OTHER PERCENTAGE TAXES OPTION TO REGISTER UNDER THE VAT SYSTEM

- Not later than 10 days before the beginning of the taxable quarter and
Percentage tax – tax imposed on sale, barter or exchange of goods, or sale of once registered, it is irrevocable for 3 consecutive years
services based upon gross sales, value in money of receipts derived by the
manufacturer, producer, or seller measured by certain percentage of the gross 8% PREFERENTIAL TAX RATE FOR SEP
selling price or receipts. Requirements:
i. non-VAT registered
***IF SUBJECT TO OPT, CANNOT BE SUBJECTED TO VAT. ii. not engaged in VAT exempt-sales/transactions
iii. not subject to other Percentage Taxes other than Section 116 of the
Kapag may business tapos VAT-registered tapos connected yung isang business Tax Code
sa Section 117, tapos may isa pang business na related on retailing. Yung iv. the SEP signified in his/her 1st Quarterly Return of his/her intention
business na connected sa Section 117, subjected to OPT kasi kasali sa Section to elect the 8% income tax, otherwise, s/he shall be considered as
116 to 127 yung business. Yung retail business, subjected to VAT because the having availed of the graduated rates
entity is VAT-registered.
• Thus, if the business is under Section 116 to 127, the entity will still be 2. Percentage tax on domestic carriers and keepers of garages (Section
subjected to OPT despite being VAT-registered. 117)
• It is also known as 3% common carriers tax (CCT)
KINDS OF PERCENTAGE TAXES
1. Tax on person exempt from value-added tax (Section 116) REQUISITES:
i. Domestic common carriers by LAND including:
Prior to July 1, 2020 3% a. Cars for rent
From July 1, 2020 to June 30, 2023 (CREATE LAW) 1% b. Cars for hire driven by the lessee
Beginning July 1, 2023 3% c. Transportation contractors including those who transport
passengers such as tourist buses for hire
TAX BASE: Gross Sales or Receipts d. Keepers of the garage
e. Transportation Network Companies with valid Certificate of
PERSONS LIABLE: Public Convenience
i. Persons who are not VAT-registered and VAT-registrable ii. Transport of passengers
ii. Persons who lease residential units where the monthly rental per unit
exceeds 15,000 but the aggregate of such rentals of the lessor during TAX RATE AND BASIS: 3% of quarterly gross receipts
the year does not exceed 3,000,000 TAXPAYER: operator, lessor, or contractor

REQUISITES: MINIMUM QUARTERLY GROSS RECEIPTS PER UNIT CARRIER

i. Not VAT-registered person Prior EOPT (before January 22, 2024)
ii. Not VAT-registrable person (annual gross sales or receipts do not Jeepney for hire Manila and other cities 2,400
exceed P3,000,000) Provincial 1,200
iii. Not exempt from VAT under section 109(1)(A) to section 109(1)(BB) Public Utility Bus Not exceeding 30 passengers 3,600
of the Tax Code Exceeding 30 but not exceeding 50 6,000
passengers
EXEMPT PERSON Exceeding 50 passengers 7,200
i. Cooperatives Taxis Manila and other cities 3,600
ii. Self-employed individuals and professionals availing of the 8% tax Provincial 2,400
on gross sales and/or receipts and other non-operating income Cars for hire With chauffeur 3,000
Without chauffeur 1,800
COMPOSITION OF THE 8%
**for example, may 10 taxi ka sa manila tapos ang pasada mo lang is 1000 per
• 5% income tax quarter. So, babayaran mo pa rin yung 3600. Pero kapag nag-exceed ng 3600,
• 3% OPT yung actual gross receipts and kailangang i-file.

