Percentage Taxes Flashcards
Who are subject to the 3% (1% from Jul. 1, 2020 - Jun. 30, 2023) tax under Sec. 116?
Persons who engage in VATable sales or leases of properties, or services in the course of trade or business:
- whose gross sales or receipts does not exceed P3,000,000; AND
- are not VAT-registered
Who are exempt from the 3% (1% from Jul. 1, 2020 - Jun. 30, 2023) tax under Sec. 116?
(1) Self-employed individual and professionals availing of the 8% tax on gross sales and other non-operating income
(2) Cooperatives (except duly registered cooperatives which transact business with members and non-members, and accumulated reserves and undivided net saving of more than P10M pesos - subject to percentage tax on all sales to non-members)
(3) Fees, per diems, allowance, and other income received by corporate directors of which they are not employees
(4) Marginal income earners or individuals who are self-employed and deriving gross sales/receipts not exceeding P100,000 during any 12-month period
(5) Persons who are VAT-registered, regardless of level of sales
(6) Persons whose line of business in non-exempt (from VAT) and are non-VAT registered, but whose gross annual sales/receipts exceeds P3,000,000
Who are subject to common carrier’s tax under Sec. 117?
(1) Lessors of cars for rent or hire driven by the lessee
(2) Transportation contractors including persons who transport passengers for hire
(3) Other domestic carriers by land for the transport of passengers
(4) Keepers of garages
Exempt: banca owners and owners of animal-drawn two-wheeled vehicles
What is the rate and base of the CCT?
3% of quarterly gross sales or receipts from the transport of passengers, provided the gross receipts is equal or greater than the minimum levels provided by law
What are the minimum quarterly receipts?
(1) Jeep for hire
(a) provincial - 1,200
(b) Manila and other cities - 2,400
(2) Public Utility Bus
(a) not exceeding 30 passengers - 3,600
(b) exceeding 30 but not exceeding 50 - 6,000
(c) exceeding 50 - 7,200
(3) Taxis
(a) Provincial - 2,400
(b) Manila and other cities - 3,600
(4) Car for hire
(a) without chauffeur - 1,800
(b) with chauffeur - 3,000
Who are subject to the percentage tax on international carriers under Sec. 118?
International air and shipping carriers doing business in the Philippines
Off-line carriers, which sell tickets (a) covering off-line flights/voyages3 or (b) flights or voyages of other carriers, are not considered engaged in business as an international carrier in the Philippines, and therefore are exempt from the OPT under Section 118
What is the rate and base of the tax on international carriers?
3% of quarterly gross receipts from the transport of cargo from the Phil. to another country
Who are subject to franchise tax under Sec. 119?
(1) Radio and/or television broadcasting companies whose annual gross receipts of the preceding year do not exceed P10M, and which did not choose to be registered under the VAT system
(2) Gas and water utilities
What is the rate and base of the franchise tax?
- Radio and/or TV broadcasting - 3% of gross receipts derived from the business covered by the law granting the franchise
- Gas and water utilities - 2% of gross receipts derived from the business covered by the law granting the franchise
Who are subject to the overseas communications tax under Sec. 120?
Payor of overseas dispatch, message, or conversation originating from the Philippines by telephone, telegraph, telewriter exchange, wireless, and other communication equipment or service
Payee collects and remits the tax within 20 days after the end of each quarter
Domestic calls are subject to VAT.
What is the rate and base of the OCT?
10% of the amount paid for the service
Who are exempt from the OCT?
(1) The Government;
(2) Embassies or consular offices of a Foreign Government;
(3) International organizations pursuant to international agreements;
(4) News services: amounts paid for messages from any newspaper, press
association, radio or television newspaper, broadcasting, or newsticker
services to any other newspaper, press association, radio or television
newspaper broadcasting agency, newsticker service, or to a bona fide
correspondent. The messages must deal exclusively with the collection
or dissemination of news items.
What is the rate and base of the tax on banks and and non-bank financial intermediaries performing quasi-banking functions under Sec. 121?
(1) Interest, commissions, discounts from lending activities, as well as income form financial leasing
- 5 years or less maturity period - 5%
- more than 5 years maturity period - 1%
(2) Dividends and equity shares and net income of subsidiaries - 0%
(3) Royalties, rentals of property, profits from exchange, and all other items of gross income under Sec. 32 - 7%
(4) Net trading gains within the taxable year on foreign currrency, debt securities, derivatives, and other similar financial instruments - 7%
BSP is not a bank nor a non-bank financial intermediary. In the performance of its
proprietary functions, it shall not be subject to the percentage tax. However, it can subject to VAT if it engages in any of the transactions under Section 105 of the Tax Code.
The term “bank” shall refer to entities engaged in the lending of funds obtained in the form of deposits.
