OTHER PERCENTAGE TAXES

SECTION 116. Tax on Persons Exempt from Value-added Tax (VAT).— Illustration: Minimum Quarterly Gross Receipts
Any person whose sales or receipts are exempt under Section 109 (BB)
of this Code from the payment of value-added tax and who is not a VAT- Case: Chris Tsuper has operates two passenger jeepneys. One of the
jeepney plies the route from Quiapo to Pasig while the other plies the
registered person shall pay a tax equivalent to three percent (3%) of his
route from Meycauayan to Malolos. During the month, the jeepneys
gross quarterly sales or receipts: Provided, That cooperatives, and report the following receipts:
beginning January 1, 2019, self-employed and professionals with total
annual gross sales and/or gross receipts not exceeding Five hundred Jeepney from Quiapo to Pasig P22,000
thousand pesos (P500,000) shall be exempt from the three percent (3%) Jeepney from Meycauayan to Malolos 200
gross receipts tax herein imposed.
The jeepney plying Meycauayan to Malolos had the above minimal
ILLUSTRATION: VAT Threshold receipts because it was involved in an accident in the beginning of the
month and was not operated for the rest of the month.
Case 1: Mr. Chan, a supermarket operator declared the following gross
sales for the period: Question: Based on the above, how much is the business tax due from
Chris Tsuper?
Sale of raw bangus Php500,000
Sale of Camila sardines 800,000 Illustration: OPT on common carriers
Sale of alcoholic beverages 1,100,000
Sale of candies and snacks 1,500,000 Case: Gruber is a common carrier with the following gross receipts for
the quarter:
Question: What is his business tax liability if he is:
1. non-VAT registered? From transport of passengers via bus P500,000
2. VAT-registered? From transport of cargo via trucking 600,000
From transport of passengers via ferries 350,000
Case 2: Mr. John, a supermarket and pet shop operator declared the From transport of cargo via ferries 250,000
following gross sales for the period:
Question: How much is the business tax liability if the common carrier
Sale of raw bangus Php500,000 is:
Sale of clownfish 800,000 1. non-VAT registered?
Sale of alcoholic beverages 1,100,000 2. VAT-registered?
Sale of candies and snacks 1,800,000
Sale of toiletries and skincare goods 2,000,000 SECTION 118. Percentage Tax on International Carriers.—
(A) International air carriers doing business in the Philippines on their
Question: What is his business tax liability if he is: gross receipts derived from transport of cargo from the Philippines to
1. non-VAT registered?
2. VAT-registered? another country shall pay a tax of three percent (3%) of their quarterly
gross receipts.
ILLUSTRATION: Tax Base (B) International shipping carriers doing business in the Philippines on
their gross receipts derived from transport of cargo from the Philippines
Case: Given the following information for the year for a non VAT- to another country shall pay a tax equivalent to three percent (3%) of
registered business: their quarterly gross receipts.
Gross Cash Sales Php900,000 Illustration: OPT on International Carriers
Gross Credit Sales 200,000
Accounts Receivable, Beginning 800,000 Case 1: Philippine Airlines declared the following gross receipts for the
Accounts Receivable, Ending 600,000 quarter:

Question: How much is the OPT payable if the above amounts pertain Transport of passengers from MNL to NYC P5,000,000
to: Transport of passengers from NYC to MNL 6,000,000
1. Sale of goods? Transport of cargos from MNL to NYC 3,500,000
2. Sale of services? Transport of cargos from NYC to MNL 4,500,000

