OTHER

PERCENTAGE
TAXES
 Learning Objectives
At the end of the chapter, learners should be able to:
• Identify the transactions subject to other percentage
taxes.
• Understand the concepts and application of other
percentage taxes.
• Know the registration and compliance requirements
of taxpayer(s) subject to other percentage taxes.
 Other Percentage Taxes

• Percentage Tax is a business tax imposed on persons or entities who

sell or lease goods, properties or services in the course of trade or
business whose gross annual sales or receipts do not exceed
P3,000,000 and are not VAT-registered.
• Percentage tax is a business tax imposed on persons, entities, or
transactions specified under Sections 116 to 127 of the National Internal
Revenue Code of 1997 (also known as Tax Code), as amended, and as
required under special laws.
Persons/Taxpayers Subject to Other
Percentage Taxes
(Sections 116-127)
• Sec. 116 -Tax on Persons Exempt from Value-added
Tax (VAT). — Any person whose sales or receipts are
exempt under Section 109(CC) of this Code from the
payment of value-added tax and who is not a VAT-
registered person shall pay a tax equivalent to three
percent (3%) of his gross quarterly sales or receipts:
Provided, That cooperatives shall be exempt from the
three percent (3%) gross receipts tax herein imposed:
Provided, further, That effective July 1, 2020 until June
30, 2023, the rate shall be one percent (1%)
• Mr. Bam ” Lover boy” Alepe, single, owns a store specializing on beauty
products. His gross sales in the previous calendar year did not exceed the
VAT threshold amount of P3,000,000. He is not VAT-registered. The
following data for last month were as follows:

Gross sales 500,000

Purchases from VAT-registered suppliers 450,000
Purchases from not VAT-registered suppliers 150,000

How much is the percentage tax due and payable?

Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• Sec. 117 - Percentage Tax on Domestic Carriers and
Keepers of Garages. — Cars for rent or hire driven by
the lessee; transportation contractors, including persons
who transport passengers for hire, and other domestic
carriers by land for the transport of passengers (except
owners of bancas and owners of animal- drawn two
wheeled vehicle), and keepers of garages shall pay a tax
equivalent to three percent (3%) of their quarterly gross
receipts.
• The gross receipts of common carriers derived from their
incoming and outgoing freight shall not be subjected to
the local taxes imposed under Republic Act No. 7160,
otherwise known as the Local Government Code of
1991.
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• In computing the percentage tax provided in this Section,
the following shall be considered the minimum quarterly
gross receipts in each particular case:
Jeepney for hire
1. Manila and other cities P2,400
2. Provincial 1,200

Public utility bus

1. Not exceeding 30 passengers P3,600
2. Exceeding 30 but not 6,000
exceeding 50 passengers
3. Exceeding 50 passengers 7,200

Taxis
1. Manila and other cities P3,600
2. Provincial 2,400

Car for hire (with chauffeur) P3,000

Car for hire (without chauffeur) 1,800
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• Sec. 118 - Percentage Tax on International Carriers.
A. International air carriers doing business in the
Philippines on their gross receipts derived from
transport of cargo from the Philippines to another
country shall pay a tax of three percent (3%) of their
quarterly gross receipts.
B. International shipping carriers doing business in the
Philippines on their gross receipts derived from
transport of cargo from the Philippines to another
country shall pay a tax equivalent to three percent (3%)
of their quarterly gross receipts.
• B. World Transportation Company, a domestic common carrier that transport
passenger and cargoes by land, sea and air within the Philippines and abroad. It had
the following data for last month:
On land carriers:
• Gross receipts from cargoes (Manila to Quezon) 500,000
• Gross receipts from passengers (Manila to Bataan) 700,000
On sea carriers:
• Gross receipts from cargoes (Cebu to Samar) 900,000
• Gross receipts from passengers (Bohol to Dumaguete) 1,000,000
• Gross receipts from cargoes (Zamboanga to Malaysia) 2,000,000
On air carriers:
• Gross receipts from cargoes (Ilocos to China) 3,000,000
• Gross receipts from passengers (Cagayan to Batanes) 400,000
Operating expenses for last month were P 5,600,000 and are allocated as follows:
land carriers, 20%; sea carriers 35% and air carriers, 45%.
Question #1 – How much is the percentage tax?
Question #2 – How much is the output value-added tax?
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• Sec. 119- Tax on Franchises. — Any provision of general or
special law to the contrary notwithstanding, there shall be levied,
assessed and collected in respect to all franchises on radio and/or
television broadcasting companies whose annual gross receipts of
the preceding 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 utilities, a tax of two percent (2%) on the gross
receipts derived from the business covered by the law granting the
franchise: Provided, however, That radio and television broadcasting
companies referred to in this Section shall have an option to be
registered as a value-added taxpayer and pay the tax due thereon:
Provided, further, That once the option is exercised, said option shall
be irrevocable.
• The grantee shall file the return with, and pay the tax due thereon to
the Commissioner or his duly authorized representative, in
accordance with the provisions of Section 128 of this Code, and the
return shall be subject to audit by the Bureau of Internal Revenue,
• Anya Company is a holder of franchise. Aside from its receipts from
the use of franchise, it also leases its auditorium and theater. In a
particular month, its gross receipts from the use of franchise amount
to P2,000,000. The gross receipts from the lease of its auditorium
and theater amount to 800,000.

