TAXATION

TAX2.001 – Other Percentage Taxes (OPT)

LECTURE NOTES

A. Kinds of Percentage Tax:

❖ Tax on person exempt from value-added tax
(Sec. 116);
❖ Percentage tax on domestic carriers and keepers of garages (Sec. 117);
❖ Percentage tax on international carriers (Sec. 118);
❖ Tax on franchises (Sec. 119);
❖ Tax on overseas dispatch, message or conversation originating from Philippines (Sec. 120);
❖ Tax on banks and non-bank financial intermediaries (Sec. 121);
❖ Tax on other non-bank financial intermediaries (Sec. 122);
❖ Tax on life insurance premiums (Sec. 123);
❖ Tax on agents of foreign insurance companies (Sec. 1234);
❖ Amusement taxes (Sec. 125);
❖ Tax on winnings (Sec. 126);
❖ Tax on sale, barter or exchange of shares of stock listed and traded through the local stock exchange or
initial public offering (Sec. 127).

B. Tax on persons exempt from Value-Added Tax (Sec. 116).

❖ Requites:
1) Not a VAT registered person; and
2) The annual gross sales or receipts do not exceed 3,000,000.

❖ Exempt person - Cooperative

❖ Formula:
Tax base PXXX
Rate 3%
Percentage Tax PXXX

Summary Rule
Annual Gross Sales Business Tax Applicable
/ Receipts
More than P3,000,000 VAT
P3,000,000 and below VAT or OPT

Note:
If the taxpayer opts to pay VAT, it will be irrevocable for 3 consecutive years.

C. Percentage tax on domestic carriers and keepers of garages (Sec. 117).

❖ Common carriers – refers to the persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers of goods, or both by land for compensation, offering their services to the
public, and shall include transportation contractors.

❖ Person liable:
1) Cars for rent or hire driven by the lessee (rent-a-car);
2) Transportation contractors, including persons who transport passengers for hire;
3) Other domestic carriers by land for transport of passengers;
4) Keepers of garages.

❖ Exempt persons:
1) Owners of bancas
2) Owners of animal-drawn two-wheeled vehicles

❖ Formula:
Tax base PXXX
Rate 3%
Common Carriers Tax PXXX

❖ Tax base
Whichever is
1) Actual Gross Receipts
higher
2) Minimum Gross Receipts

Summary Rules
Type of Transporting? Business Tax
Domestic Applicable
Common
Carrier
 By Land Persons OPT
Cargo / Goods VAT
By Air Persons, Goods VAT
or Cargoes
By Sea Persons, Goods VAT
or Cargoes

Domestic Year 1978 Old Year 2006 Updated

Carriers Minimum Gross Minimum Gross
Quarterly Receipts Quarterly Receipts
Jeepney for Hire –
1. Manila and other P2,400.00 P65,700.00
cities
2. Provincial 1,200.00 32,900.00
Public Utility Bus –
1. Not exceeding 30
passengers P3,600.00 P98,600.00
2. Exceeding 30
passengers but not 6,000.00 164,200.00
exceeding 50
passengers
3. Exceeding 50
passengers 7,200.00 197,100.00
Taxis –
1. Manila and other P3,600.00 P98,600.00
cities
2. Provincial 2,400.00 65,700.00
Car for hire (with chauffeur) P3,000.00 P82,100.00
Car for hire (without chauffeur) P1,800.00 P49,300.00

Note: The application of update Minimum Quarterly Receipts has been suspended by
Congress

D. Percentage tax on international Carriers (Sec. 118).

❖ Person liable:
1) International Air Carriers
2) International Shipping Carriers

❖ Formula:
Gross Receipts PXXX
Rate 3%
Common Carriers Tax PXXX

❖ 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 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. (RA No. 10378, RR No. 15-2023)

Summary Rules
Airline / Shipping Co. Business Tax Applicable
Domestic Corp. VAT
Resident Foreign Corp. OPT

E. Tax on franchises (Sec. 119).

❖ Person liable:
1) Franchise on Gas and Water Utilities
2) Franchise on Radio and/ or Television Broadcasting Companies

❖ Requisites for franchises on radio and/ or television broadcasting companies:

1) Not a VAT registered person; and
2) Annual gross receipts of the preceding year do not exceed P10,000,000.

