BUSINESS TAX 3% OPT or 12% vat if vat reg. or if Radio(Telev Broadcasting Co.'s. | GR > POM for the preceding year"* Gas and water ulilties 2% OPT regardless of gross receipts ‘Allother types of franchises peor ores Sec.116 All types of 12% vat OR 3% OPT under franchises Sec.116 if NV reg. & GRSP3M tadio and television broadcasting companies referred to in this Secti registered as a Value-added taxpayer and pape abl ee nipetly ayer and pay the tax due thereon, provided, that once the option is FRANCHISE TAX FOR THE NATIONAL GRID CORPORATION RA.9511 imposed a 3% franchise tax on all . x Coporeon fam is tansrisson operation, 2 eae by tte National Grd 4zmzzam. Answer: P8,000 (P200,000 x 4%) Question 2: Assuming Paeng directly obtained the insurance policy from:ABC Insurance Co, how much is the premiums tax payable on the transaction? “Answer: P10,000 (P200,000 x 5%)Parcentife aes Sea PSE UST abso i ir Of cockpits There shall be collected from the proprietor, sa aa eT ae cap : cabarets; night or day clubs, boxing exhibitions, professional and racetracks, a tax equivalent to: te Amusement Place opr Rate Jai-alia and racetracks 18% Cockpits, cabarets, night or day clubs 15% Professional basketball games (PD 871) 10% Boxing exhibitions Gross receipts embraces all receipts of the proprietor, lessee or operator of the amusement place irrespective of whether or not ay amount is charged for admission. It is also inclusive of income from television, radio, and motion picture rights, if any. A person or entity or association conducting any activity subject to the tax herein imposed shall be similarly liable for said tax with respect to such portion of the receipts derived by him/it. “Night and Day Clubs” as provided in RMC 18-2010 are drinking, dancing and entertainment venues which oftentimes serve food and provide entertainment. “Cabarets”, on the other hand, are restaurants or Clubs where liquor. and food are served, with a stage provided for performances by musicians, dancers or comedians, including a venue for dancing by patrons/customers, similar to that of nightclubs. With the advent of modern interactive entertainment, along with recorded music (and/or music video) using a microphone and Public address system, the proprietors/lessees or operators of these amusement places have pursued a new form of lounge and club entertainment. Most of these establishments provide facilities to allow patrons to sing with the expectation that sufficient revenue will be made Selling food and drinks to customers. The “terms" nigh and day clubs and cabarets have become Passe’. Amusement places which offer the same pleasurable diversion entertainment and function now include videoke bars, karaoke bare karaoke televisions, karaoke boxes and Music lounges. As such, the roprietors, lessees, or operators of the aforementioned esteblonments are deemed also subject to 18% amusement tax under Section 125 of the Tax Code, and not to the 12% value added tax (RMC 18-2010). 386: ippetey Taees The 15% percentage tax : in lie for professional basketball games shall pe in lieu of all other percentage taxes of whatever nature and description. Boxing exhibitions wherein World or Orier ips: i ivisic ntal Championships in any division is at stake shall bo exempt from amusement tax rrvided that at least one of the contenders is a citizen of Philippines, and said exhibitions are promoted by cltizen(s) of the Philippines or by a nh or association at least 60% of the capital is owned by such citizen(s). ; Te The taxes imposed herein shall be payable at the end of each quarter and it shall be the duty of the proprietor, lessee or operator concerned, as well as any party liable, to make a true and complete return of the amount of the gross receipts derived during the preceding quarter and pay the tax due thereon. ILLUSTRATION 16: CASE A: Apol B is the operator of Golden Apol Coliseum. During the morith it had the following gross receipts from various activities: | Income from the concert of Isang Direksyon 2,000,000 f Professional basketball game 3,000,000 | Ka Emong Super Derby (cockfighting) 5,000,000 Question: How much is the amusement tax payable of Apol B? “+ Answer: P1,350,000 — computed as follows: Professional basketball (P3M x 15%) ‘450,000 Cockfighting (PSMx 18%) 900,000 Total amusement tax P1,350,000° = © The income from the concert of Isang Direksyon is subject fo vat. = The tax code provides that a person or entity or association conducting any activity subject fo amusement faxes under Section 125 of the tax code shall be similarly iable to such taxes. t CASE B: The much awaited boxing bout between Pac (Filipino champion) and Floydi (American citizen) finally materialized during the current taxable year. The bout was promoted by ‘Apol B Promotions (75% owned by Filipino citizens). Gross receipts for the featured bout weré as follows: 5,000,000 Gate receipts Gross receipts, sale of food and refreshments 1,000,000 Income from live TV coverage 1,500,000 Gross receipts from sale of caps and t-shirts 500,000 387Pireentege Taees ing. the bout is for Question 1: How much is the amusement {2x payable assuming a Philippine boxing championship belt? Tee see nrower. PBD0 000 (P8,000000 x 0%) 1ssul Question 2: How much is the amusement tax payable a WBA world boxing championship? . * answer: None. ‘The bout is tax exempt ming the bout is for the vacant is for the vac Question 3: How much isthe amusement tax payable assuming the bout is for the vacant Oriental boxing championship? : : ‘Answer: None. The bouts tax exempt SECTION 12 EN AOMUN ed Every person who wins in horse races shall pay a tax equivalent fo fen percent (10%yof his winnings or ‘dividends’, the tax to be based on the actual amount paid to him for every winning ticket after deducting the cost of the ticket: Provided, That in the case of winnings from double, forecast/quinella and trifecta bets, the tax shall’ be four percent (4%). In the case of owners of winning race horses, the tax shall be ten percent (10%) of the prizes. The tax herein prescribed shall be deducted from the ‘dividends’ corresponding to each winning ticket or the ‘prize’ of each winning race horse owner and withheld by the operator, manager or person in charge of the horse races before paying the dividends or prizes to the persons entitled thereto. The operator, manager or person in charge of horse races shall, within twenty (20) days from the date the tax was deducted and withheld in accordance with the second paragraph hereof, fle a tue and correct return with the Commissioner in the manner or form to be prescribed by the Secretary of Fare, and pay within the same period the total amount of tax so deducted and withheld. eee Mey Taxpayer Winnings from Rate i : Basis Bettor | Regular bet 10% | Winning or dividends less i Bettor Double, forecast/quinella 4% Wingo ditends ees and infects bets less cost of ticket 410% _| Gross Winnings 388Pepeentige, Tagees ~ \pLUSTRATION 17: janaya had the Mr, Mananayé following records of his winnings from horse races forthe month: ype of Winnings mt hy fnnings Gross Winnings Cost of Winnings Trifecta fc P100,000 Ordnany so ag0 “00000 , 000 0 Ordinary 75,000 2000 How much is the business tax on wit “Answer: P28,600 ae Solution: Type of Net Winnings Winnings OPT rate OPT Trifecta 50,000 © 4% 2,000 Ordinary 250,000 10% 25,000 Double 40,000 4% 1,600 Total business taxes on winnings __P28,600 KSC hoe CTS) ISECTION 127.— TAX ON'SALE, BARTI ROUGH THE LOCAL STOCK OF STOCK LISTED AND TRADED. an! EXCHANGE. There shall be levied, assessed and collected on every sale, barter, exchange or other disposition of shares of stock listed and traded through the local stock by a dealer in securities, a tax at the rate of six- exchange other than the sale of 1%) of the gross selling price or gross value ‘ tenths of one percent (6/10 o in money of the shares of stock sold, bartered, exchanged or otherwise disposed which shall be paid by the seller or transferor. The following sellers or transferors of stock are liable to this tax (RR 6- 2008): a. Individual taxpayer, whether citizen or aren ; |b. Corporate taxpayer, whether domestic or foreign. Pi c. Onor taxpayers not falling under (a) and (b) above, such as estate, “trust, trust funds, and pension funds, among others. 