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 REQUISITES:
Common carriers tax (CCT) i. International carriers (RFC) doing business in the Philippines
– pertains to percentage taxes of domestic common carriers by land ii. Transport of cargoes
– Exceptions: iii. From Philippines to another country
Ø owners of bancas
Ø animal drawn two-wheeled vehicles TAX RATE AND BASIS: 3% of gross receipts
– if gross receipts are derived from their incoming and outgoing freight, it
will not be subjected to local taxes Gross Receipts
• Domestic common carriers by air or sea – total amount of money or its equivalent representing the contract,
– Subject to VAT on their gross receipts from their transport of freight/cargo fees, mail fees, deposits applied as payments, advance
passengers, goods or cargoes from one place in the Philippines to payments and other service charges and fees
another place in the Philippines
• International flights or shipments of domestic carriers by air or sea • Foreign International Carriers without flights/voyage starting from or
§ Registered – zero-rated VAT passing through any point in the Philippines (Off-Line Career)
§ Non-VAT registered – exempt from value added tax • Off-line flights or voyages – flight or voyage operations carried out or
maintained by an international carrier between ports or points outside the
Transportation Network Companies – RMC 70-2015 territorial jurisdiction of the Philippines, without touching a port or point
• TNC or Transportation Network Vehicle System (TNVS) situated in the Philippines, except when in distress or due to force majeure
– a pool of land transportation vehicles whose accessibility to the riding
public is facilitated using common point of contact 4. Tax on franchises (Section 119)
• It is applicable on radio and/or television broadcasting companies whose
Applicable Business Taxes for TNCs and “Partners” annual gross receipts of the preceding year does not exceed
• TNCs/Partners with valid “Certificate of Public Convenience (CPC)” P10,000,000.
engaged in the transport of passengers are subject to 3% CCT under
Section 117 of the Tax Code SUMMARY
• TNCs/Partners without valid CPC are classified as land transportation Grantor Type of Franchise Business Tax
contractor subject to either 12% VAT or 3% OPT under Sec. 116 of the Radio/Television 3% OPT or 12% vat if vat
Tax Code Broadcasting reg. or if GR > P10M for
Companies the preceding year
Business Taxes of Domestic Common Carriers Gas and water utilities 2% OPT regardless of
Government
Transport of Business Tax gross receipts
Passengers All other types of 12% VAT or 3% OPT
Passengers 3% CCT (Sec. 117) franchises under Sec. 116 if NV reg.
regardless of gross receipts & GR ≤ P3M
By land
Goods/Cargoes VAT or Sec. 116 if GR≤P3M* All types of franchises 12% VAT or 3% OPT
& not VAT registered Private Companies under Sec. 116 if NV reg.
Passengers VAT or Sec. 116 if GR≤P3M* & GR ≤ P3M
& not VAT registered
By air or sea
Goods/Cargoes VAT or Sec. 116 if GR≤P3M* REQUISITES:
& not VAT registered i. Franchise granted by law or the government (e.g., Cagelco, Meralco,
International flights/shipments of “domestic” 0% VAT if registered, Water District)
carriers otherwise VAT exempt ii. Annual gross receipts of the preceding year do not exceed P10 Million for
Radio or TV Broadcasting Companies
3. Percentage tax on international carriers (Section 118)
• It is known as Common Carriers Tax (CCT) on International Carriers Franchise Tax for the National Grid Corporation
• RA 9511 imposed a 3% franchise tax on all gross receipts derived by the
National Grid Corporation from its transmission operation.

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5. Tax on overseas dispatch, message or conversation originating from • Non-Bank Financial Intermediary – authorized by BSP to perform quasi-
Philippines (Section 120) banking activities
• It is also known as Overseas Communication Tax (OCT) • Financial Intermediaries – include the lending, investing or placement of
• 10% upon every overseas dispatch, message, or conversation transmitted funds or evidences of indebtedness or equity
• It is payable by the person paying for the services rendered and shall be • Quasi-Banking Activities – borrowing of funds from 20 or more personal
paid to the person rendering the services. or corporate lenders

REQUISITES: Net Trading Gain within the taxable year = cumulative total of the net trading
i. Overseas dispatch, message or conversation gain or loss since the first months of the same taxable year
ii. From the Philippines to another country
iii. By telephone, telegraph, tele-writer exchange, wireless and other 7. Tax on other non-bank financial intermediaries (Section 122)
communication equipment services Tax Rate
Remaining maturity period in 5 years or less 5%
EXEMPT FROM OCT Remaining maturity period is more than 5 years 1%
a. Government – government or any political subdivisions and
instrumentalities REQUISITES:
b. Diplomatic services – embassy and consular offices of a foreign i. Non-bank
government ii. Finance companies doing business in the Philippines
c. International organizations – public international organization or any of iii. Interest, commissions, and discounts from lending activities and income
its agencies based in the PH enjoying privileges, exemptions, and from financial leasing
immunities
d. News services – messages deal exclusively with the collection of news Gross Receipt Tax (GRT) on Lending Investors
items, for or the dissemination of news items • Lending investor – all persons other than banks, non-bank financial
intermediaries, finance companies and other financial intermediaries not
6. Tax on banks and non-bank financial intermediaries (Section 121) performing quasi-banking functions who make a practice of lending
• It is also known as Gross Receipts Tax (GRT). money for themselves or others at interest
– subject to 12% VAT on the basis of their gross receipts
Kind of Income Tax Rate
Interest, commissions and discounts from lending activities and 8. Tax on life insurance premiums (Section 123)
financial leasing on the basis of remaining maturities of
instruments from which such interests are derived RATE: 2% Insurance Tax
Maturity period is 5 years or less 5%
Maturity period is more than 5 years *** 1% REQUISITES:
Dividends and equity shares in net income subsidiaries 0% i. Life insurance
Royalties, rentals of property, real or personal, profits from 7% ii. Within the Philippines
exchange and all other items treated as gross income under Sec. iii. Not purely cooperative and associations
32 of the Tax Code
Net trading gains within the taxable year on foreign currency, 7% The following shall not be included in the taxable receipts:
debts securities, derivative and other similar financial instruments • Premiums refunded within 6 months after payment on account of
*** in case the loans are pre-terminated, then the maturity period shall be reckoned rejection of risk or returned for other reasons to the insured.
to end as of the date of the pre-termination • Reinsurance premiums where tax has previously been paid. (pinapa-
insure ka ulit sa ibang company)
Requisite for Non-Bank Financial Intermediaries: • Premiums collected or received by any branch of a domestic corporation,
i. Borrowing of funds from twenty (20) or more personal or corporate lenders firm, or association doing business outside the Philippines on account of
at any one time through issuance, endorsement or acceptance of debt ANY LIFE insurance of a NON-RESIDENT insured, if any tax on such
instruments of any kind other than deposits (quasi-banking operations) premium is imposed by a foreign country where the branch is established.

