CABRIA CPA REVIEW CENTER

PERCENTAGE TAXES(OPT) Tel. Nos. (043) 980-6659

JIEXEL L. MANONGSONG
CONCEPT and NATURE of PERCENTAGE TAX
• Generally, the law on percentage tax is imposed to cover business entities that render services.
• It is likewise imposed on business entities not subject to value-added tax when the gross sales or
receipts for the preceding taxable period are less than P3,000,000
• It is a business tax charge to a person who is not subject to the value-added tax system or whose
gross sales or receipts are exempted under the VAT system.
• Percentage tax is a gross receipt tax. This is a business tax charged to persons or entities who sell or
lease goods or services in the course of trade or business in the Philippines. It is a broad-based, low -
rate tax imposed on all income received by a business without any deductions for the costs of doing
business.

FORMULA TO COMPUTE PERCENTAGE TAX

• Percentage tax due = Tax base x Tax rate
• It can be observed that there are two elements to correctly determine the amount of percentage tax
liability. These primary elements are:
a. Tax base, and
b. Tax rate.
• In the percentage tax system, several tax rates are applied depending on the nature or type of
business entities. Needless to say, the two components need to be correctly determined to proper
identify the percentage tax due.

TAX BASE OF PERCENTAGE TAX (Sec. 116, NIRC, as amended)

• Base on GROSS RECEIPTS
• Definition of Gross Receipts (Sec. 108, NIRC, as amended)
• Refer to total money or its equivalent actually or constructively received including amount
charged to materials for services rendered and advance payments.
• Receivable do not represent money collected; hence, they should not be included as part of
gross receipts
• NO DEDUCTIONS or expenses should be made or allowed

OPTIONAL REGISTRATION (Sec. 15, Rev. Reg. 4-2007, as amended)

• Business entities subject to percentage tax shall register under such taxation system. In a similar
manner, business entities subject to value-added tax shall register under the value-added tax system
• However, the law allows businesses covered by the percentage tax system to register under the value-
added tax system.

In relation to the optional registration, the following guidelines may be observed:

1. Businesses with annual gross sales or receipts of less than P100,000 are exempt from VAT and
percentage tax.
2. Businesses with the preceding year's annual gross sales or receipts of less than P3,000,000 are
subject to 3% percentage tax.
3. Businesses subject to 3% percentage tax may opt to register under the Value-added Tax system
4. Franchise grantees of radio and TV broadcasting companies whose annual gross receipts for the
preceding year amount to P10,000,000 may opt to register under the value-added tax system
5. The optional registration is irrevocable for a period of three years counted from the quarter when the
election was made, except for franchise grantees of radio and broadcasting whose option becomes
perpetually irrevocable.

BUSINESSES SUBJECT TO PERCENTAGE TAX (Title V, NIRC, as amended)

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1. Businesses with gross annual sales of not more than Php 3,000,000 is subject to 3% percentage tax
2. Under section 116 to 127 of the National Internal Revenue Code (NIRC)
a. Carriers (domestic and international) and keepers of garages
b. International Carriers
c. Franchise grantees
d. Overseas communication from the Philippines
e. Banks and non-banks financial intermediaries
f. Life insurance companies
g. Tax on agents of foreign insurance companies
h. Amusement places
i. Tax on winnings
j. Sales of shares through local stock exchange

PERSONS EXEMPT FROM VALUE-ADDED TAX (Sec. 116, NIRC, as amended)

• Any person whose sales or receipts are exempt from payment of value-added tax under section 109(V)
of the tax code and who is not vat-registered shall pay a tax equivalent to 3% Quarterly sales or
receipts.
• Thus, persons with annual gross sales for the preceding year of not more than P3,000,000 shall be
exempt from value-added tax but shall be subject to a percentage tax of 3%. Such taxpayers may opt
to register under the VAT system not later than 10 days before the beginning of the taxable quarter.
Once registered under the optional VAT registration, he/she shall not be allowed to cancel his/her
registration for the next three years.
• However, cooperatives, other than electric cooperatives, shall be exempt-from the 3% gross receipts
tax.