389Pereentife Tawes Since the basis of the the seller shall not be a dealer in secuitles. SONS ics trom ‘oss value in MONEY: 2 ‘this reason, the tax is gross selling price or 9f sale or exchange shall therefore be ignored. CK His ANSACTION percentage tax paid herein is also referred to as TAX. : i nange or other disposition Al rived from the sale, barter, excl fy of shares, of stock Under Sec. 127 shall be exempt from capital gains tax i it IX. and from the regular individual or corporate income ta ted the sale shall collect the tax and ee Revenue (BIR) within five () ction thereof. The said stockbroker is h week to the secretary of the a true and complete return actions effected though llected by him/her, and ecurities. Every stockbroker who remit the same to the Bureau banking days from the date of colle also required to submit on Mondays of eacl stock exchange, of which, he/she is a member; which shall contain a declaration of all the transi him/her during the preceding week and of taxes co! turnéd over to the BIR. DEFINITION OF TERMS Shares of Stock ; = Shall include shares of stock of a corporation, warrants and/or options to purchase shares of stock; as well as units of participation in a partnership (except general professional partnership), joint stock companies, joint accounts, joint ventures taxable as corporation, associations and recreation * ‘or amusement clubs (such as golf, polo or similar:clubs), and mutual fund certificates (RR 6-2008). Local Stock Exchange «Refers to any domestic organization, association, or group of persons, whether incorporated or unincorporated, licensed or unlicensed, which constitutes, maintains, or provides a market place or facilities for bringing together purchasers and sellers of stocks, and includes the market place and the market facilities maintained by such exchange (RR 6-2008). Sheree Listed and Traded through the Local Stock Exchange = Refers to all sales, trades or transactions of listed Shares of St 8 lock executed through the trading system and/or facilities of the Local Stock Exchange. This term includes block sale or other types of sales, trades or transactions in the Local Stock Exchange and executed through the trading system and/or facilities of the Local Stock Exchange in accordance with the rules of 390Peri fen Tages p the Local Ste Commision (Rf enone 8 approved by the Secirtes and Exchange ‘Stockbroker * Includes all persons whose businoss Is, for t , for other brokers, to negotiate aoe or eels Of stocks, or engaged in the business of effecting bank or und Securities for the account of others but does not include a Underwriters for one or more investment companies as defined in the Investment Company Act. [Sec. 2 (0), RR 6-2006] Dealer in securities = Means a Merchant of stocks or securities, whether an individual, partnership OF corporation, with an established place of business, regularly engaged in the purchase of securities and the resale thereof to customers; that is one, Who as merchant buys securities and re-sells them to customers with a view ca gains and profits that may be derived therefrom. [Sec. 2 (b),.RR 6 Under RR 6-2008, the taxes imposed under Section 127 shall NOT: APPLY to the following: 1. Dealers in securities 2. Investor in shares of stock in a mutual fund company, as defined in Section 22 (BB) of the Tax Code, as amended, in connection with the gains realized by said investor upon redemption of said shares of stock in a mutual fund company ; and 3. All other persons, whether natural or juridical, who are specifically exempt from national internal revenue taxes under existing investment incentives and other special laws: ILLUSTRATION 18: In 2021, George sold 2,000 shares of a domestic corporation in a local stock exchange at 110 per share. The shares were acquired at P100 per share three years ago, i Question’: How much is the final income tax (capital gains tax) on the sale of shares? > Answer: PO; The transaction is not subject to capital gains tax. Question2: How much is the income subject to basic or ordinary tax? “Answer: PO; The transaction is exempt from income tax (both CGT and basic income tax). 