Summary rules applicable to radio and/or television broadcasting companies

Annual Gross Receipts Business Tax Applicable
More than P10,000,000 VAT
P10,000,000 and below VAT or OPT

Note:
If the taxpayer opts to pay VAT, it will be
irrevocable.

Page 2 TAX 1.3

 ❖ Formula:
Gross Receipts PXXX
Rate X%
Franchise Tax PXXX

❖ Rate:
1) Gas and Water – 2%
2) Radio and/or television broadcasting companies – 3%

F. Tax on overseas dispatch, message or conversation originating from the Philippines (Sec. 120).
❖ Person liable – the caller.

❖ Requisites:
1) There is an overseas dispatch, message or conversation;
2) It originated from the Philippines;
3) It was made through a telephone, telegraph, telewriter exchange, wireless and other communication
equipment.

❖ Formula:
Payments for Services PXXX
Rate 10%
Overseas Communication Tax PXXX

❖ Exempt persons: (DING)

1) Diplomatic services
2) International organizations
3) News services
4) Government

G. Tax on banks and non-bank financial intermediaries performing quasi-banking functions (Sec. 121).
❖ Banks or banking institutions – refer to those entities as defined under Section 3 of Republic Act No.
8791, otherwise known as the General Banking Law of 2000, or more
specifically to entities engaged in the lending of funds obtained in the form of deposits. The term “banks” or
“banking institutions” are synonymous and interchangeable and specifically include universal banks,
commercial banks, thrift banks (savings and mortgage banks, stock savings and loan associations, and
private development banks), cooperative banks, rural banks, Islamic banks and other classifications of banks
may be determined by the Monetary Board of the BSP. (RR No. 8-08)

❖ Non-bank Financial Intermediaries – refer to persons or entities whose principal function include the
lending, investing of placement of funds or evidence of indebtedness or equity deposited with them, acquired
by them or otherwise coursed through them, either for their own account or for the account of others. This
includes all entities regularly engaged in the lending of funds or purchasing of receivables or other obligations
with funds obtained from the public through the issuance, endorsement or acceptance of debt instruments of
any kind for their own account, or through the issuance of certificates, or of repurchase agreements, whether
any of these means of obtaining funds from the public is done on a regular basis or only occasionally. (RR No.
8-08)

❖ Quasi-banking functions – shall refer to the borrowing of funds from twenty (20) or more personal or
corporate lenders at any time, through the issuance, endorsement or acceptance of debt instruments of any
kind, other than deposits, for the borrower’s own account or through the issuance of certificates of
assignment or similar instruments, with recourse, or of repurchasing receivables or other similar obligations.
Provided, however, that commercial, industrial and other non-financial companies, which borrows funds
through any of these means for the limited purpose of financing their own needs or the needs if their agents
or dealers, shall not be considered as performing quasi-banking functions.

Gross receipts derived from: TAX RATE

1. On interest, commissions and discounts from lending activities, as well as income from financial
leasing, on the basis of remaining maturities of the instrument from which such receipts are
derived:
a. Maturity period is five years or less 5%
b. Maturity period is more than five years 1%

2. Dividend income, or equity shares and net income of subsidiaries 0%

3. On royalties, rentals of property, real or personal, profits, from exchange and all other items 7%
treated as gross income under the income tax law

4. On net trading gains on foreign currency, debt instruments, derivatives and other similar 7%
financial instruments
▪ Net gain/loss from foreign currency:
a. Computation is cumulative, i.e. net gain/loss to date less gain/loss to date of the previous
month/s to arrive at the net gain/loss for the current month;
b. Net loss from foreign currency for a month should not be deducted from the other items
Of receipts and;

Page 3 TAX 1.3

 c. Cumulative computation covers only one year.

@ In case the maturity period is shortened thru pre-termination, then the maturity period shall
be reckoned to end as of the date of pre-termination.