DOMESTIC CARRIERS AND KEEPERS OF GARAGES (Sec. 117, NIRC, as amended)

Definition: COMMON CARRIER refers to one who is engaged in the business of transporting
passengers or cargoes by land, water or air. Percentage tax on domestic carrier is also known as COMMON
CARRIER TAX.
PERSONS SUBJECT TO COMMON CARRIER'S TAX
The following taxpayers shall be subject to 3% common carrier’s tax based on actual or minimum monthly
gross receipts, whichever is higher:
A. Keepers of garages
B. Domestic carriers by land transporting passengers
C. Transportation contractors
D. Cars for rent driven by lessee

PERSONS NOT COVERED BY COMMON CARRIER TAX

A. Owners of bancas
B. Animal-drawn two wheeled vehicles
Tax rate Domestic Carrier Items Transported

3% Common Carrier Tax Common Carrier by LAND Passengers

12% VAT Common carrier by air or sea Passengers
Common carrier by air, land and Cargoes/ Goods
sea
0% VAT Common Carrier by air or sea Passenger, goods or cargoes
from the Philippines to other
countries

MINIMUM AMOUNT FOR DOMESTIC COMMON CARRIERS (Sec. 2, Rev. Reg. 9-2007)

Minimum Gross

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Quarterly Monthly
Jeepney for Hire
1. Manila and other cities Php 65, 700 Php 21, 900
2. Provincial 32, 900 10, 967
Public utility buses
1. Not exceeding 30 passengers 98, 600 32, 867
2. Exceeding 30 but not more than 50 passengers 164, 200 54, 733
3. Exceeding 50 passengers 197, 100 65, 700
Taxis
1. Manila and Other Cities Php 98, 600 Php 32, 687
2. Provincial 65, 700 21, 900
Cars for Hire
With Chauffeur 82, 100 27, 367
Without Chauffeur 49, 300 16, 434

INTERNATIONAL AIR AND SHIPPING CARRIERS (Sec. 118, NIRC, as amended)

BASIC GUIDELINES in handling the percentage tax of international air and shipping carriers:
1. International air and shipping carriers doing business in the Philippines are:
A. Subject to 3% percentage tax based on gross receipts from carriage of goods or cargoes, or
B. exempted from 3% percentage tax based on gross receipts from carriage of passengers
2. The shipments originating outside the Philippines to a point of destination other than the Philippines
are not subject to percentage tax.
3. Shipments originating from the Philippines to a point outside the Philippines (first destination) but later
destined to another point outside the Philippines (final destination) are subject to percentage tax pro-
rata only to the first destination.

FRANCHISE TAX (Sec. 119, NIRC, as amended)

• FRANCHISE is a law that authorizes a person, whether natural or juridical, to do business involving
public utility. It is a grant by the government to the grantee that may be either individual or a
corporation.
• Franchise grantees may be subject to percentage tax or value added tax.
PERSONS SUBJECT TO FRANCHISE TAX
The following taxpayers are subject to franchise tax:
1. Franchise grantees of radio and/or television broadcasting companies
2. Franchise grantees of gas and water companies

OVERSEAS COMMUNICATION TAX (Sec. 120, NIRC, as amended)

GUIDELINES:
1. It is collected on every overseas communication, dispatch, message or conversation
2. The message should be originating from or outgoing from the Philippines
3. The overseas communication tax is to be paid by the person making the call, communicating or using
the facility
4. The tax is to be collected by the provider of the communication facility and be remitted within 20 days
after the end of the quarter
5. A tax percentage of 10% shall be imposed
6. The provider or owner of the communication facility is subject to 12% VAT

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EXEMPTION FROM OVERSEAS COMMUNICATION TAX

1. The government of the Philippines on messages to any of its political subdivisions
2. Any embassy and consular offices of a foreign government
3. A public international organization based in the Philippines that enjoys exemptions or immunities
with the Philippine government
4. Any newspaper, press, radio or television to any newspaper, radio or television with messages dealing
exclusively with news items for dissemination through press, radio or television broadcasting

Tax on banks AND NON-BANK FINANCIAL INTERMEDIARIES (Sec. 121, NIRC, as amended)