391L ruatige Tate Westion3: How much is business tax due? a Answer: Percentage tax (stock transaction tax) of P1,320 SOLUTION: ‘ollng price (2,000 sh, x P110) _xPorcontage tax rate Porcentaga/Transaction Tax pica ogg Jn. 1, 2018 P1,320_, % of gross selling The transaction is subject to OPT of 6/10 of 1% of gross ® ips 1%) iano ‘of whother the transaction resulted to a galn or loss, how much is the applicable business 220,000 006. Question4: Assume George is a dealer of securities, tax due? > Answer: P2,400 VAT due computed as follows: Selling price (2,000 sh. x P110) 220,000 Cost (2,000 sh. x P100) (200,000) Gross income (subject to basic income fax) 20,000 xvat rate 12% Output Vat (BUSINESS TAX) 2,400 (2 As discussed in Chapler 7 and 8, the VAT rate in case of a dealer in securities is based ‘on gross income, not on gross salesireceips. GTR ed O ealed ld =D Cavs) Section 128(A) Returns of Gross Sales, Receipts or Earnings and Payment of Tax 1) Persons Liable to Pay Percentage Taxes. — Every person subject to the percentage taxes imposed under this Title shall file a quarterly return of the amount of his gross sales, receipts or earnings and pay the tax due thereon within twenty-five (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 Section 116 of this Code, the tax shall accrue from the date of cancellation and shall be paid in accordan ith th provisions of this Section. ae 392 Henn| . L "eteentee Tages 2) Person Reti ) pusiisse eetfrom Business. — Any person retiring from a ifternal’ fave, a to percentage tax shall notify the nearest thereon th ie Officer, file his return and pay the tax due In twenty (20) days after closing his business.” 3) tare neeen [of Correct Sales or Receipts, — When itis found no retim Ie fi “2 failed to issue receipts or invoices, or when books of coat , Or when there is reason to believe that the declarations ts or other records do not correctly reflect the filed under ry le or to be made in a return required to be Hea under the provisions of this Code, the Commissioner, a into account the sales, receipts or other taxable amlleria fer. persons engaged in similar businesses under imilar situations or circumstances, or after considering other relevant information may prescribe a minimum amount of such gross receipts, sales and taxable base and such amount so prescribed shall be prima facie correct for purposes of determining the internal revenue tax liabilities of such person. Section 128(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 places of business with the authorized agent bank, Revenue District Officer, 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. 393eregatipe Cowes Eas OF TAX ee d taxpayer who operates a rd) is a non-vat registered Shot Floyd (self-employet eh re! ‘The following were pro convenience store, 20,000 Sales of processed food items P0000 Sales of non-food items 00,000 Purchases of processed food items Pca Purchases of non-food items aso Salaries of helpers 4. How much is the correct percentage tax due? ‘Answer: P15,000 The taxpayer is non-vat registered + his gross sales did not exceed the vat threshold + the transactions are not exempt from vat. Consequently, he is subject fo 3% OPT under Section 116 of the Tax Code, as amended. © — OPT= (P280,000 + 220,000) x 3% = P15,000 2. Assume Floyd opted to be taxed at 8% on his gross sales and receipts, how much is his percentage due? “ Answer: PO © The 8% optional tax under TRAIN Law is in LIEU of Graduated income tax and Section 116 of the Tax Code. Obviously, if the taxpayer is ‘subject to Section 116, he is no longer subject to vat. | 394= sen De OF the Pranppionn ioe @ ose rom Ne Quarteri - 2551Q)) ovr antemeenantage Tax Return Tan ll oe PREART cd ee dr RP ee eon free eT ST Pe Soa ra a vexcenaedamerrrn [12 210410 lk) Cm Ow tal 7 aaa Pear np antl Min Vesting enor a g MAGBAIN UAL, (FLOYD, ae eet Tawees pt aaa [2 euAsSA A SARIN MAPAGPANGGAP poy ANMEASUUY