H. Tax on other non-bank financial intermediaries not performing

quasi-banking functions (Sec. 122).
1. On interest, commissions and discounts from lending activities, as well as income from
financial leasing, on the basis of remaining maturities of the instrument from
which such receipts are derived:
a. Maturity period is five years or less 5%
b. Maturity period is more than five years 1%

2. On dividends, royalties, rentals of property real or personal, profits from exchange and
all other items treated as gross under the income tax law 5%

@ In case the maturity period is shortened thru pre-termination, then the maturity period shall be reckoned to
end as of the date of pre=termination.

I. Tax on life insurance premium (Sec. 123)

❖ Formula:
Premium collected PXXX
Rate 2%
Premium Tax PXXX

❖ The following premiums are exempt from tax:

1) Premiums refund within six (6) months after payment on account of rejection of risk or returned for other
reason to a person paid the tax.

2) Premiums paid upon re-issuance by a company that has already paid the tax
3) Premiums collected or received by any branch of a domestic corporation, firm, or association doing business
outside the Philippines on account of any life insurance of the insured who is a non-resident, if any tax on
such premium is imposed by the foreign country where the branch is established.

4) Premiums collected are received on account , of any reinsurance, if the insured, in case of personal
insurance, resides outside the Philippines, if any tax on such premiums is imposed by the foreign country
where the original insurance has been issued or perfected;

5) Portion of the premium collected or received by the insurance companies or variable contracts in excess of
the amounts necessary to insure the lives of the variable contract workers (as defined in Sec. 232 (2) OF
Presidential Decree No. 612).

6) Premium collected by a purely cooperative company or association.

J. Tax on agents of foreign insurance companies (Sec. 124).

❖ Persons Liable:
1) Fire, Marine or Miscellaneous Agents of Non-resident Foreign Corporations engaged in insurance
business; and
2) Owners of property directly obtaining insurance from Non-resident Foreign Corporations engaged in
insurance business.

❖ Agents of non-resident foreign corporations engaged in insurance business

Formula:
Premium collected PXXX
Rate 4%
Premium Tax PXXX

❖ Owners of property directly obtaining insurance to non-resident foreign corporation engaged in

insurance business

Formula:
Premium collected PXXX
Rate 5%
Premium Tax PXXX

K. Amusement taxes (Sec. 124).

❖ Persons Liable – Proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing exhibitions,
professional basketball games, Jai Alai and racetracks.

❖ Formula:
Gross receipts PXXX
Rate X%

Page 4 TAX 1.3

 Amusement Tax PXXX

❖ Gross Receipts – embraces all the receipts (such as from television, radio and motion picture rights, if any)
of the proprietor, lessee or operator of the amusement places.

❖ Rate
Amusement Places Tax Rates
Places for Boxing Exhibition 0% or 10%
Place for professional 15%
basketball games
Cockpits, cabarets, night or 18%
day clubs
Jai-alai and racetracks 30%

❖ Requisites for exemption of boxing exhibitions:

1) World or oriental championships is at stake;
2) One of the contenders is a citizen of the Philippines; and
3) Promoted by citizens of the Philippines or by a corporation or association at least sixty percent (60%) of
the capital of which is owned by such citizen.

L. Tax on winnings (Sec. 126).

❖ Persons Liable:
1) Owners of the winning horse; and
2) Bettor in a horse race or jai-alai

❖ Owner of the winning horse:

Formula:
Prize/Winnings PXXX
Rate 10%
Tax on winnings PXXX

❖ Bettor in a horse race or jai-alai

Gross winnings PXXX
Less: Cost of the winning ticket (XXX)
Net winnings PXXX
Rate X%
Tax on winnings PXXX

Rate
1) Ordinary winnings – 10%
2) Special winnings
(Double, Forecast, Quinella, Trifecta) – 4%

M. Tax on transactions (Sec. 127).

❖ Kinds of Stock Transaction Tax:
1) Tax on sale, barter or exchange of shares of stock listed and traded through the Local Stock Exchange
2) Tax on Shares of Stock sold or exchanged through Initial Public Offering

❖ Tax on sale, barter or exchange of shares of stock listed and traded through the local stock
exchange
Requisites:
1) Seller is not a dealer in securities; and
2) Shares sold is listed and traded through the LSE

Formula:
Gross selling price PXXX
Rate .005
Stock Transaction Tax PXXX

❖ Tax on shares of stock sold or exchanged through Initial Public Offering

Requisites:
1) Sale is made through the LSE; and
2) It is an initial public offering of a “closely held corporation”.