• FINANCIAL INSTITUTION includes banks, non-bank financial intermediaries performing quasi-

banking functions, and other non-bank financial intermediaries including finance companies. This does
not, however, include insurance companies.
• BANKS OR BANKING INSTITUTIONS refer to those entities as defined under Section 3 of Republic
Act no. 8791, otherwise known as the general banking law of 2000. Specifically, the term covers
entities engaged in the lending of funds obtained in the form of deposits. The term "banks" or "banking
institutions" are synonymous and interchangeable. It includes universal banks, commercial banks, thrift
banks (savings and mortgage banks, stock savings and loan associations, and private development
banks), cooperative banks, rural banks, Islamic banks, and other classifications of banks as may be
determined by the monetary board of the BSP.
• BANKING ACTIVITIES are the functions of operations conducted to carry on the business of
commercial banking such as accepting drafts and issuing letters of credit; discounting and negotiating
promissory notes, drafts, bills of exchange, and other evidence of debt, accepting or creating demand
deposits; receiving other types of deposits and substitutes; buying and selling foreign exchange and
gold silver bullion; or acquiring marketable bonds and other debt securities; and extending credit,
subject to such rules as the monetary board of the BSP may promulgate

SHORTENED MATURITY PERIOD THROUGH PRE-TERMINATION

(SEC. 5, REV. REG. 9-2004)
• Bank borrowers who availed themselves of a long-term loan (e. g. with maturity period of more than
five years) sometimes settle their obligations prior to the maturity of the loan. In this case, there is a
pre-termination of the loan or borrowings which requires necessary adjustments in determining the
amount of gross receipts subject to percentage tax.
• In the case of pre-termination, the maturity period shall be reckoned to end as of the date of pre-
termination for purposes of classifying the transactions and applying the correct rate of tax. Any
adjustment in tax caused by pre-termination of existing agreements shall be reflected as a separate
item in the gross receipt tax return covering all transactions of the month in which the pre-termination
took place.
Guidelines:
Collection of percentage tax based on gross receipts from sources within the Philippines
A. Interest and related items
i. Maturity period is five (5) years or less – 5%
ii. Maturity period is more than five (5) years – 1%
B. Royalties and dividends – 7%
C. Net trading and foreign currency transactions – 7%
D. Dividends and equity shares in net income of subsidiaries – 0%

DETERMINATION OF NET TRADING GAIN

Sec. 3, Rev. Reg. 9-2004)
• In computing the net trading gain within the taxable year, the figure to be reported in the monthly
percentage tax return (gross receipt tax) shall be the cumulative total of the net trading gain/loss since
the first month of the applicable taxable year less the figures already reflected in the previous months
of the same taxable year.
• The net trading loss on items of income may only be deducted from the net trading gain on items of
income, but not from any other items the gross receipts to arrive at the total monthly gross receipts tax
due.

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GROSS RECEIPTS UNDER FINANCE AND OPERATING LEASE
• The taxable gross receipts in the case of financial leasing consist of the interest income only. On the
other hand, in transactions under operating lease agreements, the gross receipts is the gross rental.
The classification whether the lease transaction is a finance lease or an operating lease shall be
determined by the contents of the documents evidencing the lease agreement or the substance of the
agreement rather than the form used to evidence such agreement between the lessor and the lessee

Tax on other NON-BANK FINANCIAL INTERMEDIARIES (Sec. 122, NIRC, as amended)

• NON-BANK FINANCIAL INTERMEDIARIES refer to persons or entities whose principal function
include the lending, investing, or placement of funds or evidence 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. They include all entities regularly engaged in the lending of funds or purchasing of
receivables or other obligations with funds obtained from the public through the issuance,
endorsement, or acceptance of debt instruments or any kind for their own account, or through the
issuance of certificates, or of these means of obtaining of repurchase agreements, whether any funds
from the public is done on a regular basis or only occasionally.
• PAWNSHOPS under Revenue Regulations no. 10-2004 are classified as other non-bank financial
intermediaries. The services rendered by pawnshops, therefore, are subject to 5% gross receipt tax
• QUASI-BANKING FUNCTIONS refer to the borrowing of funds from or more personal or corporate
lenders at any one time through e issuance, endorsement, or acceptance of debt instruments of any
kind other than deposits for the borrower's own instrument with recourse, or of repurchase agreements
for purposes of relending or purchasing receivables or other similar obligations. Provided, however,
that commercial, industrial, and other non-financial companies which borrow funds through any of
these means for the limited purpose of financing their own needs or the needs of their agents or
dealers shall not be considered as performing quasi-banking functions.