The term “non-bank financial intermediaries” shall 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 for their own account or for the account of others.
The term “quasi-banking activities” shall refer to the borrowing of funds from twenty (20) or more
personal or corporate lenders at any one 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 similar obligations.
What is the rate and base of the tax on finance companies (and other non-bank financial intermediaries not performing quasi-banking functions,
doing business in the Philippines) under Sec. 122?
(1) On interest, commissions, discounts from lending activities as well as income from financial leasing
- 5 years or less maturity period - 5%
- more than 5 years maturity period - 1%
(2) On gross receipts derived from interest, commissions, discounts, and all other items treated as gross income under the Tax Code - 5%
The term “finance companies” shall refer to corporations except banks, investment houses,
savings and loans associations, insurance companies, cooperatives, and other financial
institutions organized or operating under other special laws, which are primarily organized for
the purpose of extending credit facilities to consumers and to industrial, commercial, or
agricultural enterprises, by direct lending or by discounting or factoring commercial papers
or accounts receivables, or by buying and selling contracts, leases, chattel mortgages, or other
evidences of indebtedness, or by financial leasing of movable as well as immovable properties.
The term “other non-bank financial intermediaries” above shall include pawnshops and non- stock savings and loan associations.
Who are subject to the premium tax under Sec. 123?
Any person/entity offering life insurance in the Philippines, except purely
cooperative companies or associations
What is the rate and base of the premium tax?
2% of gross premiums collected
Gross premiums shall include re-issuance fees, reinstatement fees, renewal fees, penalties
paid to the insurance company in connection with the insurance policy, and premiums on
health and accident insurance.
Who are exempt from the premium tax?
(1) Premiums received by purely cooperative companies or associations;
(2) Premiums refunded within six (6) months after payment on account of
rejection of risk, or returned for any other reason to a person insured;
(3) Premiums paid upon reinsurance by a company that has already paid the
tax;
(4) 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
(5) 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; and
(6) 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.
(7) 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;
(8) Investment income earned by the life insurance company from investing the
premiums;
If investment income arises from funds solicited for purposes other than for the payment of premiums, the same shall be subject to the
GRT under Section 121 of the Tax Code.
Who are subject to the tax on Agents of Foreign Insurance Companies under Sec. 124?
(1) 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
(2) Owners of property who obtain insurance directly with foreign companies
Does not apply to reinsurance premiums
What is therate and base of the tax on agents of Foreign Insurance Companies?
- For fire, marine, or miscellaneous insurance agent - 4% of total premiums collected
- For owners of property who obtain
insurance directly with foreign companies - 5% of premiums paid
Who are subject to the amusement tax under Sec. 125?
Proprietor, lessee, or operator of cockpits, cabarets, night or day clubs,
boxing exhibitions, professional basketball games, jai-alai, and race
tracks
What are the rate and base of the the amusement tax?
Basis: Gross Receipts
- cockpits, cabarets, and night or day clubs - 18%
- boxing exhibitions - 10%
- professional basketball games - 15%
- jai-alai and race tracks - 30%
(a) Gross receipts include admission charges, rents, and income from television, radio, and
motion picture rights.
(b) If the proprietor, lessee, or operator of the amusement place also operates, at the same
time within the premises, a bar or restaurant, the receipts of the bar or restaurant shall
form part of gross receipts subject to the amusement tax above.
(c) If such bar or restaurant in (b) is operated by a third person, the gross receipts thereof
shall be subject either to VAT or to the 3% OPT under Section 116.
(d) Amusement places include videoke bars, karaoke bars, karaoke televisions, karaoke
boxes, and music lounges.
What are exempt from amusement tax?
Boxing exhibition where:
(1) The world or oriental title is at stake;
(2) One of the contenders is a Filipino citizen; and
(3) Is promoted by a Filipino citizen, or a by a corporation/association which
is ≥ 60% owned by Filipinos.
What is the rate and base of the Gaming Tax of Offshore Gaming Licensees under Sec. 125A?
5% of the entire gross gaming revenue or receipts, or the agreed pre-determined minimum monthly gaming revenue or receipts, whichever is higher. Such 5% gaming tax shall be in lieu of all other direct and indirect internal revenue taxes and local taxes
This shall be directly remitted to the BIR not later than the 20th day following the end
of each month.
(1) Gross gaming revenue or receipts shall mean gross wagers less payouts.
(2) Non-gaming revenue. The non-gaming revenues of a duly-licensed offshore gaming
licensee shall be subject to an income tax equivalent to twenty-five percent (25%) of
taxable income. Such non-gaming revenues of OGLs shall also be subject to the VAT
or OPT, whichever is applicable.
Who are subject to the winnings tax under Sec. 126?
(1) Persons who win horse races; and
(2) Owners of winning race horses.
