PERCENTAGE TAXES (CONCEPT AND  Section 117-118 Carriers tax as

NATURE) amended by RA 9377 (July 1, 2005)

As a rule, VAT is imposed on every sale, barter, or
exchange of goods or services and on importations. SEC. 117. Percentage Tax on Domestic Carriers
However, there are instances where the same does not and Keepers of Garages. - Cars for rent or hire
apply because the transaction is subject to other
driven by the lessee, transportation contractors,
percentage taxes (OPT) as required by the NIRC.
including persons who transport passengers for
Percentage tax is a tax imposed on sale, barter, hire, and other domestic carriers by land, for the
exchange or importation of goods, or sale of services transport of passengers [except owners of bancas]
based upon gross sales, value in money of receipts and owners of animal-drawn two wheeled vehicle),
derived by the manufacturer, producer, importer or and keepers of garages shall pay a tax equivalent
seller measured by certain percentage of the gross
to three percent (3%) of their quarterly gross
selling price or receipts. If the transaction is subject to
receipts.
OPT, it is no longer subject to VAT. Nonetheless, OPT
as well as VAT may be imposed together with excise The gross receipts of common carriers derived
taxes (Tabag, 2015).1
from their incoming and outgoing freight shall not
be subjected to the local taxes imposed under
Republic Act No. 7160, otherwise known as the
 Section 116. Tax on persons exempt Local Government Code of 1991.
from VAT
In computing the percentage tax provided in this
NIRC TRAIN LAW
Section, the following shall be considered the
SEC. 116. Tax on SEC. 116. Tax on
Persons Exempt from Persons Exempt from minimum quarterly gross receipts in each
Value-Added Tax (VAT). - Value-added Tax (VAT).— particular case:
Any person whose sales Any person whose sales
or receipts are exempt or receipts are exempt Jeepney for hire
under Section 109(V) under Section 109(BB) 1. Manila and other P 2,400
2of this Code from the of this Code from the cities
payment of value-added payment of value-added 2. Provincial 1,200
tax and who is not a tax and who is not a Public utility bus -
VAT-registered person VAT-registered person
shall pay a tax shall pay a tax
Not exceeding 30 P 3,600
equivalent to three equivalent to three passengers
percent (3%) of his percent (3%) of his Exceeding 30 but not 6,000
gross quarterly sales or gross quarterly sales or exceeding 50
receipts: Provided, That receipts: Provided, That passengers
cooperatives shall be cooperatives, and Exceeding 50 7,200
exempt from the three beginning January 1, passengers
percent (3%) gross 2019, self-employed and
Taxis -
receipts tax herein professionals with total
imposed. annual gross sales 1. Manila and other P 3,600
and/or gross receipts not Cities
exceeding Five hundred 2. Provincial 2,400
thousand pesos Car for hire (with P 3,000
(₱500,000) shall be chauffer)
exempt from the three Car for hire (without 1,800
percent (3%) gross
chauffer)
receipts tax herein
imposed.”