TAX on Life Insurance Companies (Sec. 123, NIRC, as amended)

The following guidelines should be noted in computing the percentage tax on life insurance companies:
1. Companies doing life insurance business of any sort in Philippines are subject to percentage tax.
2. The basis of percentage tax is the gross receipts or total premiums collected, whether such premiums
are paid in money, notes, credits, or any substitute for money.
3. A percentage tax rate of 5% is imposed
4. Non-life insurance companies are subject to value added tax

INSURANCE COMPANIES SUBJECT TO VAT

1. Non-life insurance companies including surety, fidelity, indemnity and bonding companies
2. Pre-need companies
3. Health maintenance organizations
LIFE INSURANCE PREMIUMS EXEMPTED FROM percentage tax
1. Premium is refunded within six (6) months from the date of receipt
2. Premiums collected outside the Philippines from non-resident persons

TAX ON AGENTS OF FOREIGN INSURANCE COMPANIES (Sec. 124, NIRC as amended)

GUIDELINES
1. The percentage tax on foreign insurance companies covers policy on fire, marine or miscellaneous
insurance underwritten by agents authorized under the tax code to procure policies on risks located in
the Philippines
2. The percentage tax is 10%
3. In case the owner of property pays directly to foreign insurance companies, the owner shall personally
pay the tax of 5% based on the premium paid

AMUSEMENT PLACES (Sec. 125, NIRC, as amended)

GUIDELINES:
1. Operator, proprietor or lessee of amusement places where amusement activities conducted are subject
to percentage tax based on gross receipts
1. Cockpit
2. Cabarets and Night or Day clubs

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3. Boxing exhibitions
4. Professional basketball games
5. Jai-alai and race tracks
2. Income from television, radio and motion pictures rights are included as part of the gross receipts
3. Tax rates:
Boxing exhibition – 10%
Cockpits, night clubs or cabarets – 18%
professional basketball – 15%
Jai-alai and race tracts – 30%
4. The 15% tax on professional basketball games shall be in lieu of all other percentage taxes of
whatever nature and description
5. The 30% tax imposed on the gross receipts of jai-alai and race tracks is irrespective of whether or not
any amounts is charged for admission.

Boxing exhibition EXEMPTIONS (exempt from 10%)

1. At least one of the contenders for the world or oriental championship title in any division is a citizen of
the Philippines
2. said exhibition is promoted by citizen/s of the Philippines or;
3. said exhibition is promoted by a corporation or association, of which at least 60% of its capital is owned
by Filipino citizens.
Payment of amusement tax
• Amusement tax shall be payable at the end of each quarter. It shall be the duty of the proprietor,
lessee, or operator concerned, as well as any party liable, within 20 days after the end of each quarter,
to make true and complete return of the amount of gross receipts derived during the preceding quarter
and pay the tax due thereon.
TAX ON WINNINGS (Sec 126, NIRC as amended)
GUIDELINES
1. The persons subject to tax on winnings are only the following:
a. Owners of winning race horses
b. Winning individuals in horse race and jai-alai
2. For the winning individual, the tax base in the amount paid to him for every ticket after deducting the
cost of the ticket
3. For the owner of the winning race horse, the tax base shall be the prize without any deductions
4. The applicable percentage tax shall be withheld from the prize by the operator or owner of the
amusement place
5. The percentage tax shall be withheld from the prize by the operator or owner of the amusement place
Tax rates:
Winnings in horse race or jai-alai – 10%
Owner of winning horse – 10%
Winnings from double, forecast, quinella
and trifecta bets – 4%

SALE OF SHARES OF STOCK (Sec. 127(A), NIRC, as amended)

GUIDELINES
1. The percentage tax imposed is applicable on sale, barter exchange or trade of shares of stock through
the local stock exchange
2. The sale, exchange or trade of shares of stocks outside the local stock exchange is subject to capital
gains tax
3. The tax rate is six-tenth of 1% (6/10 of 1%) based on the gross selling price or the gross value of
money
4. The cost of stock and the gain or loss on the sale are disregarded
5. The tax shall be collected by the stock broker who effected the sale and remitted to the BIR within five
banking days from the date of collection
6. Any gain derived from the sale, barter exchange or other disposition of shares of stock listed and
traded through the local stock exchange shall be exempt from capital gains tax and from the regular
individual or corporate income tax

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7. Percentage tax paid on the sale of shares of stock listed and traded through the local stock exchange
is non-deductible for income tax purposes

Persons liable to stock transaction tax

The following sellers or transferors of stock are liable to the six-tenth of one percent (6/10 of 1%) stock
transaction tax:
1. Individual taxpayers, whether citizen or alien
2. Corporate taxpayers, whether domestic or foreign
3. Other persons such as estate, trust, trust funds, and pension funds

Persons not liable to stock transaction tax

The imposition of stock transaction tax shall not apply to the following:
1. Dealers in securities
2. Investors in shares of stock in mutual fund companies in connection with the gains realized by said
investor upon redemption of said shares of stock in a mutual fund company
3. All other persons, whether natural or juridical, who are specifically exempt from national internal
revenue taxes under existing investment incentives and other special laws.