• Assuming Anya is franchise grantee selling electricity, how much is

the franchise tax due?
• Assuming Anya is a franchise grantee of gas utilities, how much is
the franchise tax due?
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• Sec. 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;
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
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.
• Spy Telecom Inc. has the following collections for the month of April 2021.
Overseas call originating abroad P1,120,000
Overseas call originating in the Philippines 880,000
Local calls 2,240,000

How much is the overseas communications tax to be remitted for the

month?
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• Sec. 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 0%
income of subsidiaries
(c) On royalties, rentals of property, real or personal, 7%
profits, from exchange and all other items treated as
gross income under Section 32 of this Code
(d) On net trading gains within the taxable year on 7%
foreign currency, debt securities, derivatives,
and other similar financial instruments
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• 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.
• Golden Bank has the following data for the 1st quarter of 2021:
Interest income, the remaining maturity of the instrument is 5 years -P100,000
Interest income, the remaining maturity of the instrument is 6 years - 100,000
Rentals (net of 5% expanded withholding tax) 57,000
Net trading loss – January 2021 (10,000)
Net trading gain – February 2021 20,000

How much is the gross receipts tax for the quarter of Golden Bank?
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• Sec. 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) 1%
years
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• 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 prelude the Commissioner from imposing
the same tax herein provided on persons performing similar
financing activities.
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• Sec. 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.
 A domestic insurance company gave the following information for the month:
Gross receipts from its insurance policies
Premium on life insurance P2,100,000
Premium on non-life insurance 1,500,000
Gross receipts as agent of a non-resident foreign insurance company
Premium on property insurance P4,000,000
Premium on non-life insurance 1,000,000

How much is the percentage tax due?

Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• SEC. 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.
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• SEC. 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:
• Eighteen percent (18%) in the case of cockpits;
• Eighteen percent (18%) in the case of cabarets, night or day clubs;
• 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;
• 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
Atong Duterten operates a cockpit. Inside the cockpit, he also operates a
restaurant and has stalls for rent. Data for the particular quarter follow:

Gross receipts (cockpit operation) P500,000

Gross receipts (restaurant operation)
Sale of food 100,000
Sale of liquor 150,000
Gross rentals from stalls inside the cockpit 200,000

How much is the amusement tax due?

Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• 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.
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• SEC. 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.
Carrie Rista, a horseracing aficionado, has the following winnings
during a particular race day:
Total winnings P10,000
Cost of tickets 500

How much is the tax withheld from the winnings?

Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
• SEC. 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. (Repealed by Section 6 of Bayanihan 2)]
Persons/Taxpayers Subject to
Other Percentage Taxes
(Sections 116-127)
C. Return on Capital Gains Realized from Sale of Shares of Stocks. —
• 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.
• 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.
• Sara Dy invested P500,000 in the shares
of stock of Ferdie Corp. The corporation’s
shares are listed and are traded in the
local stock exchange. Sara Dy sold the
shares for P350,000 through the local
stock exchange. How much is the
percentage tax on the sale?
 Returns and Payment of
Percentage Taxes.
• Returns of Gross Sales, Receipts or Earnings and Payment of Tax. —
– 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.
– 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.
 Returns and Payment of
Percentage Taxes.
• Returns of Gross Sales, Receipts or Earnings and Payment of Tax. —
– 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.
 Returns and Payment of
Percentage Taxes.
• BIR Form 2551Q - Quarterly Percentage Tax Return
Who are required to file?
• Persons refer to individuals and non-individuals, which include, but are not limited to,
estates, trusts, partnerships, and corporations.
• (Sections 116-126)
• Persons who lease residential units where the monthly rental per unit exceeds fifteen
thousand pesos (Php15,000.00) but the aggregate of such rentals of the lessor
during the year does not exceed three million pesos (Php3,000,000.00)
• BIR Form 2552 - Percentage Tax Return for Transactions Involving Shares of Stocks
Listed and Traded Through The Local Stock Exchange or Through Initial and/or
Secondary Public Offering
Who are required to file?
• Every stock broker who effected a sale, barter or exchange of shares of stock listed
and traded through the local stock exchange other than the sale by a dealer in
securities, which tax shall be paid by the seller/transferor
• A corporate issuer, engaged in the sale, exchange or other disposition through Initial
Public Offering (IPO) of shares of stock in closely-held corporations
• A stock broker who effected a sale, exchange or other disposition through secondary
public offering of shares of stock in closely-held corporations
 Returns and Payment of
Percentage Taxes.
• 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 authorized Treasurer of
the city or municipality where said business or principal place of business is
located, as the case may be.