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Lesson 5

Other Percentage Tax

Lesson Objectives:

At the end of this lesson, the students should be able to:

a. Identify the transactions that are subject to Other Percentage Taxes, the tax
base and applicable tax rates
b. Learn how, when, and where to file the percentage tax returns
c. Apply, practice, solve, analyze, and evaluate problems relating to Other
Percentage tax

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Discussion:
Other Percentage Taxes (Summarized)
Coverage Taxable Base Tax Rate
Non-VAT registered persons under Section 109 (BB) Gross sales or receipts 3%
Domestic carriers and keepers of garages Gross receipts 3%
International air/shipping carriers doing business in the Philippines Gross receipts on 3%
transport of cargo from
the Philippines to a
foreign country
Franchise grantees: 2%
Gas and water utilities Gross receipts 3%
Radio and television broadcasting companies whose annual gross Gross receipts
receipts of the preceding year do not exceed Php10,000,000 and did
not opt to register as VAT taxpayer

Overseas dispatch, message or conversation originating from the Amount paid for the 10%
Philippines service
Banks and non-bank financial intermediaries performing quasi-banking Interest, commissions and discounts
functions from lending activities as well as
income from financial leasing, on the
basis of remaining maturities of
instruments from which receipts are
derived:
• If maturity period is five 5%
years or less
• If maturity period is 1%
more than five years
Dividends and equity 0%
shares and net income
of subsidiaries
Royalties, rentals of 7%
property, real or
personal, profits from
exchange and all other
items treated as gross
income under Sec. 32 of
the Tax Code, as
amended
Net trading gains within 7%
the taxable year of
foreign currency, debt
securities, derivatives

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and other similar

financial instruments
Other non-bank financial intermediaries Interest, commissions, 5%
discounts and all other
items treated as gross
income under the Tax
Code, as amended
Interest, commissions, discounts from
lending activities, as well as income
from financial leasing on the basis of
remaining maturities of instruments
from which such receipts are derived:
• If maturity period is five 5%
years or less
• If maturity period is 1%
more than five years
Life Insurance Company/Agent/Corporation (except purely Total premiums collected 2%
cooperative companies or associations)
Agents of foreign insurance companies (except reinsurance premium):
Insurance agents authorized under the Insurance Code to procure Total premiums collected 4%
policies of insurance for companies not authorized to transact business
in the Philippines
Owners of property obtaining insurance directly with foreign insurance Total premiums paid 5%
companies
Proprietor, lessee or operator of the following:
Cockpits Gross receipts 18%
Cabarets, Night or Day Clubs, videoke bars, karaoke bars, karaoke Gross receipts 18%
televisions, karaoke boxes and music lounges
Boxing exhibitions (except when the World or Oriental Championship is Gross receipts 10%
at stake in any division, provided further that at least one of the
contenders for World Championship is a citizen of the Philippines and
said exhibitions are promoted by a citizen/s of the Philippines or by a
corporation/ association at least 60% of the capital of which is owned
by said citizen/s)
Professional basketball games (in lieu of all other percentage taxes of Gross receipts 15%
whatever nature and description)
Jai-alai and race track Gross receipts 30%
Winnings on horse races · Winnings or 10%
'dividends'
· Winnings from 4%
double
forecast/quinella and
trifecta bets
· Prizes of owners of 10%

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winning race horses

Sale, barter, exchange or other disposition of shares of stock listed and Gross selling price or 6/10 of
traded through the Local Stock Exchange other than the sale by a gross value in money 1%
dealer of securities
Sale, barter or exchange or other disposition through: Gross selling price or gross value in
 Initial Public Offering (IPO) – the issuing corporation shall pay money
the imposed tax Proportion of disposed shares to total
 Secondary Public Offering – the seller shall pay the imposed tax outstanding shares after the listing in
the local stock exchange:
 Up to 25% 4%
 Over 25% but not 2%
over 33 1/3%
 Over 33 1/3% 1%