SECTION 117. Percentage Tax on Domestic Carriers and Keepers of Question: How much is the business tax liability of PAL?
Garages.— Cars for rent or hire driven by the lessee; transportation
contractors, including persons who transport passengers for hire, and Case 2: Qatar Airways declared the following gross receipts for the
other domestic carriers by land for the transport of passengers (except quarter:
owners of bancas and owners of animal-drawn two wheeled vehicle),
Transport of passengers from MNL to NYC P5,000,000
and keepers of garages shall pay a tax equivalent to three percent (3%) Transport of passengers from NYC to MNL 6,000,000
of their quarterly gross receipts. Transport of cargos from MNL to NYC 3,500,000
Transport of cargos from NYC to MNL 4,500,000
The gross receipts of common carriers derived from their incoming and
outgoing freight shall not be subjected to the local taxes imposed under Question: How much is the business tax liability of Qatar Airways?
Republic Act No. 7160, otherwise known as the Local Government Code
of 1991. SECTION 119. Tax on Franchises.— Any provision of general or special
law to the contrary notwithstanding, there shall be levied, assessed and
In computing the percentage tax provided in this Section, the following collected in respect to all franchises on radio and/or television
shall be considered the minimum quarterly gross receipts in each broadcasting companies whose annual gross receipts of the preceding
particular case: year do not exceed Ten million pesos (P10,000,000), subject to Section
236 of this Code, a tax of three percent (3%) and on gas and water
Jeepney for hire — utilities, a tax of two percent (2%) on the gross receipts derived from the
1. Manila and other cities P2,400 business covered by the law granting the franchise: Provided, however,
2. Provincial P1,200 That radio and television broadcasting companies referred to in this
Section shall have an option to be registered as a value-added taxpayer
Public utility bus — and pay the tax due thereon: Provided, further, That once the option is
Not exceeding 30 passengers P3,600
 exercised, said option shall be irrevocable.
Exceeding 30 but not exceeding 50 passengers P6,000
Exceeding 50 passengers P7,200 The grantee shall file the return with, and pay the tax due thereon to the
Commissioner or his duly authorized representative, in accordance with
Taxis — the provisions of Section 128 of this Code, and the return shall be
1. Manila and other cities P3,600 subject to audit by the Bureau of Internal Revenue, any provision of any
2. Provincial P2,400 existing law to the contrary notwithstanding.