1
2017 GOLDEN NOTES FACULTY OF CIVIL LAW UNIVERSITY OF
SANTO TOMAS MANILA – TAXATION LAW
UNDER THE TRAIN LAW:
2 “(BB) Sale or lease of goods or properties or the
(v) Sale or lease of goods or properties or the performance of
performance of services other than the transactions
services other than the transactions mentioned in the preceding mentioned in the preceding paragraphs, the gross annual
paragraphs, the gross annual sales and/or receipts do not exceed the sales and/or receipts do not exceed the amount of Three
amount of One million five hundred thousand pesos million pesos (₱3,000,000).
(P1,919,500): Provided, That not later January 31, 2009 and every
three years thereafter, the amounts herein stated shall be adjusted to
their present value using the Consumer Price Index, as published by
the NSO.
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.
 Revenue Regulations No. 11-2011
entitled "Revenue Regulations Defining
Gross Receipts for Common Carrier's
Tax for International Carriers pursuant
to Section 118 of the Tax Code
amending Section 10 of Revenue
Regulations No. 15-2011" finally came
up with a formal definition of Gross
Receipts for International Carriers
under Section 118 of the Tax Code as
follows:
"Gross receipts" shall include, but shall not be
limited to, the total amount of money or its
equivalent representing the contract or ticket
prize, excess baggage fees, freight/cargo fees, mail
fees, rental, penalties, deposit applied as
payments, advance payments and other service
charges and fees actually or constructively
received during the taxable quarter from the
passage of persons, excess baggage, 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.
Provided, that ticket revalidated, exchanged
and/or endorsed to another international airline
shall likewise form part of the gross receipts if the
passenger boards a plane in a port or point in the
Philippines.
Provided, further, that for a flight which originates
from the Philippines, but where transshipment of
passenger takes place at any port outside the
Philippines on another airline, only the aliquot
portion of the cost of the ticket corresponding to
the leg flown from the Philippines to the point of
transshipment shall form part of the Gross
Receipts.
 Section 119. Tax on franchises
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 (P10,000.00), 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 not 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.
 Section 120. Overseas Communication
tax
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 service, 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;
(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 (a) On interest, commissions and discounts
organization or any of its agencies based in the from lending activities as well as income from
Philippines enjoying privileges, exemptions and financial leasing, on the basis of remaining
immunities which the Government of the maturities of instruments from which such
Philippines is committed to recognize pursuant to receipts are derived:
an international agreement; and Maturity period is five 5%
years or less
(4) News Services. - Amounts paid for messages Maturity period is 1%
from any newspaper, press association, radio or more than five years
television newspaper, broadcasting agency, or b) On dividends and 0%
newstickers services, to any other newspaper, equity shares and net
press association, radio or television newspaper income of subsidiaries
broadcasting agency, or newsticker service or to a (c) On royalties, 7%
rentals of property,
bona fide correspondent, which messages deal
real or personal,
exclusively with the collection of news items for, or profits, from exchange
the dissemination of news item through, public and all other items
press, radio or television broadcasting or a treated as gross
newsticker service furnishing a general news income under Section
service similar to that of the public press. 32 of this Code
(d) On net trading 7%
gains within the
 Section 121. Tax on banks and financial taxable year on foreign
currency, debt
intermediaries
securities, derivatives,
SEC. 121. Tax on Banks and Non-Bank Financial and other similar
Intermediaries Performing Quasi- Banking financial instruments.
Functions. - There shall be collected a tax on a
gross receipt derived from sources within the Provided, however, That in case the maturity
Philippines by all banks and non-bank financial period referred to in paragraph (a) is shortened
intermediaries in accordance with the following thru pre-termination, then the maturity period
schedule: shall be reckoned to end as of the date of pre-
(a) On interest, commissions and discounts from termination for purposes of classifying the
lending activities as well as income from financial transaction and the correct rate of tax shall be
leasing, on the basis of remaining maturities of applied accordingly.
instruments from which such receipts are derived: Provided, finally, That the generally accepted
accounting principles as may be prescribed by the
Bangko Sentral ng Pilipinas for the bank or
non0bank 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.

 Section 122. Tax on finance companies

(BIR Ruling, 16 August 1990 on credit
card companies as amended by RA
9238)