frey angeleigh galvezo

 • Premiums collected or received on account of RE-INSURANCE, if the ii. Via internet
insured, in case of personal insurance resides outside the Philippines,
if any tax on such premiums is imposed by a foreign country where the 12. Tax on winnings (Section 126)
original insurance has been issued or perfected.
• Portion of the premiums collected or received by the insurance
companies on variable contracts in excess of the amounts necessary to RATES:
insure the lives of the variable contract workers. Double, forecast/quinella and trifecta bets (horseracing) 4%
Other winnings (e.g., kabayo mo yung nanalo) 10%
Variable Universal Life (VUL) – a variable contract that it is not just a life
insurance, it earns from investment because it is invested on other things. TAX BASE: actual amount paid for every winning after deducting the cost of the
winning ticket (
9. Tax on agents of foreign insurance companies (Section 124) REQUISITE: wins on horse races
PAYMENT OF TAX: within 20 days from the date the tax was deducted and
RATES: withheld
Agents of Nonresident Foreign Insurance Companies 4% STATUTORY TAXPAYER: collector
Owners of property who obtain insurance directly from foreign companies 5% ECONOMIC TAXPAYER: the nanalo

REQUISITES: 13. Tax on sale, barter or exchange of shares of stock listed and traded
i. Insurance through the local stock exchange (Section 127A)
ii. Acquired by the citizens of the Philippines
iii. Acquired from foreign insurance companies RATE: 6/10 of 1% Stock Transaction Tax (regular offering)

10. Amusement taxes (Section 125) Regular offering – occurs after initial public offering

RATES: REQUISITES:
Jai-alia and racetracks 30% i. Seller shall not be a dealer in securities (kasi if dealer, subject na to
Cockpits, cabarets, night or day clubs 18% income tax)
Professional basketball games 15% ii. Shares are publicly listed
Boxing Exhibitions 10% iii. Traded through the local stock exchange

Exempt: Boxing Exhibitions PAYMENT OF TAX: within 5 banking days from the date of collection
i. World or Oriental Championship
ii. At least one of the contenders is a citizen of the Philippines 14. Tax on Sale, Barter or Exchange of Shares of Stock Through Initial
iii. Promoted by citizen/s of the Philippines or corporation or association at Public Offerings (Before September 15, 2020) (Section 127B)
least 60% of the capital is owned by citizen/s of the Philippines
RATES: on the gross selling price or gross value in money
11. Percentage Tax on POGOs under Sec. 125-A (new provision) (Section Up to 25% 4%
125A) Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%
RATE: 5% Gaming Tax
Primary offering – first time niyang ma-trade yung stocks to public offering
Higher of For example: si CPAR (closed corporation), kapag gusto na niyang i-offer yung
§ Gross Gaming Revenue = (Gross Wagers – Payouts) shares niya into the public, kailangan niyang i-undergo yung mga requirements for
§ Agreed Predetermined Minimum Monthly Revenue or Receipts from the initial public offerings para masabi na publicly-listed na siya.
gaming operations
Basis of rates for primary offering
REQUISITES: Shares of stock disposed during the IPO
i. Derived from online games of change or sporting events Outstanding shares of stock after the listing in the Local Stock Exchange
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Secondary offering – si CPAR, gagawin nang publicly-listed. Si Ma’am Joyce,
dati nang shareholder ng CPAR. Magkakaroon ng secondary offering kapag yung
shares ni Ma’am Joyce, ‘yon ang binenta sa initial public offering

Basis of rates for secondary offering

Total shares of stock (old) disposed during the IPO
Outstanding shares of stock after the listing in the Local Stock Exchange

REQUISITES:
i. Initial Public Offering of shares of stock
ii. In closely-held corporation

PAYMENT OF TAX:
Primary Offering: shall be paid by the issuing corporation (within 30 days from
the date of listing in the LSE)
Secondary Offering: seller (within 5 banking days from the date of collection)

NOTES:
1. If the transaction is subject to OPT, it is no longer subject to VAT.
2. Quarterly Percentage Tax under Sections 116 to 126 of the Tax Code, as
amended
- within 25 days after end of each taxable

RA 11976: The Ease of Paying Taxes

• effectivity January 22, 2024
• All gross receipts will be changed to gross sales.

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