PERCENTAGE TAXES AMPLIFIED

a. Sec. 116- Tax on Person Exempt from VAT Under Section 109 (BB)
Persons subject to the whose annual gross sales and/or receipts do not exceed three million pesos
tax (Php3,000,000.00) and are exempt from value-added tax (VAT) under Section 109 (BB)
Tax base Gross monthly sales or receipts
Tax rate 3%
Optional VAT Persons subject to the above tax may apply for registration as VAT-subject persons
registration not later than ten (10) days before the beginning of the taxable quarter
Cancellation of VAT Any person exempt from VAT under sec 109(BB) who elects to register under the VAT
registration system shall not be allowed to cancel his registration for the next three (3) years
Non-VAT registered A non-VAT registered taxpayer who initially opted to avail of the 8% option but has
taxpayer exceeded exceeded the VAT threshold during the taxable year shall be subject to 3%
the VAT threshold Percentage Tax on the first P3,000,000 of his or her gross sales or receipts under
Section 116 of the tax code, as amended, without imposition of any penalty if
payment is timely made on the following month when the threshold is breached.

The excess of the threshold shall be subject to VAT prospectively, and the 8%
income tax previously paid shall be credited to the income tax due under the
graduated rates provided in Section 24(A)(2)(a) of the Tax Code, as amended
cooperatives Cooperatives shall be exempt from the 3% gross receipts tax
Mr. Jaime Rodriguez is the owner of a small variety store. His gross sales in any one year do not exceed the
VAT threshold amount. He is not VAT-registered. The following data are taken from the books of the variety
store for the month ending November 30,2018:
Merchandise inventory, December 31, 2018 P150,000
Gross Sales 250,000
Purchases from VAT-registered suppliers 150,000
How much is the percentage tax due and payable? P250,000 x 3%= P7,500

A taxpayer is a non-VAT because his vatable sales do not exceed the VAT threshold of P3,000,000. He initially
opted to pay 8% income tax in the first 3 quarters of 2018 because his gross sales amounted to P3,000,000

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only. During the same taxable year, however, his annual gross sales reached P4,000,000.
1. How much is the percentage tax, if any? P3,000,000 x 3%= P90,000
2. How much is the VAT, if any? P1,000,000 x 12%= P120,000

b. Sec. 117- Percentage Tax on Domestic Carriers and Keepers of Garage (Common
Carrier’s Tax)
Common carrier defined Persons, corporations, firms or associations engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public and shall include
transportation contractors.
Persons subject to 1. Cars for rent or hire driven by the lessee
common carrier’s tax 2. transportation contractors, including persons who transport passengers
3. other domestic carriers by land for the transport of passengers
4. keepers of garages
Persons not subject to 1. owners of banca
common carrier’s tax 2. owners of animal-drawn two wheeled vehicle
Tax base Actual monthly gross receipts or minimum monthly gross receipts whichever is
higher
Tax rate 3%
Minimum quarterly receipts Jeepney for hire Manila and other
cities 65,700 (2,400)
Provincial 32,900 (1,200)
Public utility bus Not exceeding 30
passengers 98,600 (3,600)
Exceeding 30 but not
exceeding 50
passengers 164,200 (6,000)
Exceeding 50
passengers 197,100 (7,200)
Taxis Manila and other
cities 98,600 (3,600)
Provincial 65,700 (2,400)
Car for hire (with
chauffer) 82,100 (3,000)
Car for hire (without
chauffer) 49,300 (1,800)
Exemption from local taxes The gross receipts of common carriers derived from their incoming and
outgoing freight shall not be subjected to the local taxes imposed under Local
Government Code of 1991
Transportation contractors 1. transportation contractors in their transport of goods or cargoes
and common carriers 2. Persons who transport goods or cargoes for hire
subject to VAT 3. Other domestic carriers by land relative to their transport of goods or
cargoes
4. Common carrier by air and sea relative to their transport of passengers,
goods or cargoes from one place in the Philippines to another place