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
interests, 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 the 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
Maturity period is 1%
more than five years
Provided, however, That in case the maturity
period is shortened thru pre-termination, then the
maturity period shall be reckoned to end as of the
date of pre-termination 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
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 preclude the
Commissioner from imposing the same tax herein
provided on persons performing similar financing
activities.
REVENUE REGULATION 10-2004
SEC. 1. SCOPE. - Pursuant to the provisions of
Section 244 in relation to Section 122 of the
National Internal Revenue Code of 1997 (Tax
Code), these Regulations are hereby
promulgated in order to further implement
Section 4 of Republic Act (R.A.) No. 9238 re-
imposing the gross receipts tax on other non-
bank financial intermediaries, beginning
January 1, 2004, and hereby amending for the
purpose Sec. 4 of Revenue Regulations (Rev. Regs.)
No. 9-2004 by including pawnshops under the
classification of Other Non-Bank Financial
Intermediaries.
SEC. 2. BASES OF QUALIFYING
PAWNSHOPS AS NON-BANK
FINANCIAL INTERMEDIARIES. - Whereas, in
relation to Sec. 2.3 of Rev. Regs No. 9-2004
defining “Non-bank Financial Intermediaries,
the term “pawnshop” as defined under
Presidential Decree No. 114 which authorized its
creation, to be a person or entity engaged in the
business of lending money, all fall within the
classification of Non-bank Financial
Intermediaries and therefore, covered by Sec.
4 of R.A. No. 9238.
This classification is equally supported by
Subsection 4101Q.1 of the BSP Manual of
Regulations for Non-Bank Financial
Intermediaries and reiterated in BSP Circular No.
204-99, classifying pawnshops as one of Non-
bank Financial Intermediaries within the
supervision of the Bangko Sentral ng Pilipinas.
SEC. 3. IMPOSITION OF GROSS RECEIPTS TAX
ON PAWNSHOPS. -
Pursuant to the provisions of Section 4 of R.A.
9238 which restored and amended Section 122 of
Tax Code and thereby re-imposing Gross Receipts
Tax on Other Non- Bank Financial Intermediaries,
the Commissioner is authorized to impose the
same tax on persons performing similar
financing activities particularly on those
falling within the definition of the term “Non-
bank Financial Intermediaries” under Sec. 2.3
of Rev. Regs. No. 9-2004. By virtue thereof, the
Commissioner of Internal Revenue thus, classified
the services rendered by pawnshops as those
activities being performed by Non-bank Financial
Intermediaries, hence, subject to the 5% GRT.
This effectively removed the services rendered
by pawnshops from the VAT system unless
otherwise a similar legislation is enacted to
place it under the VAT system.
 Section 123. Tax on Insurance
premiums, as amended by RA 10001
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%) [87] 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 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 (as defined in
Section 232(2) of Presidential Decree No. 612), in
excess of the amounts necessary to insure the
lives of the variable contract workers.
'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.
 Section 124. Tax on agents of foreign
insurance companies
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
provision 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.
 Section 125. Amusement taxes
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[s] 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;
(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.
 Section 126. Tax on winnings
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.
 Section 127. Percentage tax in IPOs
NIRC TRAIN LAW
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 “(A) Tax on Sale,
or Exchange of Shares Barter or Exchange of
of Stock Listed and Shares of Stock Listed
Traded through the and Traded through
Local Stock the Local Stock
Exchange.- There Exchange.— There
shall be levied, shall be levied,
assessed and collected assessed and collected
on every sale, barter, on every sale, barter,
exchange, or other exchange or other
disposition of shares of disposition of shares of
stock listed and traded stock listed and traded
through the local stock through the local stock
exchange other than exchange other than
the sale by a dealer in the sale by a dealer in
securities, a tax at the securities, a tax at the
rate of one-half of rate of six-tenths of
one percent (1/2 of one percent (6⁄10 of
1%) of the gross 1%) of the gross
selling price or gross selling price or gross
value in money of the value in money of the
shares of stock sold, shares of stock sold,
bartered, exchanged bartered, exchanged