Formula:
Gross selling price PXXX
Rate X%
Stock Transaction Tax PXXX

Rate:
Rate will depend on this ratio (Shares sold/outstanding shares after the sale)
Ratio Rate
25% and below 4%
More than 25% but not more than 33 1/3% 2%
More than 33 1/3% 1%

Page 5 TAX 1.3

 “Initial Public Offering (IPO)” refers to a public offering of shares of stock made for the first time in the Local
Stock Exchange.

“Closely Held Corporation” means any corporation at least 50% in value of the outstanding capital or at least
50% of the total combined voting power of all classes of stock entitled to vote is owned directly or indirectly
by or for not more than 20 individuals.

Persons Liable:
1) Primary offering – Issuing Corporation
2) Secondary offering – Seller

“Primary offering” refers to the original sale made to the investing public by the issuer corporation of its unissued
shares of stock.

“Secondary offering” refers to an offer for sale to the investing public by the existing shareholders of their
securities which is conducted during an IPO or a follow-on/follow-through offering.

“Follow-on/Follow-through offering of shares” refers to an offering of shares to the investing public subsequent to
an IPO.

N. Return and payment of percentage taxes

❖ In general – 20 days from the end of the month.
❖ Exceptions:
1) Tax on winnings – 20 days from date of withheld.
2) Stock transaction tax of ½ of 1% - 5 banking days from the date withheld by the broker
3) Stock transaction tax of 4%, 2% and 1% (Primary offering) – 30 days from the date of listing in the local
stock exchange
4) Amusement tax and Overseas Communications Tax – 20 days after the end of the quarter.

O. Withholding percentage tax

❖ Bureaus, offices and instrumentalities of the government, including government owned and controlled
corporations as well as their subsidiaries, provinces, cities and municipalities making any money payment to
private individuals, corporations, partnerships and or associations are required to deduct and withhold the
three (3%) taxes due from the payees on account of such money
❖ payments.

MULTIPLE CHOICES
1. Which of the following is correct? The percentage tax is
I. Imposed on sale of services
II. Imposed on sale of goods
III. Imposed together with value added tax
IV. Imposed together with excise tax
a. I and II only c. I, II, and IV only
b. I, II, and III only d. All of the above
2. One of the following is subject to 3% percentage tax
a. Establishments whose annual gross sales or receipts exceed P3,000,000 and who are VAT registered
b. Business whose annual gross receipts or sales exceed P3,000,000 and who are not VAT registered
c. VAT registered establishment whose annual gross receipts do not exceed P3,000,000
d. Establishment whose annual gross sales do not exceed P3,000,000 and who are not VAT registered.
3. Ms. Carmina, not VAT-registered person, has the following data for the year 2023:
Sale of fresh fruits P500,000
Sale of fresh vegetables 500,000
Sale of dried fish 500,000
Sale of refined sugar 500,000
Sale of cooking oil 500,000
NOTE: 50% is still uncollectible at the end of the year.
How much is the total business tax for the year 2023?
a. P75,000 c. P30,000
b. P45,000 d. P210,000
4. Ms. Danica, not VAT-registered, has the following data for the taxable year 2023:
Account receivable, 12/31/2022 P500,000
Account receivable, 12/31/2023 300,000
Gross sales 1,500,000
Sales discounts 200,000
If Ms. Danica is a seller of goods, how much is the business tax during the year?
a. P45,000 c. P51,000
b. P39,000 d. nil
5. If Ms. Danica is a seller of services, how much is the business tax during the year?
a. P45,000 c. P51,000
b. P39,000 d. nil

