MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY

DEPARTMENT OF ACCOUNTANCY

ACCTG163: REVIEW IN TAXATION

OTHER PERCENTAGE TAX

In lieu of VAT, Other Percentage Taxes are imposed on the following persons/transactions:

A. 3% percentage tax on any person whose sales or receipts are exempt from payment
of VAT because gross annual sales do not exceed P3,000,000.

Exempt from 3% GRT:

 Cooperatives

Note: Cooperatives who transact business who transact business with their
members and non-members and with accumulated reserves and undivided net savings of
more than P10,000,000 shall be subject to the percentage tax on all sales of goods and/or
other services to non-members.

 Self-employed individuals and professionals availing of the 8% tax on gross sales

and/or and other non-operating income.

Note: Such taxpayer may opt to register under VAT system not later than 10 days before the
beginning of the taxable quarter. Once registered under optional VAT registration, he/she shall
not be allowed to cancel his/her registration for the next three years.

B. Tax on domestic carriers and keepers of garages (Common Carrier’s Tax)

3% of Gross Sales or Receipts from the transport of passengers, provided the gross receipts
are greater than or equal to the minimum levels provided by law.

Persons Subject:

 Keepers of garage

 Domestic carriers by land transporting passengers

 Transporting contractors

 Cars for rent driven by lessee

 Taxicabs

 Cars for hire owned by a rent-a-car companies

 Tourist buses used for the transport of passengers

Exempted: Owners of Banca and animal drawn two-wheeled vehicle.

Minimum Quarterly Receipts Table:

DOMETIC CARRIER MINIMUM QUARTERLY RECEIPTS

Jeep for Hire:

1. Provincial P1,200

2. Manila and other Cities P2,400

Public Utility Buses:

1. Not exceeding 30 passengers P3,600

2. Exceeding 30 but not exceeding 50 P6,000

3. Exceeding 50 passengers P7,200

Taxis:

1. Provincial P2,400

2. Manila and other Cities P3,600

Car for Hire (without chauffeur) P1,800

Car for Hire (with chauffeur) P3,000

RMC 7-2015 (Transportation Network Companies “TNC’’)

TNC is a pool of land transportation vehicles whose accessibility to the riding public is
facilitated through the use of common point of contract may be in the form of text, telephone,
and/or cellular calls, email, mobile applications or by other means.

 3% Common Carrier’s Tax - TNCs/Partners with valid Certificate of Public

Convenience engaged in the transport of passengers are subject to 3% Common
Carrier Tax.

 12% VAT or 3% OPT - TNCs/Partners without valid CPC are classified as land
transportation contractor or subject to either 12% VAT or 3% OPT.

C. Tax on International Carriers

3% of Gross Receipts from the transport of CARGO from the Philippines to another country

D. Tax on Franchise (Franchise Tax)

Person Subject Other Percentage Tax

1. Radio/Television broadcasting with gross 3% of gross receipts derived from the

annual receipts is less than or equal to business covered by law granting the
P10,000,000 franchise.

2. Gas and water utilities 2% of gross receipts derived from the

business covered by law granting the
 franchise.

3. PAGCOR 5% of Gross Revenues

Note:

 Optional Registration - Radio and TV broadcasting companies whose annual gross

receipts of the preceding year do not exceed P10,000,000 may opt to register within 10
days before the beginning of the calendar year under VAT system. Once the option is
exercised, it is irrevocable.

 Franchise grantees to VAT:

1. Telephone and Telegraph Companies

2. Toll road operations

3. Electricity

4. Radio and TV Broadcasting companies whose gross sales of the preceding period
exceeded P10,000,000.

E. Overseas communication tax

It is collected on every overseas communication, dispatch, message, or conversation

originating from the Philippines by telephone, telegraph, telewriter exchange, wireless, and
other communication equipment or service.

Taxed at 10% based on the amount paid for the services rendered.

Person Subject: Payor of the Service

Responsibilities of the Payee (entity rendering the service)

 Collects and remits the tax to the BIR within 20 days after the end of each quarter.

 The provider of owner of the communication facility is subject to 12% VAT

Person not subject to Percentage Tax:

 The Philippine Government

 Embassy and consular offices of a foreign government

 International organizations based in the Philippines

 News services: amounts paid for messages from any news paper, press association,
radio or television, newspaper, broadcasting, or other news services to any other
newspaper, press association, radio or television newspaper broadcasting agency, news
services, or to a bona fide correspondent. The messages must deal exclusively with the
collection or dissemination of news items.
F. Tax on banks and non-bank financial intermediaries performing quasi-banking
functions. (Gross Receipts Tax)

On interest, commissions, discounts from lending activities as well as income from

financial leasing, on the basis of the remaining maturities of instruments from which
receipts are derived:

Maturity period is 5 years or Less

Maturity period is more than 5 years 5%

1%

On royalties, rentals of property, profits from exchange and all other items treated as 7%
gross income under the tax code

On net trading gain on foreign currency, debt instruments, derivatives, and other similar 7%
financial instruments

On dividends and equity shares in net income of subsidiaries 0%

Person subject:

1. Banks - entities engaged in the lending of funds obtained in the form of deposits.

2. Non-bank financial intermediaries performing quasi-banking functions:

 Non-bank Financial Intermediaries - Refer to persons or entities whose principal

functions include the lending, investing, or placement of funds or evidences 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.