or otherwise disposed or otherwise disposed
which shall be paid by which shall be paid by
the seller or transferor. the seller or transferor.
(B) Tax on Shares of Stock Sold or Exchanged
Through Initial Public Offering. - There shall be
levied, assessed and collected on every sale,
barter, exchange or other disposition through
initial public offering of shares of stock in closely
held corporations, as defined herein, a tax at the
rates provided hereunder based on the gross
selling price or gross value in money of the shares
of stock sold, bartered, exchanged or otherwise
disposed in accordance with the proportion of
shares of stock sold, bartered, exchanged or
otherwise disposed to the total outstanding shares
of stock after the listing in the local stock
exchange:
Up to twenty-five 4%
percent (25%)
Over twenty-five 2%
percent (25%) but
not over thirty-three
and one third
percent (33 1/3%)
Over thirty-three and 1%
one third percent (33
1/3%)
The tax herein imposed shall be paid by the
issuing corporation in primary offering or by the
seller in secondary offering.
For purposes of this Section, the term 'closely held
corporation' means any corporation at least fifty
percent (50%) in value of outstanding capital stock
or at least fifty percent (50%) of the total combined
voting power of all classes of stock entitled to vote
is owned directly or indirectly by or for not more
than twenty (20) individuals.
For purposes of determining whether the
corporation is a closely held corporation, insofar
as such determination is based on stock
ownership, the following rules shall be applied:
(1) Stock Not Owned by Individuals. - Stock
owned directly or indirectly by or for a corporation,
partnership, estate or trust shall be considered as
being owned proportionately by its shareholders,
partners or beneficiaries.
(2) Family and Partnership Ownerships. - An
individual shall be considered as owning the stock
owned, directly or indirectly, by or for his family,
or by or for his partner. For purposes of the
paragraph, the 'family of an individual' includes
only his brothers and sisters (whether by whole or
half-blood), spouse, ancestors and lineal
descendants.
(3) Option. - If any person has an option acquire
stock, such stock shall be considered as owned by
such person. For purposes of this paragraph, an
option to acquire such an option and each one of
a series of options shall be considered as an option
to acquire such stock.
(4) Constructive Ownership as Actual
Ownership. - Stock constructively owned by
reason of the application of paragraph (1) or (3)
hereof shall, for purposes of applying paragraph
(1) or (2), be treated as actually owned by such
person; but stock constructively owned by the
individual by reason of the application of
paragraph (2) hereof shall not be treated as owned
by him for purposes of again applying such
paragraph in order to make another the
constructive owner of such stock.
(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 116 of this Code, the
stock broker who effected the sale subject to the tax shall accrue from
tax imposed herein to collect the tax and remit the the date of
same to the Bureau of Internal Revenue within five cancellation and shall
(5) banking days from the date of collection thereof be paid in accordance
and to submit on Mondays of each week to the with the provisions of
this Section.
secretary of the stock exchange, of which he is a
member, a true and complete return which shall
(2) Person Retiring
contain a declaration of all the transactions from Business. - Any
effected through him during the preceding week person retiring from a
and of taxes collected by him and turned over to business subject to
the Bureau Of Internal Revenue. percentage tax shall
notify the nearest
(2) Return on Public Offerings of Shares of Stock. internal revenue
- In case of primary offering, the corporate issuer officer, file his return
shall file the return and pay the corresponding tax and pay the tax due
within thirty (30) days from the date of listing of thereon within twenty
the shares of stock in the local stock exchange. In (20) days after closing
the case of secondary offering, the provision of his business.
Subsection (C) (1) of this Section shall apply as to
the time and manner of the payment of the tax. (3) Exceptions. - The
Commissioner may, by
rules and regulations,
prescribe:
(D) Common Provisions. - any gain derived from
the sale, barter, exchange or other disposition of (a) The time for filing
shares of stock under this Section shall be exempt the return at intervals
from the tax imposed in Sections 24(C), 27(D)(2), other than the time
28(A)(8)(c), and 28(B)(5)(c) of this Code and from prescribed in the
the regular individual or corporate income tax. Tax preceding paragraphs
