OTHER PERCENT AGE TAXES

I.

Definition

II

It is a tax imposed on sale, barter, exchange or importation of goods, or sale of services based upon gross
sales, value in money of receipts derived by the manufacturer, producer, importer or seller measured by certain
percentageof the gross selling price or receipts.

If the transaction is subject to other percentage taxes. then it is exempt from vat and vice-versa.

Tax Base and Tax Rate

PERCENTAGE TAX
Sec. 116 - Tax on persons exempt from VAT under Sec. I09
(z) (sales or receipts do not exceed Pl ,919,500)

TAX BASE
Gross monthly sales or receipts

Sec. 117 - Percentage tax on DOMESTIC carriers and

keepers of gar age (transport of passengers)

Actual monthly gross receipts or

minimum whichever is lower

On gross quarterly receipts of operators of:

~ Cars for rent (rent-a-car business)
~
Cars for hire driven by the lessee
~ Transportation contractors including those who transport passengers for hire
~ Other domestic carriers by land for transport ofpassengers; and
~
Keepers of garages

Exception :
~ Owner of bancas and owners of animal-drawn two wheeled vehicles
On their income FROM the Philippines to a foreign country
-~ Subject to 0% vat (transport of passengers, goods, or cargoes)
011 their income FROM a foreign country to th Philippines
~
Vat exempt (transport of passengers, goods, or cargoes)

TAX RA TE
3%

3%

NOTE: DOMESTIC air carriers with international operations are not classified as INTERNATIONAL
air carriers because the latter refers to FOREIGN airline companies only.

Minimum quarterly gross receipts Per Unit Carrier in each particular case (RR 92007)
Jeepneyfor hire
I. Manila and other cities
2. Provincial
Public Utility bus
Not exceeding 30 passengers

Exceeding 30 but not exceeding 50 passengers

Exceeding 50 passengers
Taxis
I. Manila and other cities
2. Provincial
Car for hire with chauffeur
Car for hire without chauffeur
Sec. 118 - Percentage tax on INTERNATIONAL carriers

On quarterly gross receipts of international AIR

carriers and international SHIPPING carriers
doing business in the Philippines (cargoes)
Sec. 11 9 - Tax on franchises

11

Franchise is a special privilege or right

conferred by the State through the lawmaking
body, to operate a public utility

Minimum
Quarterly
P65 ,700
32,900

Minimum
Monthly
P21 ,900
10,967

98,600
164,200
197,100

32,867
54,733
65,700

98,600
65,700

32,867
21,900

82,100
49,300

27,367
16,434

Monthly gross receipts

3%

Gross receipts:
Franchise on radio an/.or TV
broadcasting companies whose
annual gross receipts of the
preceding year does exceed
PI 0,000,000

Mav vo/untarilv

3%

register as vat
taxpayer

Franchise on gas and water

utilities
Other franchise holders

Sec. 120 - Tax on overseas dispatch, message or conversation

originating from the Philippines

Amount paid for such services

(by the person who used the
communications facilities)

2%

12% vat or 3%
percentage tax

10%

The tax imposed on this section SHALL NOT APPLY to:

/.

Government

2.

Diplomatic Services

3.

Amounts paid for messages transmitted by an embassy and consular offices of a foreign
government.

International Organizations

4.

Amounts paid for messages transmitted by the Government of the Republic of the
Philippines or any of its political subdivisions or instrumentalities.

Amounts paid for messaged transmitted by a public international organization or any of its
agencies based in the Philippines enjoying privileges, exemptions, and immunities which the
Philippine Government is committed to recognize pursuant to an International Agreement.

News services

Amounts paid for messages from any newspaper, press association, radio or television
newspaper, broadcasting agency, or news ticker service or to 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 a public press.