SHARES OF STOCK SOLD THROUGH Initial Public Offering (IPO) (Sec. 127(B), NIRC, as amended)
DEFINITION OF TERMS
• Initial public offering (IPO) refers to a public offering of shares of stock for the first time in the local
stock exchange, where the business becomes a publicly listed company.
• Primary offering refers to the original sale made to the investing public by the issuer corporation of its
unissued shares of stock.
• Secondary offering refers to an offer for sale to the investing public by the existing stockholders of
their securities which is conducted during an IPO or a follow-on or follow-through offering.
• Follow-on or follow-through offering refers to an offering of shares to the investing public through an
IPO.
• Closely-held corporation means any corporation in which at least 50% in value of outstanding capital
stock or at least 50% of the total combined voting power of all classes of stock entitled to vote is
owned directly or indirectly by not more than 20 individuals.
Basic principles in handling shares of stock through IPO
1. The tax imposed is applicable to closely-held corporations selling shares of stock through IPO
2. The tax rates provided below are imposed based and in accordance with the proportion of shares of
stock sold, bartered or exchanged to the total outstanding shares of stock after the listing in the local
stock exchange.
Tax rates:
up to 25% – 4%
Over 25% but not exceeding 33.33% –2%
over 33.33% – 1%
PERSONS LIABLE TO PAY THE TAX
The following persons shall be held liable to pay the transaction tax imposed on account of sale of shares of
stock through IPO:
1. On primary offering - the tax shall be paid by the issuer corporation
2. On secondary offering - the tax shall be paid by the selling shareholder/s

Follow-on or follow-through sale

Follow-on or follow-though sale which is issued subsequent to IPO shall no longer be taxed pursuant to sec.
127(B) of the tax code, as amended. However, the transaction is subject to documentary stamp tax similar to
the transactions covered by primary offering and secondary offering of the shares of stock.

TIME AND MANNER OF PAYMENT OF TAX THROUGH IPO

• The corporate issuer in the primary offering shall file the return and pay the corresponding tax to the
revenue district office which has jurisdiction over the said corporate issuer within 30 days from the date
of listing of the shares of stock in the local stock exchange. The return shall be accompanied with a
copy of the instrument of sale.

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• In the case of shares of stock sold or exchanged through the secondary offering at the time of listing at
the local stock exchange of shares of a closely-held corporation, the provisions on the sale of shares of
stock listed and traded through the local stock exchange shall apply to the time and manner of
payment of tax.

Withholding Percentage Tax

CONCEPT OF WITHHOLDING PERCENTAGE TAX:
- it implies that the percentage tax due from the taxpayer is being withheld by the payor; hence, the
amount collected by the payee is net of percentage tax
- It basically applies to the Philippine government and its political subdivisions, bureaus, and offices
making payments to private individuals, partnership or corporation, which are subject to percentage tax

Entities subject to 5% withholding tax percentage

1. Non-VAT registered or exempt from vat except cooperatives
2. Operators of domestic carriers and keepers of garages
3. International air and shipping carriers doing business in the Philippines
4. Franchise operators or radio/television broadcasting companies whose gross receipts of the preceding
year do not exceed Php 10, 000, 000.

Payment of Taxes withheld and Percentages Tax

1. Taxes deducted and withheld shall be paid monthly to authorized government banks and covered by
BIR form 2307 (certificate of creditable tax withheld at source)
2. Generally payable 20 days after the end of each taxable month except
a. Amusement tax and overseas communication tax which should be paid 20 days after the end of
each QUARTER
b. Tax on winnings which is payable 20 days after the date withheld
c. Stock transaction tax which is five (5) banking days after the date withheld by brokers
d. IPO stock transaction which is 30 days from listing in the local stock exchange

-done-
MULTIPLE CHOICE
1. A is the owner of a small variety st0re. His gross sales in any one year do not exceed Php 3,000,000. He is
not VAT registered. The following data are taken from the books of the variety store for the quarter ending
March 31, 2020:
Merchandise Inventory, December 31, 2019 Php 100, 000
Gross Sales 450, 000
Purchases from VAT-registered suppliers 350, 000
How much is the percentage tax due?
A. Php 10, 000
B. Php 13, 500
C. Php 16, 500
D. none