 Quasi-banking Functions - Refer to borrowing of funds from 20 or more personal or

corporate lenders at any other 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 repurchase agreements for purpose of relending or
purchasing receivables and other similar obligations.

G. Tax on finance companies and Other non-bank financial intermediaries NOT

performing quasi-banking functions.

On interest, commissions, discounts from lending activities as well as income from

financial leasing, on the basis of the remaining maturities of instruments from which
receipts are derived:

Maturity period is 5 years or Less

Maturity period is more than 5 years 5%

1%

On royalties, rentals of property, profits from exchange and all other items treated as 5%
gross income under the tax code

*It includes pawnshops

H. Tax on life insurance premiums

2% of Gross Premiums Collected. Gross premiums shall include re-issuance fees,

reinstatement fees, renewal fees, penalties paid to insurance company in connection with the
insurance policy, and premiums on health and accident insurance.

Person subject: Any person/entity offering life insurance in the Philippines, except purely
cooperatives companies or associations.

Exemptions:

1. Premiums refunded within 6 months after payment on account of rejection of risk, or

returned for any other reason to a person insured.

2. 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 branch is established.

3. 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 premium is imposed by
the foreign country where the original insurance has been issued or perfected.

4. Portion of the premiums collected or received by the insurance companies on variable

contacts in excess of the amounts necessary to insure the lives of the variable contract
owners.

5. Management fees, rental income, or any other income earned by the life insurance
company from services which can be pursued independently of the insurance business
activity.

6. Investment income earned by the life insurance company from investing the premiums.

I. Tax on agents of foreign insurance companies

PERSON SUBJECT TAX

1. Every fire, marine, or miscellaneous insurance agent authorized 4% of total premiums

under the Insurance Code to procure policies of insurance as he collected
may have previously been legally authorized to transact, on risks
located in the Philippines for companies not authorized to transact
business in the Philippines.

2. Owners of property who obtain insurance directly with foreign 5% of premiums paid
companies

J. Amusement Taxes
1. Proprietors, operators or lessees of the following amusement places are subject to
percentage tax on gross receipts:

 Cockpits - 18%

 Boxing Exhibition - 10%

 Professional Basketball Game - 15%

 Cabarets, Night and Day Clubs - 18%

 Jai-alai - 30%

Note: Income from television, radio, and motion pictures rights is included as part of the gross
receipts.

Boxing exhibition wherein World or Oriental Championship in any division is at stake, shall be
exempt from amusement tax, provided that at least one of the contenders is a citizen of the
Philippines, and said exhibitions are promoted by Filipino citizens or by a corporation or
association which at least 60% of its capital is owned by such citizens.

K. Tax on Winnings

1. Tax rates and tax base shall apply:

 Winnings in horse races or jai-alai - 10% based on the amount paid for every ticket less
cost of the ticket.

 Winnings from double, forecast, quinella, and trifecta bet - 4% based on the amount paid
for ticket less cost of the ticket.

 Owner of the winning horse - 10% of the prize

Note: Percentage tax shall be collected/withheld from the prize by the operator or owner of the
amusement place.

L. Tax on sale of shares of stock traded thru Local Stock Exchange

 6/10 of 1% based on gross selling price or gross value of money.

 A dealer in security is not subject to percentage tax.

M. Tax on sale of shares of stock through Initial Public Offering

 Tax shall be based on the gross selling price or gross value in money of the shares of
stock sold.

 In accordance with the proportion of shares of stock sold to the total outstanding shares of
stock after listing in the local stock exchange:

Up to 25% 4%

Over 25% but not over 33 1/3% 2%

Over 33 1/3% 1%

Person Subject:
Issuing corporation in a primary offering or the selling shareholder of the shares in the
secondary offering.

Who shall pay?

In the case of primary offering - the corporate issuer shall file the return, and pay the
corresponding tax within thirty days from the date of listing of the shares of stock in the Local
Stock Exchange

In the case of secondary offering - it shall be the duty of the stockholder who effected the sale
to collect the tax, and remit the same to the BIR within five banking days from the date of
collection.

RETURNS and PAYMENT OF PERCENTAGE TAXES

PERCENTAGE TAXPAYER AFTER TRAIN

Persons whose gross or annual sales or receipts do not exceed QUARTERLY

P3,000,000 and who are not VAT Registered

Domestic Carriers and keepers of garage QUARTERLY

Operators of international air and shipping carriers QUARTERLY

Franchise grantees of gas and water QUARTERLY

Franchise grantees of radio and television below P10,000,000 threshold QUARTERLY

and who are not non-VAT registered

Banks, Quasi-banks, and non-bank financial intermediaries QUARTERLY

Life insurance companies QUARTERLY

Agents of Foreign Insurance QUARTERLY

Overseas communication QUARTERLY

Proprietors, lessees or operators of cockpits, cabarets, night and day QUARTERLY

club, boxing exhibition, professional basketball games, jai-alai and race
track

For taxpayer who avail of the EFPS:

The quarterly Percentage Tax Returns shall be e-filed in a consolidated return on a staggered
basis accoirding to the taxpayer’s industry classification. Payment of the tax due via EFPS
shall depend of the Group classification of the the taxpayer.

Exceptions:

1. Tax on Winnings - 20 days after the date withheld

2. Stock Transaction Tax - 5 banking days after the date withheld or collection
 3. IPO stock transaction tax (Primary) - 30 days from the date of listing of the shares in
the local stock exchange

4. IPO stock transaction tax (Secondary) - 5 days from the date of collection.

END