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Vatable franchises
a. Electricity – electric generation or transmission or distribution by electric cooperatives are vatable.
b. Telecommunication – Telecom companies are vatable, except on their receipts from outgoing messages since these are
subject to the 10% overseas communication tax.
c. Transportation – Transport companies are vatable, except receipts of common carriers by land on their transport of
passengers since these are subject to 3% common carriers tax.
d. Private franchises
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Tax on Overseas dispatch, message or conversation originating from the Philippines Winnings from Horse race or Jai-Alai
The overseas dispatch, message or conversation transmitted from the Philippines by telephone, telegraph, telewriter Winnings from race tracks and jai-alai are subject to the following amusement taxes:
exchange, wireless and other communication equipment services is subject to a 10% percentage tax. This percentage tax is
commonly referred to as the “overseas communication tax.”
Tax on Winnings
The pay-out on combination bets is subject to 4% on the net winnings. The pay-out on straight wagers (non-combination
bets) is taxable at 10%.*
Exemptions
The overseas communication tax shall not apply to the outgoing calls of the following:
a. Government – including any of its political subdivisions or instrumentalities
b. Diplomatic services – embassies and consular offices of foreign governments
c. International organizations – those enjoying privileges, exemptions and immunities under international agreements
d. News services
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21/04/2022
Summary of Specific Percentage Taxes Tax on Other Taxable Sales of Non-VAT Taxpayers
The imposable percentage tax on taxable sales or receipts, other than from services or transactions specifically subject to
percentage tax, of non-VAT registered persons is 1%.*
Individuals paying the 8% income tax shall only file BIR Form 1701A. There is no need to file BIR Form 2551Q.
Withholding of Percentage Tax at source
The sale to government agencies, and instrumentalities including government-owned and controlled corporation (GOCC) Note that option to be taxed at 8% income tax is not available to self-employed individuals or professionals if the taxpayer is
is subject to a withholding tax of 3% at source.* specifically subject to percentage tax.
This exemption, however, is not absolute. Sales or receipts of cooperatives outside their registered activities are still subject
to business tax similar to the business tax treatment of government agencies and non-profit institutions.
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