it tate owe | 1,724 Ramber fanetnecupioe at 11 Ena Adres tot Zi 4,7, 7,817,513 4 8 Oo tte SMA TOM a L ear et \ ‘ony finde) Raaves whose Salestacois ar subject Peroniage Tax inder Secon {16 ie Tax Gade. 35 amano siccmroyersemas ne cee ‘2 Carer oe trae yea tecae gezcome Faerate cnet Tar, naome taxrate on ross salesirecettlahers Pan Yous Ta Payable fata Taxbve fon Sowa Ten og Beate sald 11111111151 0,0; 0) 0,0] 45 Gretable Percentage Tax Wiel per BIR Farm Na, 2307 16 Tax Paidin Retr Previously Fe. is is an Aperded Reh 17 her Tax CwdtPayment epee fs Tt Fax GrectPaymarts Sum tans 156 17) s8Tax S61 Payable(Overpayrert tem 14s ten 8) rae Sonier 1 El] 2 4 1 4 : : : Lt uu 2 compronise a vu L Li poi fee eae ee L L L fz Teal Penates (sum of te 20% 78 : [ak TOTAL AMOUNT PAYABLE|Overpayment) (fur ores Y0and 23) iG Tovepoyser ark one DENY: _ [iL Totes oar onic ISS PST TI en LTS I nea gD meeyon do eI eee otra sel ope dee Rene Sem ene et sein ned eee mret hoa ain Se rg Salar a icine eee pn tod mene nn Teena Tartar FLOYD MAGBANUA SRE TES TRESS —] ka es rate Tapas Rees ors Fe oe ea : ‘na ion pears Tat eae Detals of Payer Paricatars || oemeawt | umber [Date amucerrrrg Amount fcevmetodwnee| tarsi iti list tisiuiiisiii tt Bost eo ee Ta Debit Memo | Tretia tititipi tire tt tly [ios eyo z pod tbaatrtarbaba! i miemrnits ‘nos spunweeun Texas) “Were Pea BA Daa PTR BT mE WHE 395[BinFomte, |] 2551Q) quarterly Percentage Tax Return eayzgcrcs| ae Ta ate (ATE * ~ sm 11-1 1115101010}. | 10) ffemoto Lori 1610i0)0.00]-[o.0[ oa fe 111 tnE Be Bo i et MP Pe pf 4 pt Se vt fe] pp hh Ty types el Mt 7 Tt ex Ove on io TPO on 1s 19,010 [ovo Tablet = Apion Toxo TG) Frain THOR ea a VAT We oT Danie Ones SMCmrs ov 7 Porousa Cores ae sues ona oe er ois (7 fe ee rae a oes cepts meine omeraien oesig fore Prices Sonn Esher (be 23) — Prlesona] SusDaT CoP SEE TET [is stand ocr Tacks ur 195 is nk Friction Fc (AE | — way boas We) es oe = PY S01] — Walp are an (2) e52 [perm] — | Eris ahonraates roi cl nuees, eat cgens pots uae aaa PT 1oe_[shonatvang gare we Wat es ine ate eee ors oye dn ersten ana FHomrieestconsisrs si ancsistosiestegacnte se nite asf teranng nauses ans fon aes sry pt se (sear os str pads se hse as iF aor fens ested 8 9ets cone GA He [Le nauarce Pema ee TO Tnsurance Companies (See 72 instance Agent FT YS2 2) Owes pepe Sb SUN BRE ak WN RRS ST 396ISU ee p9-1. petermine the appropriate busines: transaction/business described below. PROBLEMS S tax of each of the following types of If the. transaction/business: is subject to: « 12% vat, write, "Vv" « Percentage Tax, write “PT” « Exempt from business tax, write “E” TRANSACTION/BUSINESS __ 1. Sale of cotton. ~~~ 2. Importation of fertilizers. 3. Trader of fresh fruits whose gross receipts exceeds P3,000,000. 4, Trader of goods whose gross receipts exceeds P3,000,000. 5. Aseller of service whose gross receipts exceeds P3,000,000. 6. Pi 12. 13. 14. A practicing Certified Public Accountant whose gross receipts during the year amounted to P3,800,000. Domestic common ‘carriers transporting passengers by land. Gross receipts for the year amounted to P2,800,000. Domestic common carriers transporting passengers by land. Gross receipts for the year amounted to P4,000,000. Domestic common carriers transporting goods or cargoes. Gross receipts for the year amounted to P2,600,000. | Domestic common carriers (vat registered) transporting goods or cargoes. Gross receipts for the year amounted to P2,250,000. _ Domestic common carriers transporting goods or cargos. Gross receipts for the year amounted.to P6,000,000. Lhazadha, an online shopping company, Dormitories 7 Legal fees : naa . Review schools for government licensure examinations. - International air carriers on their transport of passengers. - International air carriers on their transport of goods. . International carriers transporting passengers and goods. . Nonresident foreign licensors. }. Night clubs . A radio television broadcasting franchisee. Gross receipts for. the « preceding year amounted to P12,000,000. , . A’vat registered radio television broadcasting franchisee. -Gross receipts for the preceding year amounted to P8,000,000. . A telephone franchise grantee offering local and overseas 397- > . — Percentage Ta 1 Okapler Eieeretses Le w4 es ar amounted to communication services. Gross recolpls for the yo 00. cal and overseas Peat fanchiso granteo AD er communication services. Gres 0. operations amounted only to P2,600,000- 25. Philippine commercial banks. 