WHAT IS BUSINESS?

It is the regular conduct of commercial or

economic activity where the primary
motive is profit or livelihood.
The secondary concerns may fall under the
categories of social responsibility,
environmental safety or promotion, and
safeguarding of public welfare and
interest.
Requisites of Business Activity:
 Intended for Profit
 Regularly Undertaken
 Financial in Character
IMPORTANCE OF CLASSIFYING BUSINESS ACTIVITY:

For
TAXATION
purposes……..
Classification of Business Entities:
 According to NATURE
• Merchandising
• Manufacturing
• Service
• Hybrid
 According to FORM/OWNERSHIP
• Sole Proprietorship
• Partnership
• Corporation
• Cooperative
WHEN IS AN ACTIVITY ENGAGED IN BUSINESS?
• Intended for Profit
Exception:
 Importation of goods for personal use
 Overseas communication
• Regularly undertaken
Exception:
 Single service rendered by NRA
 Sale of house and lot and other forms of residence/dwelling valued
over P2,500,000
 Single winning in horse race/jai-alai
 Only sale of shares thru LSE by one who is not a securities trader
• Financial in character
Exception:
Regular conduct of business whose gross sales/receipts in any month
during a 12 month period do not exceed P100,000 shall be
considered as a means of subsistence.
 WHAT IS A BUSINESS TAX?

It is a tax composed on onerous

transfer of product, property and
service.
 What is ONEROUS TRANSFER?
Means there is monetary consideration involved
in the transfer of goods/services between the
owner and the buyer.

This is the opposite of gratuitous transfer.

 BUSINESS TAXES and their COVERAGE
VAT PERCENTAGE TAX EXCISE TAX
• Sale of • Overseas communication Manufacturer/
properties/goods/ tax importer of the ff:
services in the ordinary • Franchise tax •Wines
course of business. • Common carrier’s tax •Distilled spirits
• Importation of • Amusement tax and fermented
goods/properties • Tax on winnings liquors
whether/not in the • Stock transaction tax •Cigars, cigarettes
course of and tobacco
business/trade. •Automobiles,
fuels and oils,
mineral products
and non-essential
goods
What is VAT?
Value Added Tax (VAT) is a business tax
imposed and collected from the seller in
the course of trade or business on every
sale of properties (real or personal) lease
of goods or properties (real or personal) or
vendors of services. It is an indirect tax,
thus, it can be passed on to the buyer.
What is Percentage Tax?
Percentage Tax is a business tax
imposed on persons or entities who sell
or lease goods, properties or services in
the course of trade or business whose
gross annual sales or receipts do not
exceed P1,919,500 and are not VAT-
registered.
What is Excise Tax?
Excise taxes apply to goods manufactured
or produced in the Philippines for domestic
sales or consumption or for any other
disposition and to things imported. The
excise tax imposed shall be in addition to
the value-added tax.
 REGISTRATION OF BUSINESS
• Taxpayers must register with BIR.
• COR shall be issued by the RDO for applicants
who complied with requirements.
• Annual Registration Fee of P500 shall be paid
on or before the last day of January for every
separate and distinct establishments when
sales transactions occur.
 What are separate and distinct
establishments?
• Sales outlet
• Branch
• Warehouses or storage places
• Places of production
THE END