PERCENTAGE TAX

1. OTHER PERCENTAGE TAXES (SUMMARIZED)

Percentage Tax Tax Base Tax Rate

Sec. 116 – Tax on persons exempt from VAT under Gross quarterly sales or receipts 3%
Sec. 109 (BB) (annual gross sales or receipts do
not exceed P3,000,000)
Sec. 117 – Percentage tax on domestic carriers Actual or minimum quarterly gross receipts 3%
and keepers of garage (transport of passengers) whichever is higher
Sec. 118 – Percentage tax on international carriers Quarterly gross receipts 3%

Sec. 119 – Tax on franchises Gross receipts: Franchises on radio and/or

TV broadcasting companies whose annual
gross receipts of the preceding year do
exceed ₱10,000,000 3%
Franchises on gas and water utilities 2%
Sec. 120 – Tax on overseas dispatch, message or Amount paid for such services (by the
conversation originating from the Philippines person who used the communications 10%
facilities)
1. OTHER PERCENTAGE TAXES (SUMMARIZED)

Percentage Tax Tax Base Tax Rate

Sec. 121 – Tax on banks and non-bank financial Gross receipts on interest, commissions and
intermediaries performing quasi-banking functions discounts from lending activities; income from
financial leasing:
• Remaining maturity period of instrument is 5%
5 years or less
• Remaining maturity period of instrument is 1%
more than 5 years
• Dividends and equity shares in net income
of subsidiaries; 0%
• Royalties, rentals of property, real or
personal, profits from exchange and all
other items treated as gross income under 7%
the Tax Code
• Net trading gains within the taxable year on
foreign currency, debt securities,
derivatives and other similar financial 7%
instruments
1. OTHER PERCENTAGE TAXES (SUMMARIZED)

Percentage Tax Tax Base Tax Rate

Sec. 122 – Tax on other non- bank financial Gross receipts derived from interest,
intermediaries commissions, discounts and all other
items treated as gross income under the 5%
Tax Code
Interests, commissions and discounts from
lending activities, as well as income from
financial leasing:
Remaining maturity of instrument is 5 5%
years or less
Remaining maturity of instrument is more 1%
than 5 years
Sec. 123 – Tax on life insurance premiums Total premiums collected 2%

Sec. 124 – Tax on agents of foreign insurance Total premiums collected/paid

companies (fire, marine or miscellaneous Generally 4%
insurance) Owners of property obtain insurance
directly with foreign insurance companies 5%
1. OTHER PERCENTAGE TAXES (SUMMARIZED)

Percentage Tax Tax Base Tax Rate

Sec. 125 – Amusement taxes Gross receipts
• Jai-alai and race track 30%
• Cockpits, cabarets, night or day clubs 18%
• Professional basketball games 15%
• Boxing exhibitions 10%
Sec. 126 – Tax on winnings Actual amount paid for every winning ticket
after deducting the cost of the ticket 10%
Winnings from double, forecast/ quinella and 4%
trifecta bets
Prize of winning race horse owners 10%
Sec. 127 Gross selling price or gross value in money 6/10 of
(A) Tax on sale, barter or exchange of shares of Gross selling price or gross value in money in 1%
stock listed and traded through the local stock accordance with the proportion of shares of stock
sold, bartered, exchanged or otherwise disposed
exchange
to the total outstanding shares of stock after listing
(B) Tax on shares of stock sold or exchanged in the local stock exchange
through public offerings Up to 25% 4%
Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%
2. PERCENTAGE TAXES AMPLIFIED
a. Sec. 116 - Tax on Persons Exempt from VAT Under Section 109 (BB)
1) Persons subject to the tax Persons whose annual sales or receipts do not exceed P3,000,000 (used to be
P1,919,500) and who are not VAT registered. [Sec. 109 (BB)]
2) Tax base Gross quarterly sales or receipts
3) Tax rate 3%
4) Optional VAT registration Persons subject to the above tax may apply for registration as VAT-subject
persons not later than ten (10) days before the beginning of the taxable quarter.
5) Cancellation of VAT Any person exempt from VAT under Sec. 109 (BB) who elects to register under
registration the VAT system shall not be allowed to cancel his registration for the next three
(3) years.
6) Non-VAT registered A non-VAT registered taxpayer who initially opted to avail of the 8% option
taxpayer exceeded the VAT but has exceeded the VAT threshold during the taxable year, shall be subject
threshold to 3% Percentage Tax on the first P3,000,000.00 of his or her gross sales or
gross receipts under Section 116 of the Tax Code, as amended, without imposition of any
penalty if payment is timely made on the following month when the threshold is breached.