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Philippines
Faye Transport Co., VAT-registered, is a domestic common carrier by land and sea within the Philippines. It
had the following data in a month:
on land carriers
gross receipts from cargoes 500,000
gross receipts from passengers 700,000
on sea carriers
gross receipts from cargoes 900,000
gross receipts from passengers 1,000,000
1. How much is the percentage tax? P700,000 x 3%= P21,000
2. How much is the output value-added tax, if VAT-registered? P2,400,000 x 12%= P288,000

c. Sec 118- Percentage Tax on International Carrier (Common Carrier’s Tax)

Persons subject to tax 1. International air carriers doing business in the Philippines
2. International shipping carriers doing business in the Philippines
Tax base gross receipts derived from transport of cargo from the Philippines to another
country
Tax rate 3%
Gross receipts defined Gross receipts shall include, but shall not be limited to, the total amount of
money or its equivalent representing the contract, freight/cargo fees, mail
fees, deposits applied as payments, advance payments and other service
charges and fees actually or constructively received during the taxable
quarter from cargo and/or mail, originating from the Philippines in a
continuous and uninterrupted flight, irrespective of the place of sale or issue
and the place of payment of the passage documents.
Exempt from VAT (not allowed 1. Transport of passengers by international carriers doing business in the
to register for VAT purposes) Philippines
2. Transport of cargo by international carriers doing business in the
Philippines
Off-line international carrier Not subject to the 3% common carrier’s tax on international carriers
having branch/office as sales
agent in the Philippines
The following data were provided by an air carrier:
freight and cargo fees (cargo originating from the Philippines in a continuous and
uninterrupted flight to Japan, passage documents sold in Japan) 5,000,000
mail fees (mail originating from Japan in a continuous and uninterrupted flight to the
Philippines, passage documents sold in the Philippines) 4,000,000
advance payments for cargo originating from the Philippines in a continuous and uninterrupted
flight to Singapore (passage documents sold in Singapore) 3,000,000
receipts from sale of tickets to passengers originating from Philippines in a continuous and
uninterrupted flight to Hongkong (tickets sold in the Philippines) 2,000,000

expenses, Philippines 1,500,000

1. how much is the common carrier’s tax due from the air carrier assuming it is an international carrier doing
business in the Philippines?

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freight and cargo fees 5,000,000

advance payments for cargo 3,000,000
total 8,000,000
CCT 3%
CCT Due 240,000
2. how much is the VAT due from the air carrier assuming it is a domestic air carrier? P0

d. Tax on Franchises
Persons subject to tax 1. Franchises on radio and/or television broadcasting companies
whose annual gross receipts for the preceding year do not
exceed Php 10,000,000.00
2. Franchises on gas and water utilities
Tax base gross receipts derived from the business covered by the law granting the
franchise
Tax rate 1. Franchise on gas and water utilities – 2%
2. Franchise on radio and/or TV broadcasting- 3%
3. PAGCOR and its licenses and franchisees- 5%
Optional VAT registration 1. That radio and television broadcasting companies whose annual
gross receipts of the preceding year does not exceed P10,000,000
shall have the option to be registered within 10 days before the
beginning of the calendar quarter as VAT taxpayer and pay VAT
thereon
2. once the option is exercised, said option shall not be irrevocable
Franchise grantees subject to Telephone and telegraph
VAT Radio and/or television broadcasting
Toll road operations
All other franchisees, other than those covered by Sec. 119 of the Tax
Code, regardless of how the franchise may have been granted
PAGCOR and its licenses and Pursuant to Section 13(2)(a) of P.D. No. 1869, PAGCOR is subject to a
franchisees franchise tax of five percent (5%) of the gross revenue or earnings it
derives from its operations and licensing of gambling casinos, gaming
clubs and other similar recreation or amusement places, gaming pools,
and other related operations as described above.
As a franchisee, Ms. Kathleen En, had the following data on revenues and receivable, taxes not included:
receivables
revenues beginning end
from operations:
covered by the franchisee 2,000,000 300,000 400,000
not covered by the franchisee 600,000 50,000
How much is franchise tax due if she is a franchise grantee of:
1. water and gas utilities P1,900,000 x 2%= P38,000
2. electric utility= -

