Percentage Taxes

Kinds of Percentage Taxes

Percentage Tax Rates
Compliance Requirements
 Kinds of Percentage Taxes
• Tax on person exempt from VAT
• Percentage tax on domestic carriers and
keepers of garages
• Percentage tax on international carriers
• Tax on franchises
• Tax on overseas dispatch, message or
conversation originating from Philippines
• Tax on banks and non-bank financial
intermediaries
• Tax on life insurance premiums
 Kinds of Percentage Taxes
• Tax on agents of foreign insurance
companies
• Amusement taxes
• Tax on winnings
• Tax on sale, barter or exchange of shares
of stock listed and traded through the local
stock exchange or thru initial public
offering
 Tax on persons exempt form VAT
• not VAT-registered
• annual gross sales or receipts did not exceed
P3,000,000 (TRAIN).

• Formula:
Tax Base Pxxx
x Tax Rate 3%
Percentage Tax Pxxx

Tax Base - Gross Sales (Goods) or Gross Receipts

(Service)
 Percentage Tax on Common
Carriers and Keepers of Garage
• Persons liable
– Rent-a-car
– Transportation contractors, including persons who
transport passengers for hire
– other domestic carriers by land for transport of
"passengers"
– Keepers of garages
• Exempt persons
– owners of bancas
– owners of animal-drawn two-wheeled vehicles
 Percentage Tax on Common
Carriers and Keepers of Garage
• Formula:
Tax Base Pxxx
x Rate 3%
Common Carriers Tax PXXX
 Percentage Tax on International
Carriers
• Persons Liable
– International Air Carriers
– International Shipping Carriers
• Formula:
Tax Base Pxxx
x Tax Rate 3%
Common Carriers Tax PXXX

Gross Receipts - from cargo and/or mail

originating from PHL in a continuous and
uninterrupted flight
 Tax on Franchises
• Gas and/or Water Utilities - 2%
• Radio and/or Television Broadcasting
Companies - 3%
– not VAT-registered
– annual gross receipts do not exceed P10
million
 Tax on Overseas Dispatch, etc.
Originating from PHL
• made thru telephone, telegraph, telewriter
exchange, wireless and other
communication equipment
• Person liable - caller
• Tax rate - 10%
• Exempt (DING)
– Diplomatic services
– International Org.
– News Services
– Government
Tax on Banks and Financial Intermediaries
Performing Quasi-Banking Functions
• Gross receipts derived from
– interest, commissions and discounts (remaining
maturities)
• 5 years or less - 5%
• more than 5 years - 1%
– Dividend income, equity shares and net income of
subsidiaries - 0%
– Royalties, rentals of personal/real properties and
others - 7%
– Net trading gains - 7%
• computation is cumulative, net loss should not be deducted
from other items and covers only for one year
 Tax on Non-bank and Non-
performing Quasi-Banking Function
• Gross receipts derived from
– interest, commissions and discounts
(remaining maturities)
• 5 years or less - 5%
• more than 5 years - 1%
– Dividend income, royalties, rentals of
personal/real properties and others - 5%
 Tax on Life Insurance Premiums
• Tax - 2% on premiums collected
• Exempt:
– premiums refund within 6 months after payment on account
of rejection of risk or other reason
– re-issuance that has already paid the tax
– collected by branch of domestic corp., firm, or association
doing business outside PH on account of any life insurance
of the insured who is a non-resident
– re-insurance, if outside the PH, if any tax where original
issuance has been issued or perfected
– portions of variable contracts in excess of amounts
necesasry to insure the variable contract workers' lives
– purely cooperative company/association
 Tax on Agents of Foreign
Insurance Corporation
• Fire, marine or Misc. Agents of Non-
resident foreign insurance companies -
10%
• Owners of property Directly obtaining
insurance from non-resident foreign
insurance companies - 5%
 Amusement Taxes
• Persons liable: Proprietor, lessee or
operator of cockpits, night/day clubs,
boxing exhibitions, professional baskeball
games, Jai-Alai and racetracks
 Rates for Amusement Tax
• Boxing Exhibition 0% or 10%
– 0%/Exempt if
• World or Oriental Championship
• One of the contenders is a Filipino citizen
• Promoted by citizens of PHL or by a corporation at
least 60% of capital is owned by PHL citizen
• Professional basketball games 15%
• Cockpits, Cabarets, Night/Day Clubs 18%
• Jai-Alai and Racetracks 30%
 Tax on Winnings
• Owners of the winning horse - 10% of
Prize/Winnings
• Bettor of the winning horse
– Ordinary Winnings - 10% of Net Winnings*
– Special Winnings (Double, Forecast, Trifecta,
Quinella) - 4% of Net Winnings*
– *Net winnings = Gross Winnings - Cost of the
Winning Ticket
 Tax on Stock Transactions
• Sale, Barter, Exchange of Shares of Stock
Listed and Traded in the Local Stock
Exchange* - 6/10 of 1% (TRAIN)
– Seller is not a dealer of securities
– Securities is traded/listed thru LSE*
 Tax on Stock Transactions
• Shares of Stock Sold/exchanged thru IPO*
– Thru LSE and
– Initial public offering*
 Initial Public Offering
• refers to a public offering of shares of
stock made for the first time in the local
stock exchange.
• Maybe primary/secondary offering
 Persons Liable for the Sale thru
IPO
• Primary Offering - Issuing Corporation
– Primary offering - original sale made by the
issuer corporation of unissued shares of stock
• Secondary Offering - Seller
– offer for sale to the investing public by existing
shareholders during IPO or follow-on/follow-
through offering
• Follow-on/Follow-Through Offering of
Shares - offering of shares subsequent to
IPO
 Stock Transaction Tax on
Primary and/or Secondary
Offering
• Tax rates:
Rate will Depend on this Ratio (Share
Sold/Outstanding Shares After the Sale)
Ratio Rate
25% and below 4%

more than 25% but not

2%
above 33 1/3%

more than 33 1/3% 1%

 Returns and Payments of
Percentage Tax
• General - 20 days from the end of the month
• Exceptions:
– Tax on winnings - 20 days from the date withheld
– Stock Transaction Tax of 6/10 of 1% - 5 banking
days from the date withheld by the broker
– Stock Transaction Tax of 4%, 2% and 1% (primary
offering) - 30 days from the date of listing in the LSE
– Amusement Tax and overseas communication tax -
20 days after the end of the quarter
 Withholding Percentage Tax
• Bureaus, offices and instrumentalities of
the government, including GOCCs as well
as others related to them making any
money payment to private individuals,
corporations, partnerships, and/or
associations are required to deduct and
withhold the three percent (3%) taxes due
from the payees on account of such
money payments.