paid under this Section shall not be deductible for for a particular class
income tax purposes. or classes of taxpayers
after considering such
factors as volume of
sales, financial
 Section 128. Payment of Percentage condition, adequate
taxes measures of security,
and such other
NIRC TRAIN LAW relevant information
(A) Returns of Gross “SEC. 128. Returns required to be
Sales, Receipts or and Payment of submitted under the
Earnings and Payment Percentage Taxes.— pertinent provisions of
of Tax. - “(A) x x x this Code; and
“(1) x x x
(1) Persons Liable to “(2) Persons Retiring (b) The manner and
Pay Percentage Taxes. from Business.— x x x time of payment of
- Every person subject “(3) Determination of percentage taxes other
to the percentage taxes Correct Sales or than as hereinabove
imposed under this Receipts.— x x x prescribed, including a
Title shall file a “x x x.” scheme of tax
quarterly return of the prepayment.
amount of his gross Note:
sales, receipts or (3)Exceptions under (4) Determination of
earnings and pay the the NIRC were Correct Sales or
tax due thereon within removed under the Receipts. - When it is
twenty-five (25) days Train Law found that a person
after the end of each has failed to issue
taxable quarter: receipts or invoices, or
Provided, That in the when no return is
case of a person whose filed, or when there is
VAT registration is reason to believe that
cancelled and who the books of accounts
becomes liable to the or other records do not
tax imposed in Section correctly reflect the
 declarations made or Presidential Decree (P.D.) No. 1354, these
to be made in a return Regulations are hereby promulgated, in order to,
required to be filed among others, revise the rates of withholding tax
under the provisions of on certain income payments subject to creditable
this Code, the withholding tax, and provide for the time for the
Commissioner, after filing of the various tax returns, and the payment
taking into account
of the taxes due thereon.
the sales, receipts or
other taxable base of XXX
other persons engaged
in similar businesses SECTION 6. Time for Filing of Percentage Tax
under similar Returns and the Payment of Taxes Due
situations or Thereon. – The time for filing of the percentage tax
circumstances, or returns and the payment of the taxes due thereon
after considering other shall be revised in accordance with the rules and
relevant information appropriate amendments to existing regulations,
may prescribe a
as presented below:
minimum amount of
such gross receipts, a. For non-large taxpayers, percentage tax
sales and taxable base returns shall be filed within ten (10) days after
and such amount so the end of each month and the tax thereon
prescribed shall be
shall be paid at the same time the aforesaid
prima facie correct for
return is filed, provided, however, that with
purposes of
determining the respect to non-large taxpayers who availed of
internal revenue tax the electronic filing and payment system
liabilities of such (EFPS), the deadline for electronically filing the
person. percentage tax return and paying the tax due
thereon via the EFPS shall be five (5) days later
(B) Where to File. - than the deadline set above, provided, further,
Except as the that for percentage tax returns required to be filed
Commissioner under Sections 120, 126 and 1273 of the Tax Code
otherwise permits, of 1997, they shall be filed within the periods
every person liable to stated in those sections.
the percentage tax
under this Title may,
at his option, file a
separate return for b. For large taxpayers, Section 4(3.4) of
each branch or place Revenue Regulations No. 1-98 is hereby
of business, or a amended to read as follows:
consolidated return for
all branches or places “Section 4. Filing of Returns and Payment of
of business with the Taxes. –
authorized agent
bank, Revenue District xxx xxx xxx
Officer, Collection
Agent or duly
authorized Treasurer 3. When to File and Pay
of the city or
municipality where 3.4 Other Percentage Taxes
said business or
principal place of Large taxpayers who are presently preparing
business is located, as separate percentage tax returns shall file a
the case may be. consolidated return, and pay the aggregate taxes
due, within ten (10) days after the end of each
month, provided, however, that with respect to
REVENUE REGULATION 06-2001: Large Taxpayers who availed of the EFPS, the
deadline for electronically filing the
SECTION 1. Scope. – Pursuant to Section 244
percentage tax returns and paying the taxes
of the Tax Code of 1997, in relation to Sections
due thereon shall be five (5) days later than the
25(C), 25(D), 25(E), 57, 58, 59, 81, 114(A),
deadline set above, provided, further, that for
128(A)(3) and 200(B) of the same Code and