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e. Sec. 120- Tax on Overseas Dispatch, Message or Conversation Originating from the
Philippines
Persons subject to tax The tax imposed shall be payable by the person paying for the services
rendered and shall be paid to the person rendering the services who is
required to collect and pay the tax within twenty (20) days after the end
of each quarter
Persons not subject to tax 1. Government
2. Diplomatic Services
3. International Organizations
4. News Services
Tax base amount paid for such services
Tax rate 10%
Examples of communication 1. Telephone
facilities 2. Telegraph
3. Telewriter exchange
4. Wireless and other communication equipment services
Mr. Espenilla is a businessman with transactions in and out of the Philippines. Local and overseas calls for a
period involved (tax not included)
overseas calls
for calls originating from the Philippines:
paid by the subscriber in the Philippines (personal calles amounted to P45,000) 65,000
paid by the receiver of the calls outside the Philippines (business calls) 14,500
for calls coming into the Philippines:
paid by Mr. Espenilla 15,000
paid by callers 23,000
local calls, paid by Mr. Espenilla
other than long distance (personal calls) 7,000
long distance (business calls) 20,000
1. how much is the value-added tax billed to Mr. Espenilla?
local calls, paid by Mr. Espenilla
other than long distance (personal calls) 7,000
long distance (business calls) 20,000
total 27,000
VAT rate 12%
VAT DUE 3,240
2. How much is the percentage tax billed to Mr. Espenilla? P65,000 x 10%= P6,500

f. Sec 121- Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking
Functions (Gross Receipts Tax)
Bank defined The term “bank” means every banking institution, as defined in Sec 2 of RA
No 337, as amended otherwise known as The General Banking Act. A bank
may either be a commercial bank, a thrift bank, a development bank, a
rural bank or a specialized government bank

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Non-bank financial The term “non-bank financial intermediary” means a financial intermediary,
intermediary defined as defined in Sec 2 (D) ( c) of RA No 337, as amended, otherwise known as
The General Banking Act, authorized by the Bangko Sentral ng Pilipinas (BSP)
to perform quasi-banking activities
Quasi-banking activities The term "quasi-banking activities" means borrowing funds from twenty or
more personal or corporate lenders at any one time, through the issuance,
endorsement or acceptance of debt for the borrower's own accounts, or
through the issuance certificates of assignment or similar instruments, with
recourse, or of repurchase agreements for purposes of relending or
purchasing receivable and other similar obligations: Provided, however, That
commercial, industrial and other non-financial companies which borrow
funds through any of these means for the limited purpose of financing their
own needs or the needs of their agents or dealers, shall not be considered as
performing quasi- banking functions.
Persons subject to the tax Banks and non-bank financial intermediaries performing quasi-banking
functions
Tax base and tax rates Interest, commissions and discounts from lending activities as well as
income from financial leasing, on the basis of remaining maturities
of instruments from which receipts are derived:
• If maturity period is five years or less 5%
• If maturity period is more than five years 1%
Dividends and equity shares and net income of subsidiaries 0%
Royalties, rentals of property, real or personal, profits from 7%
exchange and all other items treated as gross income under Sec.
32 of the Tax Code, as amended
Net trading gains within the taxable year of foreign currency, debt 7%
securities, derivatives and other similar financial instruments
In case maturity is shortened in case the maturity period is shortened thru pre-termination, then the
through pretermination maturity period shall be reckoned to end as of the date of pre-termination
for purposes of classifying the transaction and the correct rate of tax shall be
applied accordingly
A domestic bank had the following data in a month
rentals from safety deposit boxes and real property acquired through
mortgage foreclosures, gross of applicable tax 300,000
service fees, net of applicable tax 186,000
dividends and equity shares in the net income of subsidiaries 500,000
amounts received from lending activities, net of applicable tax, on instruments with maturities
of:
five years and less 760,000
more than five years 891,000
net trading gain during the month 500,000
net trading loss during the month (within the same year) 300,000
Compute the percentage tax for the month
rentals from safety deposit boxes and real property acquired
through mortgage foreclosures, gross of applicable tax 300,000 7% 21,000