36, Lending/lnancing companies. 27. Interest income derived by & cret activities to non-members. 28, Sale of low-cost housing b: 29, Lease of commercial spaces. ' ' 0 Pilpines Basketbol Association, a professional basketball league. 31, Operator of Jai Alal. 32. Saint Claire Dormitory 33, The Pearl Hotel 34, New wave resort 35. Vat registered exporter. 36. Hog dealers 37. MERALCO 38. Non-vat registered exporter. 39, Gasoline stations 40. Sale of wines by a dealer. z dit cooperative from its lending y vat registered real estate companies. P9-2. Ana, a self-employed resident citizen provided the following data for the 1® quarter of 2021 taxable year: Sales 1,275,000 Cost of sales 625,000 Business Expenses 350,000 Royalty from books 40,000 Gain on direct sale to buyer of shares of stock of a ; domestic corporation held as capital asset 70,000 Loss on sale of land in the Philippi : ippines held as capital asset with cost of B1,50 zonal value is 1,200,000, 1°00 when the 500,000 REQUIRED: 1. Determine the total quarter. al business tax due and payable for the first 2. Determine the total fin uarer, if applicable, assuring geo ond Payable for the first ‘© assuming Ana opted to be taxed at 8%.dapler Evercises i Eoreatiye Tages p9-3. Pedro is a CPA practitioner. His gros ther data for 2021 taxable year are provided balbironee expenses and _o' Gross receipts 100 Cost of direct services ' pre p00 Operating expenses 425,000 Rental income (net) 570,000 Dividend income: from a closely held domestic 50,000 corporation Interest income from peso bank deposit 80,000 3 Interest income from FCDS deposit 20,000 REQUIRED: 1, Determine the total business tax due and payable for 2021 assuming Pedro is non-vat registered. * 2. Determine the total business tax due and payable for 2021 assuming Pedro opted to be taxed at 8%. 3. Determine the total business tax due and payable for 2021 assuming Pedro is vat registered. P9-4. Ana (resident citizen), earning compensation income and from self- employment, provided the following data for the 4 quarter of 2021 taxable year: Compensation income " P780,000 Sales 1,275,000 7 Cost of sales 625,000 Business Expenses . 350,000 Royalty from books 40,000 Gain on direct sale to buyer of shares of stock of a domestic corporation held as capital asset 70,000 Loss on sale of land in the Philippines held as capital asset with cost of P1,500,000 when the zonal value is P1,200,000 5 : 500,000 f REQUIRED: 4. Determine the total business tax due and payable for the first quarter. 2. Determine the total business tax due and payable for the first quarter, if applicable, assuming Ana opted to be taxed at 8%, 399Oheple Ecuerises <4 Bee Tae n carrier) has the following data for P9-5. 7 ol Bus Company (a domestic comm: fet aris othe current year: ‘ations 8,000,000 Gross receipts, passenger operat a 5,000,000 , Gross revenue from cargo operatio 4°750,000 Expenses, passenger operations 2'500,000 Expenses, cargo operations 2,000,000 Gross receipts-rental of facilities Additional information: 25% of its gross rev outstanding as of the en' enue from cargo operations were still d of the quarter. . of REQUIRED: Determine the total business tax due for the first quarter. P9-6. Fast Track Company, a domestic c transport of goods and cargoes provi taxable year: .ommon carrier engaged in the ided the following data for 2021 Gross receipts, 2021 2,400,000 Receivables, January 1, 2021 500,000 Receivables, December 31, 2021 600,000 Operating expenses 1,250,000 REQUIRED: Determine the following: 1. The business tax due of Fast Track assuming the company is a non-vat registered entity. 