3
1. Section 120 – Overseas communication tax 3. Section 127 - Stock transaction tax and IPO tax
2. Section 126 – Tax on winnings
percentage tax returns required to be filed under
Sections 120, 126 and 127 of the Tax Code of
1997, they shall be filed within the periods stated
in those sections. The Head Office shall prepare a
schedule (Annex C) of all percentage tax returns of
the branches/units with the following
information:

a. Period covered;

b. Head office and branch/unit names and

addresses; and

c. Kind and amount of percentage tax payable.”

CASES –
1. China Banking Corporation vs. CTA
Topic: [base of 5% GRT on interest income]
2. Republic v. Sunlife Assurance
Facts:
Sun Life is a mutual life insurance company organized and
existing under the laws of Canada. It is registered and
authorized by the Securities and Exchange Commission and
the Insurance Commission to engage in business in the
Philippines as a mutual life insurance... company with
principal office at Paseo de Roxas, Legaspi Village, Makati
City.
Sun Life filed with the [Commissioner of Internal Revenue]
(CIR) its insurance premium tax return for the third quarter
of 1997 and paid the premium tax in the amount
"On October 20, 1997, S
On December 29, 1997, the [Court of Tax Appeals] (CTA)
rendered its decision in Insular Life Assurance Co. Ltd. v.
[CIR], which held that mutual life insurance companies are
purely cooperative companies and are exempt from the
payment of premium tax and DST.
Hence, on August 20, 1999, Sun Life filed with... the CIR an
administrative claim for tax credit of its alleged erroneously
paid premium tax and DST for the aforestated tax periods.
"For failure of the CIR to act upon the administrative claim
for tax credit and with the 2-year period to file a claim for
tax credit or refund dwindling away and about to expire, Sun
Life filed with the CTA a petition for review
In its petition, it prayed... for the issuance of a tax credit
certificate... representing... erroneously paid premium tax for
the third quarter of 1997... and... of DST on policies of
insurance from August 21 to December 18, 1997.
The CTA found in favor of Sun Life.
Seeking reconsideration of the decision of the CTA, the CIR
argued that Sun Life ought to have registered, foremost,
with the Cooperative Development Authority before it could
enjoy the exemptions from premium tax and DST extended
to purely cooperative companies or associations
For its failure to register, it could not avail of the exemptions
prayed for.
"Notwithstanding these arguments, the CTA denied the
CIR's motion for reconsideration.
Ruling of the Court of Appeals
In upholding the CTA, the CA reasoned that respondent was
a purely cooperative corporation duly licensed to engage in
mutual life insurance business in the Philippines.
Thus, respondent was deemed exempt from premium and
documentary stamp taxes, because its affairs are managed...
and conducted by its members with money collected from
among themselves, solely for their own protection, and not
for profit.
Hence, this Petition.
Issues:
Whether Respondent Is a Cooperative
Whether CDA Registration Is Necessary
Ruling:
Having satisfactorily proven to the Court of Tax Appeals, to
the Court of Appeals and to this Court that it is a bona fide
cooperative, respondent is entitled to exemption from the
payment of taxes on life insurance premiums and
documentary stamps. Not being... governed by the
Cooperative Code of the Philippines, it is not required to be
registered with the Cooperative Development Authority in
order to avail itself of the tax exemptions. Significantly,
neither the Tax Code nor the Insurance Code mandates this
administrative... registration.
The Petition has no merit.
The Tax Code defines a cooperative as an association
"conducted by the members thereof with the money
collected from among themselves and solely for their own
protection and not for profit."[8] Without a doubt,
respondent is a cooperative engaged in a... mutual life
insurance business.
First, it is managed by its members. Both the CA and the
CTA found that the management and affairs of respondent
were conducted by its member-policyholders.
Second, it is operated with money collected from its
members. Since respondent is composed entirely of
members who are also its policyholders, all premiums
collected obviously come only from them.
Third, it is licensed for the mutual protection of its members,
not for the profit of anyone.
Under the Tax Code although respondent is a cooperative,
registration with the Cooperative Development Authority
(CDA) is not necessary in order for it to be exempt from the
payment of both percentage taxes on insurance premiums,
under Section 121; and documentary stamp taxes on policies
of insurance or annuities it grants, under Section 199.
3. CIR v. Lhuiller, GR 150947
Topic: Pawnshop is not lending investors
FACTS:
On 1991, the CIR issued Revenue Memorandum Order
(RMO) No. 15-91, which was clarified by RMO No. 43-
91 imposing a 5% lending investors tax on pawnshops. It
held that the principal activity of pawnshops is lending money
at interest and incidentally accepting personal property as
security for the loan. Since pawnshops are considered as
lending investors effective, they also become subject to
documentary stamp taxes.