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service fees, net of applicable tax 200,000 7% 14,000

dividends and equity shares in the net income of subsidiaries 500,000 0% -
five years and less 800,000 5% 40,000
more than five years 900,000 1% 9,000
net trading gain 200,000 7% 14,000
percentage tax - - 98,000

g. Sec 122- Tax on Other Non-Bank Financial Intermediaries (Gross Receipts Tax)
Persons subject to the tax non-bank financial intermediaries doing business in the Philippines, such as
money changers and pawnshops
Tax base and tax rates Interest, commissions, discounts and all other items treated as 5%
gross income under the Tax Code, as amended
Interest, commissions, discounts from lending activities, as well as
income from financial leasing on the basis of remaining maturities
of instruments from which such receipts are derived:
• If maturity period is five years or less 5%
• If maturity period is more than five years 1%
In case maturity is shortened in case the maturity period is shortened thru pre-termination, then the
through pretermination maturity period shall be reckoned to end as of the date of pre-termination
for purposes of classifying the transaction and the correct rate of tax shall
be applied accordingly
A pawnshop has the following receipts:
gross receipts from interest, commissions, discounts 100,000
other items treated as gross income under the Tax Code 150,000
interests, commissions, and discounts from lending activities (remaining maturity of
instruments is more than 5 years) 120,000
interests, commissions, and discounts from lending activities (remaining maturity of
instruments is 5 years) 140,000
1. how much is the gross receipts tax?

gross receipts from interest, commissions, discounts 100,000 5% 5,000

other items treated as gross income under the Tax Code 150,000 5% 7,500
interests, commissions, and discounts from lending activities
(remaining maturity of instruments is more than 5 years) 120,000 1% 1,200
interests, commissions, and discounts from lending activities
(remaining maturity of instruments is 5 years) 140,000 5% 7,000

gross receipts tax 20,700

2. assuming the above taxpayer is a non-bank financial intermediary performing quasi-banking function, how
much is the gross receipts tax?

gross receipts from interest, commissions, discounts 100,000 5% 5,000

other items treated as gross income under the Tax Code 150,000 7% 10,500

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interests, commissions, and discounts from lending activities

(remaining maturity of instruments is more than 5 years) 120,000 1% 1,200
interests, commissions, and discounts from lending activities
(remaining maturity of instruments is 5 years) 140,000 5% 7,000

gross receipts tax 23,700

h. Sec 123- Tax on Life Insurance Premiums

Persons subject to the tax
Tax base
tax rate
Exemption of life insurance
premium
Other items subject to the
premium tax
Items earned by life insurance
company subject to VAT or
percentage tax as the case
may be
Investment income realized
from the investment of
premiums earned
Persons subject to VAT
person, company or corporation (except purely cooperative companies
or associations) doing life insurance business of any sort in the Philippines
total premium collected, whether such premiums are paid in money,
notes, credits or any substitute for money
2%
Five (5) years after the effectivity of this Code, no tax on life insurance
premium shall be collected. This was vetoed by President Gloria
Macapagal Arroyo
1. Premium on Health and Accident Insurance, whether received by
a life or non-life insurance company
2. Re-issuance fees, reinstatement fees, renewal fees as well as
penaltie paid to the life insurance company which are incidental
to or in connection with the insurance policy contracts issued
3. Investment income realized from the investment of funds obtained
from others allowed and approved by the Insurance Commission
1. Insurance and reinsurance commissions, whether life or non-life
2. Management fees
3. Rental income
4. Other income earned which can be pursued independently of the
insurance business activities
The interest income earned by the life insurance companies from investing
the premiums received in marketable securities, bonds and other financial
instruments is considered exempt from further imposition of business tax
since the premiums which have been the source of the funds invested had
already been subject to the premium tax
1. Non-life insurance companies (except their crop insurance)
including surety, fidelity, indemnity and bonding companies
2. Pre-need companies
3. Health maintenance organizations (HMOs)

