Percentage Tax (OPT)

Section 116: Tax on exempt person from VAT

- Those sales or receipt are exempt under VAT and who is not a VAT registered person shall pay
3% of gross receipt or sales. Cooperatives are exempt, 1% percentage tax July 1, 2020 – June 30,
2023.
- Exempt person (CREATE LAW)
1. Cooperatives
2. Self employed individuals and professional availing 8% tax on gross sales or receipt.
 REQUISITES
1. Not a VAT Registered Person
2. Gross sales or receipt do not exceed 3,000,000
3. Not exempt from VAT under sec. 109 (1) (A) to 109 (BB) amended by create Law.

Section 117: Domestic Carriers and Keepers of Garages

 Also known as Common Carriers Tax on Domestic on transport of passenger by land

Tax base (Whichever is higher) 3%

1. Actual Gross Receipts

2. Minimum Gross Receipts
 Exempt
1. Owner of bancas
2. Animal-drawn two wheeled vehicles

Section 118: International Carriers

 Transport of Goods or Cargoes originating in Philippines (Air, Ship)

3% of Gross receipts

- Cargo, mail and baggage OUTGIONG

Section 119: Tax on Franchise

 Also known as Franchise Tax on franchise Grantees

 Liable
1. Franchise on Gas and Water utilities (2%)
2. Franchise on radio and/or Television broadcasting companies’ gross receipt not exceed 10M
(3%)

Section 120: Tax on overseas dispatch, message or conversation originating from Philippines

 Also known as Overseas Communication Tax (OCT)

 Exempt persons:
1. Philippine Government or any of its political subdivision and instrumentalities
2. Diplomatic services
3. International Organizations
4. News Services
 10%

Section 121: Tax on banks and non-banks financial intermediaries performing Quasi-banking functions

 Also known as Gross Receipt Tax (GRT)

Interest income, commissions and Discount

from Lending activities and Financing Lease
a. Remaining maturity period 5yrs or less 5%
b. More than 5yrs 1%
Dividends and shares in net income of 0%
 subsidiaries
Royalties, rentals of property, real or personal, 7%
profits from exchange and all other treated as
gross income
Net trading gains within taxable year on foreign 7%
currency, debts securities, derivatives and other
similar financial instrument

Section 122: Tax on other non-bank financial intermediaries not performing quasi-banking functions

Interest, commissions, discount and all other 5%

items treated as gross income under the tax code
Interest, commissions and discounts from lending
activities and financial leasing
1. 5yrs or less 5%
2. More than 5yrs 1%

Section 123: Tax on Life insurance premium

 Also known as Premium Tax

 2% premium tax
 Exempt
1. Premiums refund within six 6 months after payment on account of rejection of risk
2. Premiums paid upon reissuance by a company that has already paid tax
3. Premiums collected or received from abroad by branches of domestic corporation doing
business in Philippines
4. Excess of premiums on variable contracts in excess of the amount necessary to insure the
lives of the variable contract owners
5. Premium collected by purely cooperatives company or association.

Section 124: Tax on agents of foreign insurance company

 Also known as Premiums Tax on agents of nonresident foreign insurance companies

 Liable
- Fire, marine or miscellaneous agents of non-resident foreign corporation engaged in insurance
business
 4% - tax on agents of nonresident foreign corporation

Section 124(B): Tax on owners of property obtaining insurance directly with nonresident foreign
corporation

 5%

Section 125: Amusement Taxes

 Liable
- Proprietor, lessee or operator of cockpits, cabarets, night or day club, boxing exhibitions,
professional basketball games, jai-alai and racetracks.
 Gross receipts

Place for boxing exhibition 10%

Place for professional basketball games 15%
Cockpits, cabarets, night or day club 18%
Jai-alai and racetracks 30%

Section 126: Tax on winnings

  Liable
1. Owners of the winning horse
2. Bettor in a horse race or jai-alai

Ordinary winnings and owner of winning horse 10%

Bettor in horse race or jai-alai 4% (double, forecast/quinella, trifecta)

Section 127: Tax on stocks transactions

 Also known as stock transaction tax (STT)

- Kinds of stock transaction tax
1. Tax on sale, barter or exchange of shares of stock listed and traded through PSE. Sec.127(A)
 60% of 1% Selling price or Gross Value in money
 REQ.
- Seller is not a dealer in securities; and
- Shares sold is listed and traded through PSE
2. Tax on shares of stock sold or exchange through Initial Public Offering (IPO). Sec. 127(B)

Up to 25% 4%
Over 25% but not over 33 ½ 2%
Over 33 1/2 1%
 ReQ.
- Sale is made thorough PSE
- It is an initial public offering of “closely held Corporation”
 Person Liable
1. Primary offering – Issuing Corporation
2. Secondary offering – seller

Repealed the effect of Sec.127(B), RR 23-2020

Took effect on September 15, 2020