Car for hire (with chauffeur) P3,000 Illustration: Franchise Tax

Car for hire (without chauffeur) P1,800
Case: Meralwasa operates several franchises granted by the Philippine
Government. During the year, Meralwasa reported the following
receipts:
V. T. Francisco, CPA
 OTHER PERCENTAGE TAXES
Water distribution P5,000,000
Electric distribution (nonrenewable sources) 2,000,000
Electric distribution (renewable sources) 1,500,000
Question: How much is the business tax liability of Meralwasa based on
the above?
Illustration: OPT and Special VAT Threshold for franchisees of radio
and television broadcasting rights
Case 1: ABGM5 is a television broadcasting network operating under a
government-granted franchise. ABGM5 reported the following gross
receipts from its operations in the last 5 years:
Year 2014 P8,000,000
Year 2015 12,000,000
Year 2016 9,000,000
Year 2017 15,000,000
Year 2018 14,000,000
Questions:
1. How much is the business tax liability of ABGM5 if:
a. it never registered for VAT?
b. it decided to register for VAT after 2015?
2. In (b) above, when can ABGM5 revoke its VAT registration?
SECTION 120. Tax on Overseas Dispatch, Message or Conversation
Originating from the Philippines.—
(A) Persons Liable. — There shall be collected upon every overseas
dispatch, message or conversation transmitted from the Philippines by
telephone, telegraph, telewriter exchange, wireless and other
communication equipment services, a tax of ten percent (10%) on the
amount paid for such services. The tax imposed in this Section 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.
(B) Exemptions.— The tax imposed by this Section shall not apply to:
(1) Government.— Amounts paid for messages transmitted by the
Government of the Republic of the Philippines or any of its political
subdivisions or instrumentalities;
(2) Diplomatic Services.— Amounts paid for messages transmitted by
any embassy and consular offices of a foreign government;
(3) International Organizations. — Amounts paid for messages
transmitted by a public international organization or any of its agencies
based in the Philippines enjoying privileges, exemptions and immunities
which the Government of the Philippines is committed to recognize
pursuant to an international agreement; and
(4) News Services. — Amounts paid for messages from any newspaper,
press association, radio or television newspaper, broadcasting agency,
or newstickers services, to any other newspaper, press association,
radio or television newspaper broadcasting agency, or newsticker
service or to a bona fide correspondent, which messages deal
exclusively with the collection of news items for, or the dissemination of
news item through, public press, radio or television broadcasting or a
newsticker service furnishing a general news service similar to that of
the public press.
Illustration: OPT on overseas communications
Case: Telsmart Communications reported the following receipts for the
quarter:
From domestic calls P3,000,000
From overseas calls of Philippine origin 2,000,000
From internet services 2,000,000
P100,000 worth of the above overseas calls was for the account of the US
Embassy.
Question: How much is the business tax liability of Telsmart?
SECTION 121. Tax on Banks and Non-Bank Financial Intermediaries
Performing Quasi-Banking Functions.— There shall be collected a tax on
gross receipts derived from sources within the Philippines by all banks
and non-bank financial intermediaries in accordance with the following
schedule:
(a) On interest, commissions and 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:
Maturity period is five years or less 5%
Maturity period is more than five years 1%
(b) On dividends and equity shares and net income of
subsidiaries — 0%
(c) On royalties, rentals of property, real or personal, profits, from
exchange and all other items treated as gross income under
Section 32 of this Code — 7%
(d) On net trading gains within the taxable year on foreign
currency, debt securities, derivatives, and other similar
financial instruments — 7%
Provided, however, That in case the maturity period referred to in
paragraph (a) is shortened thru pretermination, then the maturity period
shall be reckoned to end as of the date of pretermination for purposes of
classifying the transaction and the correct rate of tax shall be applied
accordingly.
Provided, finally, That the generally accepted accounting principles as
may be prescribed by the Bangko Sentral ng Pilipinas for the bank or
nonbank financial intermediary performing quasi-banking functions shall
likewise be the basis for the calculation of gross receipts.
Nothing in this Code shall preclude the Commissioner from imposing
the same tax herein provided on persons performing similar banking
activities.
SECTION 122. Tax on Other Non-Bank Financial Intermediaries.— There
shall be collected a tax of five percent (5%) on the gross receipts derived
by other non-bank financial intermediaries doing business in the
Philippines, from interest, commissions, discounts and all other items
treated as gross income under this Code: Provided, That interests,
commissions and discounts from lending activities, as well as income
from financial leasing, shall be taxed on the basis of remaining
maturities of the instruments from which such receipts are derived, in
accordance with the following schedule:
Maturity period is five (5) years or less 5%
Maturity period is more than five (5) years 1%
Provided, however, That in case the maturity period is shortened thru
pretermination, then the maturity period shall be reckoned to end as of
the date of pretermination for purposes of classifying the transaction