The excess of the threshold shall be subject to VAT prospectively, and the 8% income tax
previously paid shall be credited to the Income Tax Due under the graduated rates
provided in Section 24(A)(2)(a) of the Tax Code, as amended.
2. PERCENTAGE TAXES AMPLIFIED
a. Sec. 116 - Tax on Persons Exempt from VAT Under Section 109 (BB)
6) Cooperatives Cooperatives shall be exempt from the 3% gross receipts tax.
2. PERCENTAGE TAXES AMPLIFIED
b. Sec. 117 - Percentage Tax on Domestic Carriers and Keepers of Garage (Common Carrier’s Tax)
1) Common carrier defined Persons, corporations, firms or associations engaged in the business of carrying
or transporting passengers or goods or both, by land, water, or air, for
compensation, offering their services to the public and shall include
transportation contractors.
2) Persons subject to 1) Cars for rent or hire driven by the lessee
common carrier’s tax 2) Transportation contractors, including persons who transport passengers
3) Other domestic carriers by land for the transport of passengers
4) Keepers of garage
3) Persons not subject to 1) Owners of banca
common carrier’s tax 2) Owners of animal-drawn two wheeled vehicle
4) Tax base Actual quarterly gross receipts or minimum quarterly gross receipts whichever is
higher.
5) Tax rate 3%
2. PERCENTAGE TAXES AMPLIFIED
b. Sec. 117 - Percentage Tax on Domestic Carriers and Keepers of Garage (Common Carrier’s Tax)
6) Minimum quarterly 1) Jeepney for hire Manila and other cities P65,700 (P2,400)
receipts Provincial P32,900 (P1,200)

2) Public utility bus Not exceeding 30 passengers P98,600 (P3,600)

>30 but ≤50 passengers P164,200 (P6,000)
Exceeding 50 passengers P197,100 (P7,200)
3) Taxis Manila and other cities P98,600 (P3,600)
Provincial P65,700 (P2,400)

4) Car for hire With chauffeur P82,100 (P3,000)

Without chauffeur P49,300 (P1,800)