i. Sec 124- Tax on Agents of Foreign Insurance Companies

Persons subject to the tax Every fire, marine or miscellaneous insurance agent authorized under the
Insurance Code to procure policies of insurance as he may have
previously been legally authorized to transact on risks located in the
Philippines
Tax base Total premiums collected
tax rate 4%

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Direct insurance with foreign
insurance companies
j. Sec 125- Amusement Taxes
Persons subject to the tax
Tax base and tax rate
Payment of tax
Exempt boxing exhibition
15% tax on professional
basketball games in lieu of all
other percentage taxes
30% tax and other taxes
imposed even if no amount is
charged for admission
Meaning of gross receipts
Ms. N is a caterer and a videoke bar operator. In a taxable period, she had the following data, tax not
included:
sales
from operations of the Truluv Catering Service:
cash sales
accounts receivable (catering)
credit card sales
from operations of the Dude Videoke Bar:
cash sales
credit card sales
85
In all cases where owners of property obtain insurance directly with
foreign companies, they shall pay the tax of five percent (5%) on
premiums paid
proprietor, lessee or operator of cockpits, cabarets, night or day clubs,
boxing exhibitions, professional basketball games, Jai-Alai and racetracks
Tax base Tax rate
Cockpits Gross receipts 18%
Cabarets, Night or Day Clubs, Gross receipts 18%
Boxing exhibitions Gross receipts 10%
Professional basketball games Gross receipts 15%
Jai-alai and race track Gross receipts 30%
The term “cabarets, night and day clubs” includes videoke bars, karaoke
bars, karaoke televisions, karaoke boxes and music lounges
it shall be the duty of the proprietor, lessee or operator concerned, as well
as any party liable, within twenty (20) days after the end of each quarter,
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.
Boxing exhibition wherein the World or Oriental Championship is at stake in
any division, provided further that at least one of the contenders for World
Championship is a citizen of the Philippines and said exhibitions are
promoted by a citizen/s of the Philippines or by a corporation/ association
at least 60% of the capital of which is owned by said citizen/s
The 15% tax on professional basketball games shall be in lieu of all other
percentage taxes of whatever nature and description
Thirty percent (30%) in the case of Jai-Alai and racetracks - of their gross
receipts, irrespective, of whether or not any amount is charged for
admission
For the purpose of the amusement tax, the term ‘gross receipts’ embraces
all the receipts of the proprietor, lessee or operator of the amusement
place. Said gross receipts also include income from television, radio and
motion picture rights, if any
400,000
250,000
243,000
1,360,000
624,200
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payments for catering service, based on gross receipts (80% of which are to VAT taxpayers) 60%
1. How much is the amusement tax payable? P1,984,200 x 18%= P357,156
2. How much is the value added tax payable?
sales from Dude Videoke Bar 1,984,200
sales from Truluv Catering Service 643,000
total 2,627,200
x 60%
payment for catering service 1,576,320
x 80%
applicable to VAT taxpayer 1,261,056
VAT rate 12%
VAT 151,326.72
P151,326.72 x (643/2,627.2) = P37,037
P643,000 x 12%= P77,160 – P37,037 = P40,123