Page 6 TAX 1.3

 6. All of the following, except one, are not subject to common carrier’s tax?
a. Owner of a parking lot/building
b. Rent-a-car companies
c. Common carriers engaged in carriage of goods or cargoes.
d. Domestic airline companies
7. Elaiza Liner Co. is a vat-registered common carrier with passenger buses and cargo trucks. For the month, it had
the following data on receipts, taxes not included:
From transport of passengers P 800,000
From transport of cargoes 200,000
From bus rental on school fieldtrips 400,000
Common carrier tax is?
a. P36,000 c. P24,000
b. P12,000 d. nil
8. Shiela Lines, a VAT-registered person, has the following gross receipts in February:
Bus 1 (carriage of goods, P18,000) 100,000
Bus 2 (carriage of goods, P13,500) 165,000
Taxi 90,000
Jeepney 35,500
Cargo truck 45,000
Sea vessel 250,000
Additional Informations:
a. Salaries of drivers and conductor 125,000
b. Cost of oil and gasoline 175,000
During the month, Bus 1 was bumped by another bus owned by Mandaon Lines and paid Shiela Lines P120,000
for the damage done.
The percentage tax due on Shiela Lines in February is?
a. P10,770 c. P11,715
b. P14,370 d. nil
9. A keeper of garage whose gross receipts for the year exceed P 3,000,000 is subject to:
a. VAT c. franchise tax
b. common carrier’s tax d. All of the above
10. Which of the following is subject to the 3% common carrier’s tax?
a. Transportation contractors on their transport of goods or cargoes.
b. Common carriers by air and sea relative to their transport of passengers.
c. Owners of animal-drawn two wheeled vehicle.
d. Domestic carriers by land for the transport of passengers.
11. A transportation contractor (non-vat registered) is engaged in the transport of passengers, goods and cargoes.
What business taxes is he liable?
a. 12% value-added tax
b. 3% common carrier’s tax
c. 3% tax on vat-exempt persons on gross receipts from transport of goods and cargoes and 3% common
carrier’s tax on gross receipts from transport of passengers
d. 12% VAT on gross receipts from transport of goods and cargoes and 3% common carrier’s tax on gross
receipts from transport of passengers
12. If the transportation contractor in the preceding problem is vat-registered, what business taxes is he liable?
a. 12% value-added tax
b. 3% common carrier’s tax
c. 3% tax on vat-exempt persons on gross receipts from transport of goods and cargoes and 3% common
carrier’s tax on gross receipts from transport of passengers
d. 12% VAT on gross receipts from transport of goods and cargoes and 3% common carrier’s tax on gross
receipts from transport of passengers
13. China Northern Airlines Inc., a resident foreign corp. has the following collections for the quarter ended of April
30, 2024:
Passengers airfare from China to P1,800,000
Philippines
Passengers airfare from 1,500,000
Philippines to China
Airfare for cargoes from 700,000
China to Philippines
Airfare for cargoes from 1,300,000
Philippines to China
How much is the common carriers tax payable for the month?
a. P60,000 c. P84,000
b. P39,000 d. P159,000
14. WateGas Company operates a gas and radio/television broadcasting franchise. It has the following data for the
year 2023:
Gross receipts:
Gas franchise P2,000,000
Radio franchise 10,000,000

Page 7 TAX 1.3

 Operating expenses (5,000,000)
Net Income P7,000,000

The total franchise tax is:

a. P340,000 c. P40,000
b. P300,000 d. P190,000
15. Radio Station DYXL, not vat-registered, annual gross receipts in the preceding year is P10,000,000. During the
month, it had a gross receipts from advertisements of P330,000 while the disbursements subject to VAT
amounted to P224,000, inclusive of tax. How much business tax is payable by DYXL?
a. P30,000 c. P50,000
b. P9,900 d. P10,000
16. Based on the preceding number, how much is the business tax payable if it is registered under the VAT system?
a. P10,000 c. P11,357
b. P9,900 d. 15,600
17. Meralco is a holder of franchise to sell electricity. It also leases its first-class auditorium and theatre. In a
particular month, its gross receipts from sale of electricity amounted to P10,000,000. The gross receipts from the
lease of its auditorium and theatre amounted to P2,000,000. How much is the franchise tax due for the month?
a. P1,440,000 c. P300,000
b. P1,200,000 d. P0
18. Which of the following statements is false?
a. BBC, an international news agency, is required to pay 10% percentage tax from messages originating from
the Philippines by telephone or telegraph.
b. Amounts paid for messages transmitted by an embassy and consular offices of a foreign government is not
subject to 10% overseas communications tax.
c. Overseas communications initiated by a resident citizen not engaged in trade or business is subject overseas
communication tax.
d. None of the above
19. One of the following statements is incorrect.
a. Overseas communications tax is imposed on overseas communications originating from the Philippines.
b. The person liable to overseas communications tax may or may not be engaged in any trade or business.
c. The overseas communications tax is imposed whether the overseas communications are made in the course
of trade or business or not.
d. The overseas communications tax is imposed on the owner of the communications facilities used to make
overseas communications.
20. Moon Telecom Inc. has the following collections for the month of April 2024:
Overseas call originating abroad 1,120,000
Overseas call originating in the
Philippines 880,000
Local calls 2,240,000
How much is the overseas communication tax to be remitted by Moon for the month?
a. P220,000 c. P200,000
b. P88,000 d. P80,000
21. Based on the preceding number, how much is the output tax?
a. P240,000 c. P360,000
b. P454,286 d. P268,800
22. Piggy Bank has the following data for the month of January 2024:
Interest income, the remaining 80,000
maturity of the instrument is 5 years
(net of 20% final withholding tax)
Rentals (gross of 5% expanded 50,000
withholding tax)
Net trading loss (10,000)
How much is the gross receipts tax on the collections of Piggy for January 2014?
a. P5,000 c. P7,800
b. P3,500 d. P8,500
23. In addition to the information in the preceding number, Piggy bank has the following information for the month of
February 2024:
Interest income, the remaining 80,000
maturity of the instrument is 6 years
(net of 20% final withholding tax)
Rentals (gross of 5% expanded 50,000
withholding tax)
Net trading gain 20,000
How much is the gross receipts tax on the collections of Piggy Bank for February 2024?
a. P5,200 c. P9,200
b. P5,900 d. P9,900
24. Mr. D executed on January 1, 2019, a long term loan from Bank C in the amount of P6,000,000 payable within
ten (10) years, with an annual interest of 2%. However, on January 31, 2023, the loan was pre-terminated.

Page 8 TAX 1.3

 Assuming Bank C declared correctly the interest from 2019 to 2022 and the applicable gross receipts taxes were
paid, how much gross receipts tax should be paid for the year 2023?
a. P19,200 c. P19,700
b. P24,500 d. P500
25. Rose Insurance Co. furnished us its data as follows:
Insurance premiums collectible is P3,750,000
The breakdown of the above premiums is as follows:
Life Insurance Premiums 75%
Non-Life Insurance Premiums 25%
▪ During the quarter, life insurance premium collected represents 70%.
The premiums tax payable is:
a. P94,437.50 c. P78,750.00
b. P39,375.00 d. P196,875.00
26. Paelo wants to procure fire insurance for his Mansion in Dasmarinas Village from ABC Insurance Co., a non-
resident foreign corp, through its agent in the Philippines, Mr. Webner. He paid premiums in 2023 amounting to
P5M. How much is the premiums tax payable on the transaction?
a. P500,000 c. P100,000
b. P250,000 d. P200,000
27. Using the same information above, assuming Paelo directly obtained the insurance policy from ABC Insurance
Co., how much is the premiums tax payable on the transaction?
a. P500,000 c. P100,000
b. P250,000 d. P200,000
28. Sinner Corp., a cabaret, had the following data during the month of February:
Net income during the month 80,000
Collections during the month:
From services rendered in January 100,000
From services rendered in January 600,000
From services to be performed
in March 20,000
How much is the amusement tax for the month?
a. P216,000 c. P108,000
b. P72,000 d. P129,600
29. Based on the preceding number, if it is a racetrack, how much is the amusement tax payable for the month?
a. P216,000 c. P108,000
b. P72,000 d. P129,600
30. Ka Emong operates a cockpit in Bacolod City. Inside the cockpit is a restaurant which he also operates. The data
during the month are as follows:
Receipts from entrance fee 780,000
Gross receipts from restaurant:
Sale of food and beverages 42,000
Sale of wines & liquor 66,000
Expenses 444,000
a. P79,920 c. P143,640
b. P159, 840 d. P140,400
31. Based on the preceding number, suppose the restaurant is owned and operated by Rico, the percentage tax
payable by Rico is –
a. P3,240 c. P19,440
b. P159,840 d. P79,920
32. Based on the preceding number, the percentage tax due on Ka Emong is –
a. P79,920 c. P143,640
b. P159,840 d. P140,400
33. Golden Boy is the operator of Golden Coliseum. During the month it had the following gross receipts from various
activities:
Concert by Pedro 1,170,000
Professional Basketball game 1,240,000
Boxing Exhibition 1,780,000
NOTE: The boxing exhibition is a world championship fight between Marchweather and Chavez, American and
Mexican. The fight is promoted by Mr. Bobadilla, a Filipino citizen.
How much is the amusement tax payable?
a. P186,000 c. P178,000
b. P364,000 d. nil
34. Based on the preceding number, if Chavez is a Filipino, how much is the amusement tax payable?
a. P186,000 c. P178,000
b. P364,000 d. nil