7) Exemption from local The gross receipts of common carriers derived from their incoming and outgoing
taxes freight shall not be subject to the local taxes imposed under the Local
Government Code of 1991.
8) Transportation 1) Transportation contractors on their transport of goods or cargoes;
contractors and common 2) Persons who transport goods or cargoes for hire;
carriers subject to VAT 3) Other domestic carriers by land relative to their transport of goods or cargoes;
4) Common carrier by air and sea relative to their transport of passengers, goods
or cargoes from one place in the Philippines to another place in the Philippines.
2. PERCENTAGE TAXES AMPLIFIED
c. Sec. 118 - Percentage Tax on International Carrier (Common Carrier’s Tax)
1) Persons subject to tax 1) International air carriers doing business in the Philippines
2) International shipping carriers doing business in the Philippines
2) Tax base Gross receipts derived from the transport of cargo from the Philippines to another
country
3) Tax rate 3%
4) Gross receipts defined Gross receipts shall include, but shall not be limited to, the total amount of money
or its equivalent representing the contract, freight/cargo fees, mail fees, deposits
applied as payments, advance payments and other service charges and fees
actually or constructively received during the taxable quarter from cargo and/or
mail, originating from the Philippines in a continuous and uninterrupted flight,
irrespective of the place of sale or issue and the place of payment of the passage
documents. (Sec. 5, RR 15-2013, implementing R.A. No. 10378)
5) Exempt from VAT 1) Transport of passengers by international carriers doing business in the
(not allowed to register for Philippines
VAT purposes) 2) Transport of cargo by international carriers doing business in the Philippines
6) Off-line international Not subject to the 3% common carrier’s tax on international carriers
carrier having branch/office
as a sales agent in the
Philippines
2. PERCENTAGE TAXES AMPLIFIED
c. Sec. 118 - Percentage Tax on International Carrier (Common Carrier’s Tax)
6) Off-line international carrier having Not subject to the 3% common carrier’s tax on international carriers
branch/office as a sales agent in the
Philippines
2. PERCENTAGE TAXES AMPLIFIED
d. Sec. 119 – Tax on Franchises
1) Persons subject to tax 1) Franchises on radio and/or television broadcasting companies whose annual
gross receipts of the preceding year does not exceed P10,000,000;
2) Franchises on gas and water utilities.
2) Tax base Gross receipts derived from the business covered by the law granting the
franchise.
3) Tax rates 1) Franchise on gas and water utilities - 2%
2) Franchise on radio and/or TV broadcasting - 3%
3) PAGCOR and its licensees and franchisees - 5%
4) Optional VAT registration 1) Radio and TV broadcasting companies whose annual gross receipts of the
preceding year does not exceed P10,000,000 shall have the option to be
registered within 10 days before the beginning of the calendar quarter as VAT
taxpayer and pay VAT thereon.
2) Once the option is exercised, it shall not be revoked.
5) Franchise grantees 1) Telephone and telegraph;
subject to VAT 2) Radio and/or television broadcasting;
3) Toll road operations;
4) All other franchisees, other than those covered by Sec. 119 of the Tax Code,
regardless of how their franchise may have been granted.
2. PERCENTAGE TAXES AMPLIFIED
d. Sec. 119 – Tax on Franchises
6) PAGCOR and its licensees and PAGCOR and its licensees and franchisees were subjected to VAT but
franchisees nullified in a Supreme Court decision (G.R. 172087 dated March 15,
2011). Subject to 5% franchise tax of the gross revenue or earnings
from its operations and licensing
of gambling casinos, gaming clubs and other similar recreation or
amusement places, gaming pools, and other related operations
pursuant to Section 13 (2) of P.D. No. 1869 (Revenue Memorandum
Circular No. 33-2013).).
2. PERCENTAGE TAXES AMPLIFIED
e. Sec. 120 - Tax on Overseas Dispatch, Message or Conversation Originating from the Philippines
1) Persons subject to tax The tax imposed 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 the quarter.
2) Persons not subject to tax 1) Philippine Government;
2) Diplomatic services;
3) International organizations;
4) News services.
3) Tax base Amount paid for the services rendered
4) Tax rate 10%
5) Examples of 1) Telephone;
communication facilities 2) Telegraph;
3) Telewriter exchange;
4) Wireless and other communication equipment services.
2. PERCENTAGE TAXES AMPLIFIED
f. Sec. 121 - Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions
(Gross Receipts Tax)
1) Bank defined The term “bank” means every banking institution, as defined in Sec. 2 of R.A.
No. 337, as amended, otherwise known as The General Banking Act. A bank
may either be a commercial bank, a thrift bank, a development bank, a rural
bank or a specialized government bank.
2) Non-bank financial The term “non-bank financial intermediary” means a financial intermediary, as
Intermediary defined defined in Sec. 2 (D) (c) of R.A. No. 337, as amended, otherwise known as The
General Banking Act, authorized by the Bangko Sentral ng Pilipinas (BSP) to
perform quasi-banking activities
3) Quasi-Banking activities The term “quasi-banking activities” means borrowing funds from twenty (20) or
more personal or 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 repurchase agreements for purposes of relending or purchasing receivables
and other similar obligation: Provided, however, That commercial, industrial and other non-
financial companies, which borrow funds through any of these means for the limited
purpose of financing their own needs or the needs of their agents or dealers, shall not be
considered as performing quasi-banking functions.
4) Persons subject to the tax Banks and non-bank financial intermediaries performing quasi-banking functions
2. PERCENTAGE TAXES AMPLIFIED
f. Sec. 121 - Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions
(Gross Receipts Tax)
Tax base Tax rates
5) Tax base and tax rates Gross receipts on interest, commissions and discounts from
lending activities; income from financial leasing:
• Remaining maturity period of instrument is 5 years or less 5%
• Remaining maturity period of instrument is more than 5 1%
years
• Dividends and equity shares in net income of subsidiaries 0%
• Royalties, rentals of property, real or personal, profits from
exchange and all other items treated as gross income 7%
under the Tax Code
• Net trading gains within the taxable year on foreign
currency, debt securities, derivatives and other similar 7%
financial instruments
6) In case maturity is shortened In case the maturity period is shortened thru pre-termination, the maturity
through pre-termination period shall be reckoned to end as of the date of pre-termination for purposes
of classifying the transaction and applying the correct rate of tax accordingly.
a. Sec. 123 – Tax on Life Insurance Premiums
1) Persons subject to the tax Person, company or corporation (except purely cooperative companies or
associations) doing life insurance business of any sort in the Philippines.
2) Tax base Total premiums collected, whether such premiums are paid in money, notes,
credits or any substitute for money.
3) Tax rate 2% (per Sec. 1, R.A. No. 10001) (used to be 5%)
4) Other items subject to the a) Premium on Health and Accident Insurance, whether received by a life or
premium tax (RMC No. 49- non-life insurance company
2010) b) Re-issuance fees, reinstatement fees, renewal fees as well as penalties paid
to the life insurance company which are incidental to or in connection with
the insurance policy contracts issued
c) Investment income realized from the investment of funds obtained from
others allowed and approved by the Insurance Commission
5) Items earned by life a) Insurance and reinsurance commissions, whether life or non-life
insurance company subject b) Management fees
to VAT or percentage tax as c) Rental income
the case may be (RMC No. d) Other income earned which can be pursued independently of the insurance
49-2010) business activities
a. Sec. 123 – Tax on Life Insurance Premiums
6) Investment income The interest income earned by the life insurance companies from investing the
realized from the investment premiums received in marketable securities, bonds and other financial
of premiums earned instruments is considered exempt from further imposition of business tax since
the premiums which have been the source of the funds invested had already
been subject to the premium tax (RMC No. 49-2010).
7) Persons subject to VAT 1) Non-life insurance companies (except their crop insurance) including surety,
fidelity, indemnity and bonding companies;
2) Pre-need companies;
3) Health Maintenance Organizations (HMOs).
b. Sec. 124 – Tax on Agents of Foreign Insurance Companies
1) Persons subject to tax Every fire, marine or miscellaneous insurance agent authorized under the
Insurance Code to procure policies of insurance on risks located in the
Philippines.
2) Tax base Total premiums collected
3) Tax rate 4%
4) Direct insurance with In all cases where owners of property obtain insurance directly with foreign
foreign insurance companies companies, they shall pay the tax of 5% on premiums paid.
c. Sec. 125 – Amusement Taxes
1) Persons subject to tax Proprietor, operator or lessee of:
1) cockpits; 4) Professional basketball games;
2) cabarets, night and day clubs; 5) Jai-alai and race tracks.
3) boxing exhibitions;
2) Tax base and tax rates
TAX BASE TAX RATE
Jai-alai and race tracks Gross receipts 30%
Cockpits Gross receipts 18%
Cabarets, night and day clubs Gross receipts 18%
Professional basketball games Gross receipts 15%
Boxing exhibitions Gross receipts 10%

