TITLE V — OTHER PERCENTAGE TAXES

SEC. 116. Tax on Persons Exempt from Value-added Tax (VAT). — Any person
whose sales or receipts are exempt under Section 109(CC)136 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%).137
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.
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 exceeding 50 6,000
passengers
3. Exceeding 50 passengers 7,200

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

136
As amended by Section 13 of the CREATE Law.
137
Ibid.

National Internal Revenue Code of 1997 (as amended by the CREATE Law and Bayanihan 2) 137
 TITLE V — OTHER PERCENTAGE TAXES

Car for hire (with chauffeur) P3,000

Car for hire (without chauffeur) 1,800

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.
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, any provision of any existing law to the contrary
notwithstanding.
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.

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TITLE V — OTHER PERCENTAGE TAXES

(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;
(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.
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 income of 0%
subsidiaries
(c) On royalties, rentals of property, real or personal, profits, 7%
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 foreign 7%
currency, debt securities, derivatives, and other similar
financial instruments

National Internal Revenue Code of 1997 (as amended by the CREATE Law and Bayanihan 2) 139
 TITLE V — OTHER PERCENTAGE TAXES

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.
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) years 1%

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.
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

140 Isla Lipana & Co., the Philippine member firm of the PwC network
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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.
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.
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:
(a) Eighteen percent (18%) in the case of cockpits;
(b) Eighteen percent (18%) in the case of cabarets, night or day clubs;
(c) 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

National Internal Revenue Code of 1997 (as amended by the CREATE Law and Bayanihan 2) 141
 TITLE V — OTHER PERCENTAGE TAXES

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;
(d) 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
(e) 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.
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 Commission-
er 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.

142 Isla Lipana & Co., the Philippine member firm of the PwC network
TITLE V — OTHER PERCENTAGE TAXES

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%)138 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.]139
(C) Return on Capital Gains Realized from Sale of Shares of Stocks. —
(1) 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.
(2) 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.

138
As amended by Section 39 of the TRAIN Law. Previous rate was ½ of 1%.
139
Repealed by Section 6 of Bayanihan 2.

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 TITLE V — OTHER PERCENTAGE TAXES

SEC. 128. Returns and Payment of Percentage Taxes.140 —

(A) Returns of Gross Sales, Receipts or Earnings and Payment of Tax. —
(1) 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.
(2) 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.
(3) 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.
(B) 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.

140
As amended by Section 40 of the TRAIN Law. Original Subsection (A) (Exceptions) was
removed.

144 Isla Lipana & Co., the Philippine member firm of the PwC network
TITLE VI — EXCISE TAXES ON CERTAIN GOODS

CHAPTER I. GENERAL PROVISIONS

SEC. 129. Goods Subject to Excise Taxes. — Excise taxes apply to goods
manufactured or produced in the Philippines for domestic sales or consumption
or for any other disposition and to things imported as well as services performed
in the Philippines.141 The excise tax imposed herein shall be in addition to the
value-added tax imposed under Title IV.
For purposes of this Title, excise taxes herein imposed and based on weight or
volume capacity or any other physical unit of measurement shall be referred to
as ‘specific tax’ and an excise tax herein imposed and based on selling price or
other specified value of the good or service performed142 shall be referred to as
‘ad valorem tax’.
SEC. 130. Filing of Return and Payment of Excise Tax on Domestic Products.
—
(A) Persons Liable to File a Return, Filing of Return on Removal and
Payment of Tax. —
(1) Persons Liable to File a Return. — Every person liable to pay excise tax
imposed under this Title shall file a separate return for each place of
production setting forth, among others, the description and quantity
or volume of products to be removed, the applicable tax base and the
amount of tax due thereon: Provided, however, That in the case of
indigenous petroleum, natural gas or liquefied natural gas, the excise
tax shall be paid by the first buyer, purchaser or transferee for local
sale, barter or transfer, while the excise tax on exported products
shall be paid by the owner, lessee, concessionaire or operator of the
mining claim.
Should domestic products be removed from the place of production
without the payment of the tax, the owner or person having
possession thereof shall be liable for the tax due thereon.
(2) Time for Filing of Return and Payment of the Tax. — Unless otherwise
specifically allowed, the return shall be filed and the excise tax
paid by the manufacturer or producer before removal of domestic

141
Introduced by Section 41 of the TRAIN Law.
142
Ibid.

National Internal Revenue Code of 1997 (as amended by the CREATE Law and Bayanihan 2) 145