The following data are presented to you:

gross receipts, sale of tickets 500,000
gross receipts, sale of food and drinks inside the amusement place 1,000,000
gross receipts, sale of souvenir items inside the amusement place 300,000
Compute the amusement tax assuming the amusement place is a:
1. Race track= P1.8M x 30%= P540,000
2. Cockpit= P1.8M x 18%= P324,000
3. Videoke Bar= P1.8M x 18%= P324,000
4. Venue where professional basketball games are held= P1.8M x 15%= P270,000
5. Venue where boxing exhibitions featuring Philippine championship= P1.8M x 10%= P180,000
6. Venue where world boxing championship is held involving a Filipino boxer and promoted by a domestic
corporation= exempt

k. Sec 126- Tax on Winnings

Persons subject to the tax
Tax base and tax rate
Definition of terms
1. Every person who wins in horse races
2. winnings from double, forecast/quinella and trifecta bets
3. owners of winning race horses
Tax base Tax rate
actual amount paid to him for every 10% (persons who wins in horse
winning ticket after deducting the races)
cost of the ticket
Amount paid for every winning 4% (double, forecast/quinella and
ticket less cost of the tickets trifecta bets)
Prizes 10% (owners of winning race horses)
1. Daily double or extra double is an event wherein the bettor selects a
number in each of two consecutive races and the selection in each race
must finish first
2. forecast is an event wherein the bettor selects two (2) numbers in a
selected race, and the selection must finish first and second in the correct

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Collection of tax
Remittance of tax to BIR
order
3. Double quinella is an event wherein the bettor selects two (2) numbers in
each of the two (2) selected races, and the selection in each race must finish
first and second in either order
4. Trifecta is an event wherein the bettor selects three (3) numbers in a
selected race and the selection must finish first, second, and third in the
correct order
1. Tax on winnings shall be deducted from the 'dividends' corresponding
to each winning ticket or the 'prize' of each winning race horse
2. Tax on winnings shall be withheld by the operator, manager or person
in charge of the horse races before paying the dividends or prizes
The operator, manager or person in charge of horse races shall, within twenty
(20) days from the date the tax was deducted and withheld

l. Sec 127 (A)- Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded through
the Local Stock Exchange
Persons subject to tax seller or transferor of the stock
Persons not subject to tax dealer in securities
Tax base gross selling price or gross value in money
Tax rate six-tenths of one percent (6/10 of 1%) (used to be ½ of 1%)
Collection of tax It shall be the duty of every stock broker who effected the sale subject to the
tax
Remittance of tax to BIR The tax collected shall be remitted within five (5) banking days from the date
of collection
Not deductible for income Tax paid under Sec 127 shall not be deductible for income tax purposes
tax purposes
Gain derived from sale, any gain derived from the sale, barter, exchange or other disposition of
barter, exchange or other shares of stock under Sec 127 shall be exempt from capital gains tax and
disposition of shares of stock from the regular individual or corporate income tax
under Sec. 127
Pink Yummy has shares of stock in Manila Trading Corp valued at P500,000 which are held as investment. She
sold them for P300,000
a. how much is the percentage tax on the sale of the shares listed and traded in the local stock exchange
assuming the sale is on December 1, 2017? P300,000 x .005= P1,500 STT
b. how much is the percentage tax on the sale of the shares listed and traded in the local stock exchange
assuming the sale is on January 5, 2018? P300,000 x .006= P1,800 STT
c. how much is the capital gains tax assuming the shares are sold December 1, 2017 directly to a buyer and
not through the stock exchange? (200,000) no CGT
d. how much is the capital gains tax assuming the shares are sold January 5, 2018 directly to a buyer and not
through the stock exchange? no CGT
e. how much is the value added tax assuming the shares are held as inventory and Pink Yummy is a VAT-
registered dealer in securities? No VAT