Note: The term “cabarets, night and day clubs” includes videoke bars, karaoke
bars, karaoke televisions, karaoke boxes and music lounge. (RMC No. 18-2010)
3)Payment of tax 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 gross receipts derived during the
preceding quarter and pay the tax due thereon.
c. Sec. 125 – Amusement Taxes
4) Exempt boxing exhibition Boxing exhibitions wherein World or Oriental Championships in any division is at
stake shall be exempt from amusement tax provided that at least one of the
contenders is a citizen of Philippines, and said exhibitions are promoted by
citizen/s of the Philippines or by a corporation or association at least 60% of the
capital is owned by such citizens.
5) 15% tax on professional The 15% tax on professional basketball games shall be in lieu of all other
basketball games in lieu of percentage taxes of whatever nature and description.
all other percentage taxes
6) 30% tax and other taxes The 30% tax in the case of Jai-Alai and racetracks of their gross receipts is
imposed even if no amount irrespective of whether or not any amount is charged for admission
is charged for admission
7) Meaning of gross receipts For the purpose of 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 right, if
any.
d. Sec. 126 - Tax on Winnings
1) Persons subject to tax 1. Every person who wins in horse races;
2. Winning from double, forecast/ quinella and trifecta bets;
3. Owners of winning race horses
2) Tax base and tax rates
TAX BASE TAX RATE
Amount paid for every winning 10% (person who wins in horse
ticket less cost of the tickets races)
Amount paid for every winning 4% (double, forecast /quinella and
ticket trifecta bets)
less cost of the tickets
Prize 10% (owners of winning racehorses)
3) Definition of terms 1. Daily double or extra double is an event wherein the bettor selects a numberin each of
two consecutive races and the selection in each race must finish first.
2. Forecast is an event wherein the bettor selects two (2) numbers in a selectedrace, and
the selection must finish first and second in the correct order.
3. Double quinella is an event wherein the bettor selects two (2) numbers in each of the
two (2) selected races, and the selection in each race must finish first and second in
either order.
4. Trifecta is an event wherein the bettor selects three (3) numbers in a selected
5. race and the selection must finish first, second and third in the correct order.
d. Sec. 126 - Tax on Winnings
4) Collection of tax 1. Tax on winnings shall be deducted from the “dividends” corresponding to
each winning ticket or the “prize” of each winning racehorse.
2. Tax on winnings shall be withheld by the operator, manager or person in
charge of the horse races before paying the dividends or prizes.
5) Remittance of tax to BIR The operator, manager or person in charge of horse races shall remit the taxes
to the BIR within 20 days from the date the tax was deducted and withheld.
e. Sec. 127 (A) - Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded Through the
Local Stock Exchange.
1) Persons subject to tax Seller or transferor of shares of stock
2) Person not subject to tax Dealer in securities
3) Tax base Gross selling price or gross value in money
4) Tax rate 6/10 of 1% (.006) effective January 1, 2018 (used to be 1/2 of 1%)
5) Collection of tax It shall be the duty of every stock broker who effected the sale to collect the tax.
6) Remittance of tax collected The tax collected shall be remitted within 5 banking days from the date of
collection.
7) Not deductible for income The tax on sale, etc. of shares of stock listed and traded through the local stock
tax purposes exchange shall not be deductible for income tax purposes
8) Gain derived from sale, Any gain derived from the sale, barter, exchange or other disposition of shares
barter, exchange or other of stock under Sec. 127 shall be exempt from capital gains tax and from the
disposition of shares stock of regular individual or corporate income tax.
under Sec. 127
f. Sec. 127 (B) - Tax on Shares of Stock in Closely Held Corporation Sold or Exchanged Through
Initial Public Offering.
1) Persons subject to tax 1) Issuing corporation in initial public offering;
2) Seller in secondary offering.
2) Tax base Gross selling price or gross value in money
3) Tax rates