and the correct rate shall be applied accordingly.
Provided, finally, That the generally accepted accounting principles as
may be prescribed by the Securities and Exchange Commission for
other non-bank financial intermediaries shall likewise be the basis for
the calculation of gross receipts.
Nothing in this Code shall preclude the Commissioner from imposing
the same tax herein provided on persons performing similar financing
activities.
Illustration: OPT on banks and financial intermediaries
Case: Metro de Oro had the following receipts for the period:
Interest income from 3 year loans P1,500,000
Interest income from 5 year loans 2,000,000
Interest income from 8 year loans 1,350,000
Interest income from deposits with other banks 2,000,000
Income from service charge and processing 1,200,000
Rent income from foreclosed properties 500,000
Dividend income 200,000
Income from sale of foreclosed real properties 3,000,000
Question: How much is the gross receipts tax liability of Metro De Oro
if it is:
1. a bank?
2. a non-bank financial intermediary transacting with 25 lenders?
3. a non-bank financial intermediary transacting with 3 lenders?
Illustration: Remaining maturities
Case: Northsouth Bank has the following outstanding loans in the
current year:
• a 10-year, 8% loan issued in January 1, 2010 for P10,000,000, of which
P2,000,000 is currently outstanding;
• A 10-year, 5% loan issued in January 1, 2018 for P5,000,000 for which
principal payments of P500,000 are due every December 31 starting in
2018; and
• A 3-year, 8.5% loan issued January 1, 2019 for P200,000 for which
principal
Questions:
1. Determine the tax rate to be applied to each of the foregoing loans.
2. Determine the gross receipts tax due from Northsouth Bank for the
current year.
V. T. Francisco, CPA
 OTHER PERCENTAGE TAXES
Illustration: Pretermination of loans
Case: On January 1, 2015, Insecurity Bank issued a P10,000,000 loan
paying 4% interest annually, with the principal maturing in 10 years.
The debtor is current on interest payments and the Bank was able to
remit the tax using the applicable tax rates. In December 31, 2018, the
debtor pre-terminated the loan by paying the interest for the year and
the full amount of principal.
Question: How much is the gross receipts tax liability of Metro De Oro
in the year of pretermination?
Illustration: Income from Finance Leasing
Case: Bibimbank entered into a financing agreement with a construction
company who did not have enough cash to purchase an excavator.
Under the agreement, Bibimbank will acquire an excavator on January
1, 2019 to lease out to the company for a period of five years for rent
payments of P1,000,000 due every year end. Bibimbank acquired the
excavator for P3,600,000. The implicit rate of interest in the lease is 12%.
Question: How much is the tax liability of Bibimbank in each of the
years of the lease contract?
SECTION 123. Tax on Life Insurance Premiums. — There shall be
collected from every person, company or corporation (except purely
cooperative companies or associations) doing life insurance business of
any sort in the Philippines a tax of two percent (2%) of the total premium
collected, whether such premiums are paid in money, notes, credits or
any substitute for money; but premiums refunded within six (6) months
after payment on account of rejection of risk or returned for other reason
to a person insured shall not be included in the taxable receipts; nor
shall any tax be paid upon reinsurance by a company that has already
paid the tax; nor upon 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
nonresident, if any tax on such premium is imposed by the foreign
country where the branch is established nor upon premiums collected or
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; nor upon that portion of the
premiums collected or received by the insurance companies on variable
contracts, in excess of the amounts necessary to insure the lives of the
variable contract owners.
Cooperative companies or associations are such as are conducted by
the members thereof with the money collected from among themselves
and solely for their own protection and not for profit.
Illustration: OPT on Life Insurance Premiums
Case: Moon Life underwrites both life and non-life insurance. The
following were premiums collected in the quarter:
Question:
1. How much is the OPT due based on the above?
2. How much is the total business tax liability of Asa Life?
SECTION 124. Tax on Agents of Foreign Insurance Companies.— 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 for companies not authorized to transact business in the
Philippines shall pay a tax equal to twice the tax imposed in Section 123:
Provided, That the provisions of this Section shall not apply to
reinsurance: Provided, however, That the provisions of this Section shall
not affect the right of an owner of property to apply for and obtain for
himself policies in foreign companies in cases where said owner does
not make use of the services of any agent, company or corporation
residing or doing business in the Philippines. In all cases where owners
of property obtain insurance directly with foreign companies, it shall be
the duty of said owners to report to the Insurance Commissioner and to
the Commissioner each case where insurance has been so effected, and
shall pay the tax of five percent (5%) on premiums paid, in the manner
required by Section 123.
Illustration: OPT on Non-Life Insurance Premiums
Case: Suffer Ferry is trying to evaluate whether to acquire a foreign
insurance policy on their ocean vessel directly from a foreign insurance