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m. Sec 127 (B)- Tax on Shares of Stock in Closely Held Corporation Sold or Exchanged
Through Initial Public Offering
Persons subject to tax
Tax base
Tax rates
Payment of tax
Not deductible for income
tax purposes
Gain derived from sale,
barter, exchange or other
disposition of shares of stock
under Sec. 127
Repealed under Section 6 of Republic Act No. 11494, otherwise known as the "Bayanihan to
Recover as One Act."
Returns and Payments of Percentage Taxes
Quarterly return
Consolidated return of
large taxpayers
Large taxpayers
88
1. Issuing corporation in initial public offering
2. Seller in secondary offering
Gross selling price or gross value in money
𝑠ℎ𝑎𝑟𝑒𝑠 𝑠𝑜𝑙𝑑, 𝑏𝑎𝑟𝑡𝑒𝑟𝑒𝑑, 𝑒𝑥𝑐ℎ𝑎𝑛𝑔𝑒𝑑
𝑡𝑜𝑡𝑎𝑙 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 𝑠ℎ𝑎𝑟𝑒𝑠
Up to 25% 4%
Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%
1. In case of primary offering- the corporate issuer shall file the return and pay
tax within 30 days from the date of listing of the shares in the local stock
exchange
2. In case of secondary offering- the stock broker shall collect the tax and
remit the same to BIR within 5 banking days from the date of collection
The tax paid on initial public offering and secondary offering shall not be
deductible for income tax purpose
any gain derived from the sale, barter, exchange or other disposition of shares
of stock under Sec 127 shall be exempt from capital gains tax and from the
regular individual or corporate income tax
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
large taxpayer shall file a consolidated return and pay the tax accordingly
1. As to tax payments
percentage tax at least P200,000 per quarter
VAT at least P200,000 per quarter
excise tax at least P1,000,000 per year
income tax at least P1,000,000 per year
documentary stamp tax at least P1,000,000 per year
withholding tax at least P1,000,000 annually
1. As to Financial condition
gross sales/receipts at least P1,000,000,000 per year
gross purchases at least P800,000,000 for the preceding year
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at least P300,000,000 at the close of each calendar

net worth or fiscal year
Person whose VAT in the case of a person whose VAT registration is cancelled and who becomes
registration is cancelled liable to the 3% tax on VAT-exempt persons, the tax shall accrue from the date of
cancellation and shall be paid within twenty-five (25) days after the end of each
taxable quarter
Person retiring from Any person retiring from a business subject to percentage tax shall notify the
business subject to nearest internal revenue officer, file his return and pay the tax due thereon within
percentage tax twenty (20) days after closing his business
Withholding of percentage
tax
Commissioner of Internal the Commissioner may prescribe a minimum amount of such gross receipts under
Revenue may prescribe a the following cases
minimum amount of gross 1. When it is found that a person has failed to issue receipts or invoices
receipts 2. when no return is filed
3. when there is reason to believe that the books of accounts or other
records do not correctly reflect the declarations made or to be made in a
return
Place of filing the return 1. authorized agent bank
and payment of 2. Revenue District Officer
percentage tax 3. Collection Agent
4. duly authorized Treasurer of the city or municipality where said business or
principal place of business is located, as the case may be.
Option to file a separate every person liable to the percentage (except large taxpayers) may, at his
return or consolidated option, file a separate return for each branch or place of business
return

Summary:
The lesson classified the transactions that are subject to other percentage taxes, its tax base
and the applicable tax rates. The lesson also highlighted the filing of percentage tax returns
of a taxpayer. The lesson also focused on illustrating problems relating to other percentage
tax.

References:
TAMAYO, LIM, CAIGA, MANUEL (2019). Other Percentage Taxes 1. Taxation. The Review
School of Accountancy
TAMAYO, LIM, CAIGA, MANUEL (2019). Other Percentage Taxes 2. Taxation. The Review
School of Accountancy
TABAG, E.D. (2020). Other Percentage Taxes. CPA Reviewer in Taxation with Special Topics
and Properly Filled BIR Forms. EDT Bookshop

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