Sec. 121 - Tax on BANKS and NON-BANK financial

intermediaries performing quasi-banking
functions (R.A. 9238)

Gross receipts on interest,

commissions and discounts from
lending activities; income from
financial leasing;
(a) Remaining maturity period in 5
years or less

5%

(b) Remaining maturity period is

more than 5 years

I%

(c)Dividends and equity shares in

net income of subsidiaries;

0%

(d) Royalties, rentals of property,

real or personal, profits from
exchange and all other items
treated as gross income under the
Tax Code

(e) Net trading gains within the

taxable year on foreign currency,
debts securities, derivative and
other similar financial instruments

7%

7%

Banks or Banking institutions

Persons and entities engaged in the lending of funds obtained from the public through the receipt of
deposits or the sale of bonds, securities, or obligations of any kind, and all entities regularly conducting
such operations.

Financial Intermediary

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.

Non-Bank Financial Intermediaries

21

..

Refer to persons or entities whose principal functions include the lending, investing, or places of funds or
evidences of indebtedness or equity deposited

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 the purposes of relending or purchasing
receivables and other similar obligations.

On Net TRADING gain

};:>
In computing the net trading gain WITHIN the taxable year on items of income provided in (e)
above, the figure to be reported m the monthly percentage tax return shall be the
CUMULATIVE total of the net trading gain or loss since the first months of the same taxable
year. Provided, that the net trading loss on items of income provided in (E) above may on ly be
deducted from net trading gain on items of income provided in (E) above, but not from any
other items of gross receipt to arrive at the total monthly gross receipts due.

Sec. 122 - Tax on OTHER NON-BANK financial

intermediaries (non-bank financial intermediary NOT
performing quasi-banking functions)

Gross receipts derived from

interest, commissions, discounts,
and all other items treated as
gross income under the Tax Code

5%

Interests, commissions and

discounts from lending activities,
as well as income from financial
leasing:

Financial Leasing
>- The taxable gross receipts shall consists
only of interest income (recovery of
principal not included).

Operating Lease Agreements

};:> The gross receipt is the gross rental amount.

Sec. 123 - Tax on life insurance premiums

(from every person, company or corporation;
except:
purely cooperative companies
associations)

or

Cooperative/Associations are such as are conducted

by members thereof with the money collected from
among themselves and solely for their own
protection and not for profit.

Remaining maturity is 5 years or

less

5%

Remaining maturity is more than

5 years

1%

Total premiums collected

2% (New)

Whether premiums are paid

in money, notes, credits or
any substitute for money

-RA 10001 & RMO 22-2010;

RMC22-2010
!

Prospective
application.
Provided
however
that
insurance policies taken out
before the effectivity of
RAIOOOI but premiums are
not yet fully paid, the new
rate of (2%) shall be paid to
the remaining balance and for
the remaining years.

: Five (5) years after the

effectivity of RA I000 I, no
tax
on
life. insurance
premiums shall be collected.

Signed into law on February

23,2010

31

Effective October 14, 20 IO

(RMO 79-2010)

..
I
The following shall NOT BE INCLUDED in the taxable receipts:
I. Premiums refunded within six (6) months after payment on account of rejection of risk or returned for
other reasons to the insured.
2. Reinsurance premiums where tax has previously been paid.
3. 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 a NON-RESIDENT insured, if
any tax on such premium is imposed by a foreign country where the branch is established.
4. Premiums collected or received on account of RE-INSURANCE, if the insured, in case of personal
insurance resides outside the Philippines, if any tax on such premiums is imposed by a foreign country
where the original insurance has been issued or perfected.
5. 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 workers.

Sec. 124 - Tax on AGENTS of foreign insurance companies

except re-insurance premium
(fire, marine or miscellaneous insurance agent
authorized under the insurance code)

Sec. 125 - Amusement taxes (proprietors, lessee or operator)

Gross receipts embraces ALL receipts irrespective of

whether or not any amount is charged for admission.

It is also inclusive of income from television, radio,
and motion picture rights, if any.