company at P135,000 annually or through an agent at P140,000.
Questions:
1. Which of the alternatives is better for Suffer Ferry?
2. How much is the net advantage from choosing the better alternative?
SECTION 125. Amusement Taxes.— There shall be collected from the
proprietor, lessee or operator of cockpits, cabarets, night or day clubs,
boxing exhibitions, professional basketball games, Jai-Alai and
racetracks, a tax equivalent to:
(a) Eighteen percent (18%) in the case of cockpits;
(b) Eighteen percent (18%) in the case of cabarets, night or day
clubs;
(c) Ten percent (10%) in the case of boxing exhibitions: Provided,
however, That boxing exhibitions wherein World or Oriental
Championships in any division is at stake shall be exempt
from amusement tax: Provided, further, That at least one of the
contenders for World or Oriental Championship is a citizen of
the Philippines and said exhibitions are promoted by a citizen/
s of the Philippines or by a corporation or association at least
sixty percent (60%) of the capital of which is owned by such
citizens;
(d) Fifteen percent (15%) in the case of professional basketball
games as envisioned in Presidential Decree No. 871:
Provided, however, That the tax herein shall be in lieu of all
other percentage taxes of whatever nature and description;
and
(e) 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. A person or entity or
association conducting any activity subject to the tax herein imposed
shall be similarly liable for said tax with respect to such portion of the
receipts derived by him or it.
The taxes imposed herein shall be payable at the end of each quarter
and 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.
Illustration: Amusement Taxes
Case 1: Mama Sang operates a "beer house" which declared the
following receipts for the quarter:
Sale of alcoholic beverages P1,500,000
Sale of bar food and pulutan 2,000,000
Sale of tickets of pay-per-view basketball match 2,000,000
Question: How much is the business tax liability of Mama Sang?
Case 2: Sir Bong is an operator of a cockpit. For the quarter, the
operation of the cockpit resulted in the following:
Gross receipts from tongs P800,000
Receipts of a canteen in the cockpit 500,000
The above canteen is also operated by Bong within the cockpit's
premises.
Question: How much is the business tax liability of Sir Bong?
Case 3: Aling H owns and operates a racetrack. For the quarter, the
operation of the racetrack resulted in the following:
Gross receipts from bets P2,300,000
Receipts of a canteen in the racetrack 800,000
The above canteen is operated by a concessionaire who paid rent of
P200,000 to Aling H for the quarter.
V. T. Francisco, CPA
 OTHER PERCENTAGE TAXES
Questions:
1. How much is the business tax liability of Aling H?
2. How much is the tax liability of the concessionaire if:
a. he is not VAT-registered and his gross receipts for the year
did not exceed P3,000,000?
b. he is VAT-registered?
Case 4: Revlon James, a retired basketball player who is still very
passionate about the sport organizes basketball games from which he
incidentally derives receipts. He declared gross receipts amounting to
P200,000 for the period.
Question: How much is the business tax liability of Revlon if:
1. The basketball games are professional games?
2. The basketball games are recreational games?
Case 5: Araneta Skydome hosted a much awaited World Championship
boxing match between Lloyd Langweder, a half-Filipino born in
Germany who was naturalized as Filipino citizen, and Johnny Pacquain,
a French citizen.
Question: What is the business tax liability of Araneta Skydome if:
1. The match is promoted by Bogs Arum, a Filipino citizen?
2. The match is promoted by Jollibag, a domestic corporation whose
shares are 100% owned by American nationals?
3. Lloyd Julyweather was not naturalized as a Filipino citizen?
SECTION 126. Tax on Winnings.— Every person who wins in horse races
shall pay a tax equivalent to ten percent (10%) of his winnings or
'dividends', the tax to be based on the actual amount paid to him for
every winning ticket after deducting the cost of the ticket: Provided, That
in the case of winnings from double, forecast/quinella and trifecta bets,
the tax shall be four percent (4%). In the case of owners of winning race
horses, the tax shall be ten percent (10%) of the prizes.
The tax herein prescribed shall be deducted from the 'dividends'
corresponding to each winning ticket or the 'prize' of each winning race
horse owner and withheld by the operator, manager or person in charge
of the horse races before paying the dividends or prizes to the persons
entitled thereto.
The operator, manager or person in charge of horse races shall, within
twenty (20) days from the date the tax was deducted and withheld in
accordance with the second paragraph hereof, file a true and correct
return with the Commissioner in the manner or form to be prescribed by
the Secretary of Finance, and pay within the same period the total
amount of tax so deducted and withheld.
Illustration: Winnings
Case 1: Yumeko is a compulsive gambler who frequents the Sta. Ana
Hippodrome. She had the following transactions in the Hippodrome:
Winnings from straight bets P120,000
Winnings from combination bets 60,000
Cost of total tickets 60,000
P25,000 worth of winning tickets is attributable to straight bets while
P15,000 is attributable to combination bets. The remainder is attributable
to losing tickets.
Questions:
a. How much is the business tax due from Yumeko?
b. How much is the take-home winnings of Yumeko from the above
transactions?
c. Who is liable to remit the business tax from (a)?