2. In the third quarter of 2020, a taxpayer engaged in the sale of services whose annual gross receipts do not
exceed Php 3,000,000 has the following data
Accounts receivable, beginning of the quarter Php 50, 000
Sales during the quarter 100, 000
Accounts receivable, end of the quarter 75, 000
Purchases of supplies, total invoice amount 11, 200
How much is the percentage tax due for the quarter?
A. Php 2, 250
B. Php 3, 000
C. Php 7, 500
D. Php 6, 500

3. A, operates a ferryboat. During a particular quarter, its receipts consist of the following
Gross receipts: (without VAT)

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Transport of passengers Php 1, 000, 000
Transport of goods 1, 500, 000
Transport of cargoes 500, 000
How much is the common carrier tax payable?
A. Php 30, 000
B. Php 90, 000
C. Php 100, 000
D. None

4. Using the above data, how much is the output VAT?

A. Php 360, 000
B. Php 90, 000
C. Php 100, 000
D. Php 240, 000

5. ABC Insurance Corporation, a domestic corporation, received the following premiums (net of any tax):
INSURANCE
LIFE FIRE MARINE
Cash received Php 400, 000 Php 300, 000 Php 200, 000
Promissory notes 100, 000 -0- -0-
Totals Php 500, 000 Php 300, 000 Php 200, 000
How much is the amount subject to percentage tax?
A. Php 400, 000
B. Php 500, 000
C. Php 900, 000
D. Php 1, 000, 000

How much is the output tax?

A. Php 36, 000
B. Php 24, 000
C. Php 60, 000
D. Php 120, 000

6. ABC Corporation is a holder of franchise to operate transportation units on land. The records for the month
show (net of any tax):
Cargo Passenger
Gross receipts from transporting Php 2, 000, 000 Php 3, 000, 000
VAT Supplier Non-VAT Supplier
Payments to Php 800, 000 Php 300, 000
How much is the percentage tax due?
A. Php 150, 000
B. Php 60, 000
C. Php 90, 000
D. Php 144, 000

Using the above data, but franchise is for air and sea transport, within the Philippines, the VAT due is?
A. Php 144, 000
B. Php 600, 000
C. Php 468, 000
D. Php 504, 000

7. A operates a cockpit. Inside the cockpit, he also operates a restaurant. Data for the particular quarter follow
Gross receipts:
Cockpit operations Php 500, 000
Restaurant operations:
Sale of foods 100, 000
Sale of liquor 150, 000
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How much is the amusement tax due from A?
A. Php 90, 000
B. Php 135, 000
C. Php 225, 000
D. Php 75, 000

Using the above data, except that the restaurant is not owned by A but is owned by another person, B, not
VAT registered and whose annual gross sales never exceeded Php 3,000,000. How much is the amusement
tax due from A?
A. Php 90, 000
B. Php 135, 000
C. Php 225, 000
D. Php 75, 000

Continuing the preceding question, how much is the percentage tax due from B?
A. Php 90, 000
B. Php 135, 000
C. Php 225, 000
D. Php 7, 500

8. A, a resident citizen, promoted a world boxing championship in Manila featuring B, a Filipino champion. Gate
receipts amounted to Php 3, 000, 000 and additional receipts from television coverage were Php 2, 000,
000. How much is the amusement tax due?
A. None
B. Php 500, 000
C. Php 300, 000
D. Php 900, 000

Assuming that the above data is not a world championship but a Philippine national boxing championship,
how much is the amusement tax due?
A. None
B. Php 500, 000
C. Php 300, 000
D. Php 900, 000

9. A, is a radio – TV broadcasting franchise grantee. During the preceding year, its gross receipts did not
exceed Php 10, 000, 000. During the first quarter of the current year, it has the following data:
Gross receipts, sale of airtime Php 2, 000, 000
Gross receipts, use of radio station’s communication facilities 500, 000
Business expenses 700, 000
How much is the franchise tax due for the first quarter?
A. Php 60, 000
B. Php 40, 000
C. Php 75, 000
D. Php 39, 000

10. A, horseracing enthusiast has the following winnings during a particular racing day
Total winnings (winner take all) Php 10, 000
Cost of winning tickets 500
How much is the tax on winnings?
A. Php 1, 000
B. Php 400
C. Php 950
D. Php -0-

Using the above data, but the total winnings came from double bet, how much is the percentage tax on
winnings?