2. The business tax due of Fast Track assumi ompany i vat registered entity. ing the company fs 8 . P9-7, Fly Away Air Lines (a resident it py ey ar ee nt international carrier) has the following data Gross receipts, Philippines ( Gross receipts, Philippines (corse neeperations) 10,000,000 i cargo Operatic Gross receipts, Japan (passenger Spsciee) at Gross receipts, Japan (car; i S, Jaf ‘90 operations Eeoles: priipeines (passenger pore tons) #900000 Eee hilippines (cargo Operations)» 2000.00 epeneee: Japan (passenger Operations) pe eo s, Japan (cargo operations) 4500 »250,| 400Olithir Epa ve sf Geercises — Percentage Taees REQUIRED: Determine ti 4. The income tax dj . The income 7 preferential home Ta. mn: the company is subject to a agreement or treaty, of 2% under an existing international | 3. The business tax due for the year, P98. he following: Ue for the year, 4, Juan invested 10,000 g N, @ closely-held corporation. During the 5 Held i of his shares to Pedro for:-P50 per share. es 000 shares for P250,000 in the shares of stock of ‘i ‘Ofporation, a closely-held Corporation. During the year, Mark sold all his shares to Villar for P35 per share. 3. Assume the same data in #1 @ i ji aediororescuiee xcept that Juan is a registered 4, George is a shareholder of GJ Corporation, a listed entity. During 2021, he sold his 5,000 shareholdings for P120,000 which he purchased for P20 per share. Assume the same data in the preceding number except that George sold the shares for P18 per share. 5. P9-10. Mr. Talion operates a cockpit. ‘ Results of operations for 2021 were provided as follows: Gross receipts: Cockpit operations ' P4,000,000 Restaurant operations 1,850,000. Purchases: Supplies for cockpit operations (net of vat) 750,000 f Supplies for restaurant operations (invoice amount) 224,000 Required: Determine the following: 1. Total business tax due of Mr. Talion 2. Amusement tax due of Mr. Talion assuming the restaurant is operated by GJ Company, a non-vat registered entity whose annual gross receipts is lower than the vat threshold. : 3. Using the assumption in the preceding number, how much is the business tax due of GJ Company ta 4. Assuming GJ is a vat registered entity, how much is its vat payable for the year?Clipe Evercises = Percentage Tees 8 ; half of 2021: Re aaioie Bank has the following data for the firs! st eieitet 2° Qu 00,000 2,800,000 Interest and commission income from lending , P4, tunios with maturity of 3YE8S 4 600,000 3,800,000 Interest and commission income from len‘ activities with maturity of 5 years 6,000,000 7,200,000 Interest and commission income from lending ivities with maturity of 7 years 000 825,000 Stor come on rentals of facilities and 775, other assets 7 co ae Income from financial leasing (remaining 1,200, maturity’is more than 5 yrs) - Dividends and equity shares in net income subsidiaries os —_ Net trading gain (loss) (150,000) 500,000 400,000 Required: Determine the following: 1. Gross receipts tax for March 31, 2021 2. Gross receipts tax for June 30, 2021 TRUE OR FALSE 1. Persons not subject to vat are likewise exempt from other percentage tax. 2. Persons subject to Percentage tax on vat exempt sales or receipts under Sec. 116 shall have the option to register under the vat system which shall not be revoked for a period of three (3) years. 3. Domestic.common carriers by air or sea are subject to vat on their gross receipts from their transport of passengers, goods or cargoes from one place in the Philippines to another place in the Philippines. 4. International flights or shipments of domestic carriers by air or sea ' shall either be subject to 0% vat, vat exempt, or 3% common carrier's tax depending on whether or not the entity is vat registered. 5. The gross receipts of domestic common carriers derived from thei incoming and outgoing freight shall be subject to the local ta er é ee under the Local Government Tax Code. - : common carrier's t i ‘i a on the actual quarterly opens ee IM eaters is based whichever is lower. mnimum quarterly receipt 7. International air and shippii i percentage tax based ogee cline i a be. subject to’ 3% ree ipts derived from Philippines 402