MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY

COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY

DEPARTMENT OF ACCOUNTANCY

ACT184: Business Taxes

Other Percentage Tax

ABSTRACTION

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. (GROSS RECEIPT TAX)

Exempt from 3% GRT:

 Cooperatives
However, cooperatives 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
services to non-members.
 Self-employed individuals and professionals availing of the 8% tax on gross sales
and/or receipts 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 VAT, 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/receipts from the transport of passengers, provided the gross receipts
are ≥ minimum levels provided by law. (See Table 1)

Person subject:
 Keepers of garages
 Domestic Carriers by land transporting passengers
 Transportation 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
 Owners of animal drawn two-wheeled vehicle.

Table 1:
Domestic Carriers 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

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 MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

2. Exceeding 30 but not exceeding 50 passengers 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 is a pool of transportation vehicles whose accessibility to the riding public is facilitated
through the use of common point of contract which may be in the form of text, telephone, and/or
cellular calls, email, mobile applications or by other means.
 3% Common Carriers Tax – TNCs/partners with valid “Certificate of Public Convenience
(CPC)” engaged in the transport of passengers are subject to 3% of common carrier’s
tax.
 12% VAT or 3% OPT – TNCs/partners without valid CPC are classified as land
transportation contractors or subject either to 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
Person Subject Other Percentage Tax
1. Radio or Television broadcasting with 3% of gross receipts derived from the
gross annual receipts ≤ P10,000,000 business covered by law granting the
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

 Optional Registration
o Radio and TV Broadcasting companies whose annual gross receipts of the
preceding year do no 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 by the radio and TV broadcasting companies, it is
irrevocable
 Franchise grantees subject to VAT:
o Telephone and telegraph companies
o Toll road operations
o Electricity
o 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.
Tax is 10% based on the amount paid for the services rendered.

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 MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

Person subject:
 Payor of the service

Responsibilities of the payee (person/entity rendering service):

 Collects and remits the tax to the BIR within 20 days after the end of each quarter
 The provider or owner of the communication facility is subject to 12% VAT

Persons not subject to Percentage Tax:

 The Philippine government
 Embassy and consular offices of a foreign government
 International organizations based in the Philippines
 News Services

F. Tax on Banks and Non-banks Financial Intermediaries Performing Quasi-Banking Function.

(Gross Receipt Tax)

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:
o Maturity period is five years or less 5%
o Maturity period is more than 5 years 1%

 On royalties, rentals of property, profits from exchange and all

other items treated as gross income under the Tax Code 7%

 On net trading on foreign currency, debt instruments, derivatives

and other similar financial instruments 7%

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

Person Subject:
 Banks
 Non-banks 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 own account or for the account of others

Quasi-Banking Functions: refer to the borrowing of funds from 20 or more personal

corporate lenders at any 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 purposes of relending or purchasing
receivables and other and other similar obligations.

G. Tax on Finance Companies and Other Non-Bank financial intermediaries NOT performing
quasi-banking functions

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 MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

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 five years or less 5%
 Maturity period is more than 5 years 1%

 On interest, commission, discounts, and all

other items treated as gross income under the Tax Code 7%

Person Subject
 Finance Companies
 Other non-bank financial intermediaries not performing quasi-banking functions
doing business in the Philippines. (Example: Pawnshop)

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:
 Premiums refunded within six months after payment on account of rejection of risk, or
returned for any other reason to a person insured
 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 the branch is established.
 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
 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.
 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
 Investment income earned by the life insurance company from investing the premiums.

I. Tax on agents of foreign insurance companies

Person Subject TAX
Every fire, marine, or miscellaneous insurance agent authorized 4% of total premiums

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 MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

under the Insurance Code to procure policies of insurance as collected

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

J. Amusement Taxes
 Proprietors, operators, or lessees of the following amusement places are subject to
percentage tax on gross receipts:
o Cockpits – 18%
o Boxing Exhibitions – 10%
o Professional Basketball Games – 15%
o Cabarets, Night and Day Clubs – 18%
o Jai-Alai – 30%
 Income from Television, radio, and motion pictures rights is included as part of the gross
receipts
 Boxing exhibitions 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
 Tax Rates and Tax Base shall apply:
o Winnings in horse races or jai-alai - 10% based on the amount paid for every
ticket less cost of the ticket
o Winnings from double, forecast, quinella and trifecta bets - 4% based on the
amount paid for ticket less cost of the ticket
o Owner of the winning horse- 10% of the prize
 The 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

 Sale of shares of stock listed and traded through local stock exchange is subject to
percentage tax at the rate of 6/10 of 1% based on gross selling price or the 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

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 MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

 In accordance with the proportion of shares of stock sold to the total outstanding shares of
stock after the listing in the local stock exchange
o Up to 25% 4%
o Over 25% but not over 33 1/3% 2%
o Over 33 1/3% 1%
Person Subject:
 Issuing corporation in a primary offering or
 The selling shareholder of the shares in a 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 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 of the BIR within five banking days from the
date of collection.

Returns and Payment of Percentage Taxes

 Generally, percentage tax is payable
Percentage Taxpayer
Persons whose gross annual sales/receipts do not exceed P3,000,000 Quarterly
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 non-VAT registered
Banks, quasi0banks and non-bank financial intermediaries Quarterly
Life insurance companies Quarterly
Agents of foreign insurance Quarterly
Overseas communications Quarterly
Proprietors, lessees or operators of cockpits, cabarets, night/day clubs, Quarterly
boxing exhibition, professional basketball games, jai-alai and race track

 For taxpayers who avail EFPS:

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

 Exceptions:
o Tax on winnings – 20 days after the date withheld
o Stock transaction tax – 5 banking days after the date withheld or collection
o IPO stock transaction (Primary) – 30 days from the date listing of the shares in
the local exchange

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 MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY
COLLEGE OF BUSINESS ADMINISTRATION AND ACCOUNTANCY
DEPARTMENT OF ACCOUNTANCY

o IPO stock transaction (Secondary) – 5 days from the date of collection

- END-

REFERENCES
Tabag, E. D. (2019). Transfer and Business Taxation. Manila: Info Page.

Valencia, E. G. (2017). Transfer and Business Taxation. Baguio City: Valencia Educational
Supply.