On 1997, the Bureau of Internal Revenue (BIR) issued an
Assessment Notice against Lhuillier demanding payment of
deficiency percentage.
Lhuillier filed an administrative protest with the Office of the
Revenue Regional Director contending that neither the Tax
Code nor the VAT Law expressly imposes 5% percentage tax
on the gross income of pawnshops; that pawnshops are
different from lending investors, which are subject to the 5%
percentage tax under the specific provision of the Tax Code;
that RMO No. 15-91 is not implementing any provision of the
Internal Revenue laws but is a new and additional tax measure
on pawnshops, which only Congress could enact, and that it
impliedly amends the Tax Code, and that it is a class
legislation as it singles out pawnshops.
On 1998, the BIR issued Warrant of Distraint and/or Levy
against Lhuilliers property for the enforcement and payment
of the assessed percentage tax.
When Lhuiller's protest was not acted upon, they elevated it
to the CIR which was also not acted upon. Lhuiller filed a
Notice and Memo on Appeal with the CTA.
On 2000, the CTA held the the RMOs were void and that the
Assessment Notice should be cancelled.
The CIR filed a motion for review with the CA which only
affirmed the CTA's decision thus this case in bar.
ISSUE: Whether pawnshops included in the term lending
investors for the purpose of imposing the 5% percentage tax
under the NIRC.
RULING:
No.
The held that even though the RMOs No were issued in
accordance with the power of the CIR, they cannot issue
administrative rulings or circulars not consistent with the law
sought to be applied. It should remain consistent with the law
they intend to carry out. Only Congress can repeal or amend
the law.
In the NIRC, the term lending investor includes all persons
who make a practice of lending money for themselves or
others at interest. A pawnshop, on the other hand, is defined
under Section 3 of P.D. No. 114 as a person or entity engaged
in the business of lending money on personal property
delivered as security for loans.
While it is true that pawnshops are engaged in the business of
lending money, they are not considered lending investors for
the purpose of imposing the 5% percentage taxes citing the
following reasons:
1. Pawnshops and lending investors were subjected to
different tax treatments as per the NIRC.
2. Congress never intended pawnshops to be treated in the
same way as lending investors.
3. Section 116 of the NIRC of 1977, as amended by E.O. No.
273, subjects to percentage tax dealers in securities and
lending investors only. There is no mention of pawnshops.
4. The BIR had ruled several times prior to the issuance of the
RMOs that pawnshops were not subject to the 5% percentage
tax imposed by Section 116 of the NIRC of 1977. As Section
116 of the NIRC of 1977 was practically lifted from Section
175 of the NIRC of 1986, and there being no change in the
law, the interpretation thereof should not have been altered.
4. First Planters Pawnshop v. CIR, GR No. 174134
FACTS: In a Pre-assessment Notice, petitioner was
informed by the BIR that it has an existing tax deficiency on
its VAT and Documentary Stamp Tax (DST) liabilities for
the year 2000. Petitioner protested the assessment for lack of
legal and factual bases.
Petitioner subsequently received a Formal Assessment
Notice, directing payment of VAT deficiency and DST
deficiency, inclusive of surcharge and interest. Petitioner
filed a protest, which was denied by the Acting Regional
Director.
Petitioner then filed a petition for review with the CTA,
which upheld the deficiency assessment. Petitioner filed an
MR which was denied.
Petitioner appealed to the CTA En Banc which denied the
Petition for Review. Petitioner sought reconsideration but
this was denied by the CTA.. Hence, the present petition for
review under Rule 45 of the ROC.
The core of petitioner’s argument is that it is not a lending
investor within the purview of Section 108(A) of the NIRC,
as amended, and therefore not subject to VAT. Petitioner
also contends that a pawn ticket is not subject to DST
because it is not proof of the pledge transaction, and even
assuming that it is so, still, it is not subject to tax since a
DST is levied on the document issued and not on the
transaction.
ISSUE: is petitioner in this case liable for:
1. VAT
2. DST
HELD:
1. NO
The determination of petitioner’s tax liability depends on the
tax treatment of a pawnshop business. It was the CTA’s
view that the services rendered by pawnshops fall under the
general definition of “sale or exchange of services” under
Section 108(A) of the Tax Code of 1997.
The Court finds that pawnshops should have been treated
as non-bank financial intermediaries from the very
beginning, subject to the appropriate taxes provided by law.
At the time of the disputed assessment, that is, for the year
2000, pawnshops were not subject to 10% VAT under the
general provision on “sale or exchange of services” as
defined under Section 108(A) of the Tax Code of 1997.
Instead, due to the specific nature of its business, pawnshops
were then subject to 10% VAT under the category of non-
bank financial intermediaries, as provided in the same
Section 108(A), which reads:
SEC. 108. Value-added Tax on Sale of Services and Use or
Lease of Properties.–
(A) xx
The phrase “sale or exchange of services” means the
performance of all kinds or services in the Philippines for
others for a fee, remuneration or consideration, including x x
x services of banks, non-bank financial intermediaries
and finance companies; and non-life insurance companies
(except their crop insurances), including surety, fidelity,
indemnity and bonding companies..xx
Coming now to the issue at hand – Since petitioner is a non-
bank financial intermediary, it is subject to 10% VAT for
the tax years 1996 to 2002; however, with the levy,
assessment and collection of VAT from non-bank
financial intermediaries being specifically deferred by
law, then petitioner is not liable for VAT during these
tax years. But with the full implementation of the VAT
system on non-bank financial intermediaries starting January
1, 2003, petitioner is liable for 10% VAT for said tax
year. And beginning 2004 up to the present, by virtue of
R.A. No. 9238, petitioner is no longer liable for VAT but it
is subject to percentage tax on gross receipts from 0% to 5
%, as the case may be.