Sec. 126 - Tax on winnings (horse races)

Insurance Agents authorized under

the insurance code to procure
policies of insurance for companies
not authorized to transact business
in the Philippines.
Total premiums collected I paid
Generally

10%

Owners of property obtaining

insurance directly with foreign
insurance companies

5%

Gross receipts
Jai-alai and racetracks

30%

(operators shall withheld

tax on winnings)

Cockpits, cabarets, night or day

clubs

18%

Professional basketball games

15%

Boxing exhibitions

10%

Actual amount paid for every

winning ticket after deducting the
cost of the ticket

10%

Winnings from double,

forecast/quinella and trifecta bets

4%

Prize of winning race horse owners

10%

Forecast
An event wherein the bettor selects two numbers in a selected race, and the selection must finish
first and second in the correct order.
Double quinella
An event wherein the bettor selects the number in each of two selected races, and the selection in
each race must finish first and second in either order.
Trifecta
An event wherein the bettor selects three numbers in a selected race and the selections must finish
first, second and third in the correct order.
Sec. 127 - Tax on sale, barter or exchange of shares of stock
listed and traded through the local stock
exchange (on Shares held as Capital Assets)

The following sellers or transferors of stock are

liable to this tax:

a.
b.
c.

41

Individual taxpayer, whether citizen or alien

Corporate taxpayer, whether domestic or
foreign
Other taxpayers not falling under (a) and (b)
above, such as estate, trust, trust funds, and

Gross selling price or gross value in

money

Yi of I%

pension funds, among others.

The stockbroker who effected the sale shall collect

the tax from the seller and remit the same to the
collecting bank within five (5) banking days from the
date of collection thereof.

The taxes imposed herein SHALL NOT apply to the

following:
(a) Dealers in securities;
(b) Investor in shares of stock in a mutual fund
company, as defined in Section 22 (BB) of the Tax
Code, as amended, and Sec. 2(s) of these
Regulations, in connection with the gains realized by
said investor upon redemption of said shares of stock
in a mutual fund company ; and
(c) All other persons, whether natural or juridical,
who are specifically exempt from national internal
revenue taxes under existing investment incentives
and other special laws.
Sec. 128 - Tax on shares of stock sold or exchanged
through public offerings.

Gross selling price or gross value in

money in accordance with the
proportion of share of stock sold,
bartered, exchanged or otherwise
disposed to the total outstanding
shares of stock after listing in the
local stock exchange up to 25%

4%

Over 25% but not over 33 1/3 %

2%

Over 33 1/3 %

1%

Initial public offering

Refers to the to a public offering of shares of stock made for the first time in the Local Stock Exchange.
Primary offering

Refers to the original sale made to the investing public by the issuer corporation of its unissued shares of stock.
The applicable tax shall be paid by the issuer corporation.
Secondary offering

Refers to an offer for the sale to the investing public by the existing shareholders of their securities which is
conducted during an IPO or a follow-on/follow-through offering. The tax herein imposed shall be paid by the
selling shareholder(s) with respect to the Shares of Stock corresponding to the Secondary Offering.
Follow-on/follow through offering

Refer to an offering of shares to the investing public subsequent to an IPO.

Closely held corporation

Any corporation at least 50% in value of the outstanding capital stock of at least 50% of the total combined voting
power of all classes of stock entitled to vote is owned directly or indirectly by or for more than twenty (20)
individuals.

III.

RETURN AND PAYMENTS OF PERCENTAGE TAXES

a. Monthly Percentages Tax Return ---(RR No. 4-2002)
I) The monthly percentage Tax Returns of taxpayers, whether large or non-large, shall be filed , and taxes
paid, not later than the 20 1h day following the end of each month.
2) With respect to taxpayers enrolled with the Electronic Filing and Payment System (EFPS), the
deadline fore-tiling the Monthly Percentage Tax and e-paying the tax due thereon shall be five (5) days
later than the deadline in no. I).
LARGE TAXPAYERS
As to Tax Payments:

Percentage taxes
VAT
Excise Tax
Income Tax
Documentary Stamp Tax

P200,000 per quarter

P200,000 per quarter
P 1,000,000 per year
P 1,000,000 per year
P 1,000,000 per year

As to Financial Condition:

Gross Sales or Receipts

Net Worth

P 1,000,000,000 per year

P300,000,000 at the close of each calendar or
fiscal year

SI

3) Payment of Certain Percentage Taxes: The return for the following percentage taxes and payment of such
. ds stated.m the part1cu
. Iar securities:
taxes shaII be Wit. h'In th e perlO
Section
Percentage Tax
Due Date
Section 120 Tax on overseas dispatch, message or 20 days after the end of the quarter
conversation
Section 125
Amusement taxes
20 days after the end of the quarter
Section 126 Taxes on winnings
20 days after the tax was withheld and
deducted
Section 127 Taxes on sales, barter or exchange of shares 5 banking days from the date of
of stock listed and traded through the local collection
stock exchange

-- - --- - -- .. - ... - .. -- - .. - ... - .. -- - --- -- -

- - - - ...

Taxes on public offerings

Initial public offering

-- -- - -- - --- - ------- ......... -- ......

30 days from the date of listing of the

shares in the local stock exchange

--------- --------------------- ----------------------5 banking days from the date of

- - ---

Secondary public offering

collection

4) Large taxpayers shall file a consolidated return and the pay the tax accordingly.
5) In the case of a person whose VAT registration is cancelled and who becomes liable to the 3% tax on
VAT-exempt persons, the tax shall accrue from the date of cancellation and shall be paid within 20 days
after the end of each taxable month.
6) Any person retiring from a business subject to percentage tax shall notify the nearest internal revenue
office, file his return and pay the tax due thereon within 20 days after closing his business.
7)

Withholding of Percentage Tax

a) Bureau, offices and instrumentalities of the Government including government-owned or
controlled corporations as well as their subsidiaries, provinces, cities and municipalities
making any money payments to private individuals, corporations, partnerships and/or
associations are required to deduct and withhold other percentages taxes.
b) Any person, natural or juridical, with respect to his/her purchase in the course of trade or
business from non-VAT taxpayers subject to 3% percentage under Section 116 of the Tax
Code shall be subject to a percentage tax withholding at source at a rate of 3% based on the
payee's (or seller's) sales/receipts. The withholding shall be done if the taxpayer-payee opts
to remit his percentage tax through withholding by filling "Notice of Availment of the Option
to Pay the Tax Through the Withholding Process."

8) The Commissioner of Internal Revenue may prescribed a minimum amount of gross receipts under the
following cases:
a) When a taxpayer failed to issue receipts or invoices;
b) When no return is filed;
c) When there is reason to believe that the books of accounts or other records do not correctly
reflect the declarations made or be made in return.
b.

Place to File turn and Pay the Percentage Tax

I) Authorized agent banks;
2) Revenue District office;
3) Collection Agent:
4) Duly authorized Treasurer of the city or municipality where the business or principal place of business is
located, as the case may be.
Note: A person liable to percentage tax (except large taxpayers) may, at his option, file a separate
return for each branch or place of business, or a consolidated return foe all branches or
places of business.

c.

61

Withholding of Other Percentage Taxes

I) Bureaus, offices and instrumentalities of the Government including GOCCs as well as their subsidiaries,
provinces, cities and municipalities making any payments to private individuals, corporations,
partnerships and/or associations are required to deduct and withhold other percentage taxes.
2) Any person (natural or juridical), with respect to its purchase in the course oftrade or business from nonvat taxpayers subject to 3% other percentage tax under Section 116 of the Tax Code shal l withhold at
source at a rate of 3% based on the payee's or seller' sales or receipts.
The withholding shall be done if the taxpayer-payee opts to remit his percentage tax through withholding by filing
"Notice of Availment of the Option to Pay the Tax through the withholding process".