4) Payment of tax 1) In case of primary offering – The corporate issuer shall file the return and
pay the tax within 30 days from the date of listing of the shares in the local
stock exchange.
2) In case of secondary offering – The stock broker shall collect the tax and
remit the same to BIR within 5 banking days from the date of collection.
5) Not deductible for income The tax paid on initial public offering and secondary offering shall not be
tax purposes deductible for income tax purposes.
6) Gain derived from sale, Any gain derived from the sale, barter, exchange or other disposition of shares
barter, exchange or other of stock under Sec. 127 shall be exempt from capital gains tax and from the
disposition of shares stock of regular individual or corporate income tax.
under Sec. 127
2. RETURNS AND PAYMENTS OF PERCENTAGE TAXES
a. Quarterly Return Every person subject to the percentage taxes imposed 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.
b. Consolidated return of Large taxpayers shall file a consolidated return and pay the tax accordingly.
large taxpayers
c. Large taxpayers 1) As to tax payments
Percentage tax At least P200,000 per quarter
VAT At least P200,000 per quarter
Excise tax At least P1,000,000 per year
Income tax At least P1,000,000 per year
Documentary stamp tax At least P1,000,000 per year
Withholding tax At least P1,000,000 per year
2) As to financial condition
Gross sales/receipts At least P1,000,000,000 per year
Gross purchases At least P800,000,000 for the preceding year
Net worth At least P300,000,000 at the close of each calendar
or fiscal year
2. RETURNS AND PAYMENTS OF PERCENTAGE TAXES
d. Person whose VAT In the case of a person whose VAT registration is cancelled and who becomes
registration is cancelled liable to the 3% tax on VAT-exempt persons, the tax shall accrue from the date
of cancellation and shall be paid within 25 days after the end of each taxable
quarter.
e. Person retiring from a Any person retiring from a business subject to percentage tax shall notify the
business subject to nearest internal revenue officer, file his return and pay the tax due thereon
percentage tax within 20 days after closing his business.
f. Withholding of percentage Any person, natural or juridical, with respect to his/its purchase in the course of
tax trade or business from non-VAT taxpayers subject to the 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 filing “Notice of Availment of the Option to Pay the
Tax Through the Withholding Process”.
g. Commissioner of Internal The Commissioner of Internal Revenue may prescribe a minimum amount of
Revenue may prescribe a gross receipts under the following cases:
minimum amount of gross 1) When a taxpayer fails to issue receipts or invoices;
receipts 2) When no return is filed;
3) 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 return.
2. RETURNS AND PAYMENTS OF PERCENTAGE TAXES
h. Place of filing the return 1) Authorized agent bank;
and payment of the 2) Revenue District Office/Large Taxpayer District Office/Large Taxpayer
percentage tax Assistance Division;
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.
i. Option to file a separate A person liable to percentage tax (except large taxpayers) may, at his option,
return or consolidated return file a separate return for each branch or place of business, or a consolidated
return for all branches or places of business.