1. YES
Applying jurisprudence, it was ruled that the subject of DST
is not limited to the document alone. Pledge, which is an
exercise of a privilege to transfer obligations, rights or
properties incident thereto, is also subject to DST, thus –
xx.. the subject of a DST is not limited to the document
embodying the enumerated transactions. A DST is an excise
tax on the exercise of a right or privilege to transfer
obligations, rights or properties incident thereto… xx
Pledge is among the privileges, the exercise of which is
subject to DST. A pledge may be defined as an accessory,
real and unilateral contract by virtue of which the debtor or a
third person delivers to the creditor or to a third person
movable property as security for the performance of the
principal obligation, upon the fulfillment of which the thing
pledged, with all its accessions and accessories, shall be
returned to the debtor or to the third person.

True, the law does not consider said ticket as an evidence of

security or indebtedness. However, for purposes of taxation,
the same pawn ticket is proof of an exercise of a taxable
privilege of concluding a contract of pledge. At any rate, it
is not said ticket that creates the pawnshop’s obligation to
pay DST but the exercise of the privilege to enter into a
contract of pledge. There is therefore no basis in petitioner’s
assertion that a DST is literally a tax on a document and that
no tax may be imposed on a pawn ticket.

Also, Section 195 of the NIRC unqualifiedly subjects all

pledges to DST. It states that “[o]n every x x x pledge x x x
there shall be collected a documentary stamp tax x x x.” It is
clear, categorical, and needs no further interpretation or
construction.

In the instant case, there is no law specifically and expressly

exempting pledges entered into by pawnshops from the
payment of DST. Section 199 of the NIRC enumerated
certain documents which are not subject to stamp tax; but a
pawnshop ticket is not one of them. Hence, petitioner’s
nebulous claim that it is not subject to DST is without merit.