35. Hinete has the following winnings (losses) during the year:

Page 9 TAX 1.3

 Cockfighting P90,000
Phil. Charity Sweepstakes 2,000,000
Lotto (PAGCOR) 1,000,000
Horseracing winnings 100,000
Cost of tickets, P1,000 pertains
to winning tickets (30,000)
Billiard Losses (400,000)
Casino Losses (300,000)
The business tax on winnings is
a. P9,900 c. P249,000
b. P18,900 d. P319,000
36. Mang Jose had the following records of his horse races in the current month of 2024:

Horse Type of Gross Cost of

Winnings Winnings Winnings
Vice Trifecta P90,000 P40,000
Anne Ordinary 250,000 50,000
John Double 60,000 10,000
Angelica Ordinary 175,000 25,000
How much is the business tax on winnings?
a. P45,000 c. P39,000
b. P48,500 d. P57,500
37. Using the same information above, assuming that Mr. Yu is a bettor, how much percentage taxes were withheld
from him?
a. P45,000 c. P39,000
b. P48,500 d. P57,500
38. Virgin Corporation, a closely held corporation offered for the first time its own shares of stock at par of P20 per
share. The corporation’s authorized capital stock is P5,000,000, with a P2,000,000 outstanding capital stock
before IPO. The gross receipts at its initial public offering was P600,000. The percentage tax for the initial public
offering is:
a. P9,900 c. P24,000
b. P31,000 d. P18,900
Questions 39 to 42 are based on the following data:
Uro Realty Corp., a closely-held corporation, has authorized capital stock of 100,000,000 shares with par value of
P1.00/share.

Of the 100,000,000 authorized shares, 25,000,000 thereof is subscribed and fully paid up by the following stockholders:
Mr. Cajucom 5,000,000
Mrs. Clavaton 5,000,000
Mr. Felipe 5,000,000
Mr. Pua 5,000,000
Mr. Ty 5,000,000
Total Shares Outstanding 25,000,000
On March 2023, Uro Realty Corp. finally decides to conduct an IPO and initially offers 25,000,000 of its unissued shares
to the investing public for P1.50/share.
At the IPO, one of its existing stockholders, Mrs. Clavaton, has likewise decided to sell her entire 5,000,000 shares to the
public for P1.50/share.
39. How much is the percentage tax due on the primary offering?

a. P375,000 c. P750,000
b. P1,500,000 d. nil
40. How much is the percentage tax due on the secondary offering?
a. P75,000 c. P150,000
b. P300,000 d. nil
41. If in June 2023, Uro Realty Corp. again decides to increase capitalization by offering another 30,000,000 of
unissued shares to the public at P2.00/share, how much is the percentage tax due?
a. P600,000 c. P2,400,000
b. P1,200,000 d. nil
42. If in July 2023, Mr. Cajucom decides to sell his entire stock ownership to the public at P2.00/share, how much is
the percentage tax due?
a. P50,000 c. P400,000
b. P200,000 d. nil

=end of quizzer=

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