Case 2: Ryota owns racehorses competing in Sta. Ana Hippodrome. One
of them wins a high-stakes horse race from which he won a total prize
of P200,000. The hippodrome operator deducted a 10% dividend from
this amount.
Questions:
a. How much is the business tax due from Ryota?
b. Who is liable to remit the business tax from (a)?
SECTION 127. Tax on Sale, Barter or Exchange of Shares of Stock Listed
and Traded through the Local Stock Exchange or through Initial Public
Offering.—
(A) Tax on Sale, Barter or Exchange of Shares of Stock Listed and
Traded through the Local Stock Exchange. — There shall be levied,
assessed and collected on every sale, barter, exchange, or other
disposition of shares of stock listed and traded through the local stock
exchange other than the sale by a dealer in securities, a tax at the rate of
six-tenths of one percent (6/10 of 1%) of the gross selling price or gross
value in money of the shares of stock sold, bartered, exchanged or
otherwise disposed which shall be paid by the seller or transferor.
(B) Tax on Shares of Stock Sold or Exchanged through Initial Public
Offering. — There shall be levied, assessed and collected on every sale,
barter, exchange or other disposition through initial public offering of
shares of stock in closely held corporations, as defined herein, a tax at
the rates provided hereunder based on the gross selling price or gross
value in money of the shares of stock sold, bartered, exchanged or
otherwise disposed in accordance with the proportion of shares of stock
sold, bartered, exchanged or otherwise disposed to the total outstanding
shares of stock after the listing in the local stock exchange:
Up to twenty-five percent (25%) 4%
Over twenty-five percent (25%) but not over
thirty-three and one third percent (33 1/3%) 2%
Over thirty-three and one third percent (33 1/3%) 1%
The tax herein imposed shall be paid by the issuing corporation in
primary offering or by the seller in secondary offering.
For purposes of this Section, the term 'closely held corporation' means
any corporation at least fifty percent (50%) in value of the outstanding
capital stock or at least fifty percent (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 twenty (20) individuals.
For purposes of determining whether the corporation is a closely held
corporation, insofar as such determination is based on stock ownership,
the following rules shall be applied:
(1) Stock Not Owned by Individuals. — Stock owned directly or indirectly
by or for a corporation, partnership, estate or trust shall be considered
as being owned proportionately by its shareholders, partners or
beneficiaries.
(2) Family and Partnership Ownerships. — An individual shall be
considered as owning the stock owned, directly or indirectly, by or for
his family, or by or for his partner. For purposes of this paragraph, the
''family of an individual' includes only his brothers and sisters (whether
by whole or half-blood), spouse, ancestors and lineal descendants.
(3) Option. — If any person has an option to acquire stock, such stock
shall be considered as owned by such person. For purposes of this
paragraph, an option to acquire such an option and each one of a series
of options shall be considered as an option to acquire such stock.
(4) Constructive Ownership as Actual Ownership. — Stock
constructively owned by reason of the application of paragraph (1) or (3)
hereof shall, for purposes of applying paragraph (1) or (2), be treated as
actually owned by such person; but stock constructively owned by the
individual by reason of the application of paragraph (2) hereof shall not
be treated as owned by him for purposes of again applying such
paragraph in order to make another the constructive owner of such
stock.
(C) Return on Capital Gains Realized from Sale of Shares of Stocks. —
(1) Return on Capital Gains Realized from Sale of Shares of Stock Listed
and Traded in the Local Stock Exchange. — It shall be the duty of every
stock broker who effected the sale subject to the tax imposed herein to
collect the tax and remit the same to the Bureau of Internal Revenue
within five (5) banking days from the date of collection thereof and to
submit on Mondays of each week to the secretary of the stock exchange,
of which he is a member, a true and complete return which shall contain
a declaration of all the transactions effected through him during the
preceding week and of taxes collected by him and turned over to the
Bureau of Internal Revenue.
(2) Return on Public Offerings of Shares of Stock. — In case of primary
offering, the corporate issuer shall file the return and pay the
corresponding tax within thirty (30) days from the date of listing of the
shares of stock in the local stock exchange. In the case of secondary
offering, the provision of Subsection (C)(1) of this Section shall apply as
to the time and manner of the payment of the tax.
(D) Common Provisions. — Any gain derived from the sale, barter,
exchange or other disposition of shares of stock under this Section shall
be exempt from the tax imposed in Sections 24(C), 27(D)(2), 28(A)(8)(c),
and 28(B)(5)(c) of this Code and from the regular individual or corporate
income tax. Tax paid under this Section shall not be deductible for
income tax purposes.
V. T. Francisco, CPA
 OTHER PERCENTAGE TAXES
authorized Treasurer of the city or municipality where said business or
Illustration: Sale of shares of stocks through PSE principal place of business is located, as the case may be.
Case: During the period, Company A effected the transfer of the
following shares of stocks listed in the Philippine Stock Exchange:

Questions:
How much is the business tax liability of Company A if:
a. it is not a dealer in securities?
b. it is a dealer in securities?

Illustration: OPT on primary offerings

Case 1: During the year, Gerald Company offered its shares of stocks for
the first time to the public through the stock exchange at P1. Prior to the
IPO, 100,000 of its 200,000 P100 par value authorized shares are
subscribed and fully paid by the following shareholders:

Maja 10,000
Bea 27,500
Sarah 20,000
Kim 35,000
Julia 7,500

Question: How much is the business tax due on the IPO if:
a. 50,000 shares are offered through the IPO?
b. 30,000 shares are offered through the IPO?

Case 2: Further to case 1, Bea and Julia decided to sell their shares in the
IPO.

Additionally, subsequent to the IPO, Gerald Company further decides

to increase capitalization by selling 20,000 shares of stocks to Arci for
P125 per share.

Question: How much is the IPO tax due for:

a. Bea?
b. Julia?
c. Arci?

SECTION 128. Returns and Payment of Percentage Taxes.—

(A) Returns of Gross Sales, Receipts or Earnings and Payment of Tax.—
(1) Persons Liable to Pay Percentage Taxes. — 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: Provided, That in the case of a person whose VAT registration is
cancelled and who becomes liable to the tax imposed in Section 116 of
this Code, the tax shall accrue from the date of cancellation and shall be
paid in accordance with the provisions of this Section.
(2) Person Retiring from Business. — Any person retiring from a
business subject to percentage tax shall notify the nearest internal
revenue officer, file his return and pay the tax due thereon within twenty
(20) days after closing his business.
(3) Determination of Correct Sales or Receipts. — When it is found that a
person has failed to issue receipts or invoices, or when no return is filed,
or 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 required to be filed under the provisions of this Code, the
Commissioner, after taking into account the sales, receipts or other
taxable base of other persons engaged in similar businesses under
similar situations or circumstances, or after considering other relevant
information may prescribe a minimum amount of such gross receipts,
sales and taxable base and such amount so prescribed shall be prima
facie correct for purposes of determining the internal revenue tax
liabilities of such person.

(B) Where to File. — Except as the Commissioner otherwise permits,

every person liable to the percentage tax under this Title may, at his
option, file a separate return for each branch or place of business, or a
consolidated return for all branches or places of business with the
authorized agent bank, Revenue District Officer, Collection Agent or duly

V. T. Francisco, CPA