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A. Php 1, 000
B. Php 400
C. Php 950
D. Php 380

11. A domestic corporation paid Php 40, 000 stock transaction tax on IPO of Php 500, 000 shares. After the
IPO, there were 800, 000 shares outstanding. How much is the selling price of the shares?
A. Php 10
B. Php 8
C. Php 4
D. Php 2

ABC Corporation, closely held corporation has an authorized capital stock of 1, 000, 000 shares with a par value
of Php 100/shares as of January 1, 2020. Of the 1, 000, 000 authorized shares, 250, 000 thereof is subscribed
and fully paid by the following stockholders:
A 150, 000
B 50, 000
C 25, 000
D 12, 500
E 12, 500
Total shares outstanding 250, 000

On March 1, 2020, ABC Corporation finally decides to conduct an IPO and initially offers 250, 000 of its
unissued shares to the investing public at Php 150. 00/share. At the IPO, two of the existing stockholders, A
and B likewise decided to sell their entire 150, 000 and 50, 000 shares respectively to the public also at Php
150. 00/share.
12. How much is the percentage tax due for the primary offering?
A. Php 375, 000
B. Php 750, 000
C. Php 1, 500, 000
D. Php -0-

13. How much is the percentage tax due for the sale of A’s share?
A. Php 225, 000
B. Php 450, 000
C. Php 900, 000
D. Php -0-

14. How much is the percentage tax due for the sale of B’s share?
A. Php 75, 000
B. Php 150, 000
C. Php 300, 000
D. Php -0-

15. Later, on August 1, 2020, another stockholder C, sold his 25, 000 shares to the public subsequent to the
IPO at Php 200. 00/share. How much is the percentage tax due?
A. Php 25, 000
B. Php 50, 000
C. Php 100, 000
D. Php 200, 000

16. Using the preceding number, on September 1, 2020 ABC Corporation again decides to increase
capitalization by offering another 300, 000 of unissued shares to the public at Php 200.00/shares
consequently bringing the total issued shares to 800, 000 shares, how much is the percentage tax due?
A. Php 600, 000
B. Php 1, 200, 000
C. Php 2, 400, 000

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CABRIA CPA REVIEW CENTER
D. Php -0-

17. Realty Corporation in the course of business sells real property. During the month of January 2011, it had
the following data per sales document (VAT excluded):
Cash Sales Php 800, 000
Sales on installment payment basis (initial payment is 25% of the SP) 500, 000
The real property sold for cash had a zonal value of Php 700, 000 (excluding VAT) and the property sold
under the installment payment basis had a fair market value of Php 600, 000 (excluding VAT). How much is
the output VAT/percentage tax on the sale of real property?
A. Php 101, 000
B. Php 114, 000
C. Php 108, 000
D. Php 156, 000

18. LAS Corporation is a common carrier operating several units of transportation by land, air and sea. It had
the following data on gross receipts for the month of April (tax not included):
From To Land Air Sea
Cargoes Passenger Cargoes Passenger Cargoes Passenger
Phils. Phils Php 400, 000 Php 1M Php800, 000 Php 2M Php 1.6M Php 1M
Phils. Abroad Php 1.4M Php 1.8M

How much is the VAT/percentage tax due for the month?

A, provided the following data for the 1st quarter of the year 2020:
Gross Receipts
Taxi 1, Plying Manila Php 100, 000
2, Plying Manila 80, 000
3, Plying Provincial routes 70, 000
4, Plying Provincial routes 60, 000

Bus 1, Plying Manila (25 seater) 100, 000

2, Plying Manila (55 seater) 150, 000
3, Plying Provincial routes (50 seater) 180, 000

Car for hire With chauffeur 100, 000

Without chauffeur 40, 000

Jeepney 1, Plying Manila 100, 000

2, Plying Manila 60, 000
3, Plying Provincial routes 50, 000
4, Plying Provincial routes 30, 000

The composite index for 1978 = 6.38; 2020 = 174. 60

a. How much is the total percentage tax due for the taxis?
b. How much is the total percentage tax due for the buses?
c. How much is the total percentage tax due for the cars for hire?
d. How much is the total percentage tax due for the jeepneys?

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