PERCENTAGE TAXES

What is Percentage Tax?

Percentage tax is a business tax imposed on
persons or entities who sell or lease goods,
properties or services in the course of trade or
business whose gross annual sales and/or
receipts do not exceed P1,919,500 and who are
not VAT-registered.
 What are Gross Receipts?
They refer to total money or its
equivalent actually or constructively
received including amount charged to
materials for services rendered and
advance payments.
Who pays the Tax?

The seller or transferor. [Sec.

127 (A) NIRC, as amended by
R.A. No. 8424]
What businesses are subject to OPT?
The ff. businesses are subject to OPT:
Businesses whose Gross Annual Sales of not more than P1,919,500;
Listed under Sections 116-127 of the NIRC:
Carriers and keepers of garages;
Franchise
Overseas Communications;
Banks/Non-banks financial intermediaries;
Life insurance companies;
Foreign insurance companies agents;
Amusement places;
Tax on winnings; and
Sale of Stocks thru LSE.
 Who are required to file Percentage Tax Returns?
Any person who is not a VAT-registered person (persons exempt
from VAT under Sec. 109z of the Tax Code)
Domestic carriers and keepers of garages, except owners of
bancas and owners of animal drawn two- wheeled vehicle
Operators of international air and shipping carriers doing business
in the Philippines
Franchise grantees of electric, gas or water utilities
Franchise grantees of radio and/or television broadcasting
companies whose gross annual receipts for the preceding year do
not exceed Ten Million Pesos (P 10,000,000.00) and did not opt to
register as VAT taxpayers
 Banks and non-bank financial intermediaries and finance
companies
Life insurance premiums
Agents of foreign insurance companies
Proprietor, lessee, or operator of cockpits, cabarets, night or day
clubs, boxing exhibitions, professional basketball games, jai-alai
and race tracks
Every stock broker who effected a sale, barter, exchange or other
disposition of shares of stock listed and traded through the Local
Stock Exchange (LSE) other than the sale by a dealer in securities
Corporate issuer / stock broker, whether domestic of foreign,
engaged in the sale, barter, exchange or other disposition through
Initial Public Offering (IPO) seller in secondary public offering of
shares of stock in closely held corporations
 Operators of communication equipment sending overseas dispatch, messages,
or conversations from the Philippines, except on services involving the following:
Government of the Philippines - for messages transmitted by the
Government of the Republic of the Philippines or any of its political
subdivisions and instrumentalities
Diplomatic services - for messages transmitted by any embassy and consular
offices of a foreign government
International organizations - for messages transmitted by a public
international organization or any of its agencies based in the Philippines
enjoying privileges, exemptions and immunities which the government of the
Philippine is committed to recognize pursuant to an international agreement
News Services - for messages from any newspaper, press association, radio or
television newspaper broadcasting agency, or newsticker services to any
other newspaper, press association, radio or television, newspaper,
broadcasting agency or newsticker services, or to bonafide correspondents,
which messages deal exclusively with the collection of news items for, or the
dissemination of news items through public press, radio or television
broadcasting or a newsticker service furnishing a general news service similar
to that of the public press
 What are common carriers?
They refer to one who is engaged in
the business of transporting
passengers or cargoes by land, water
or air.
 What is common carriers tax?
It is percentage tax on common carriers.

EXEMPTION:
Owners of bancas and animal-drawn two
wheeled vehicles are exempt from OPT.
 Minimum amount of Domestic
Common Carrier:
Areas covered by Operation
Cities Provinces
Jeepney for hire P2,400 P1,200
Public Utility Bus:
Not exceeding 30 passengers 3,600 3,600
Exceeding 30 but not more 50 6,000 6,000
Exceeding 50 7,200 7,200
Taxis 3,600 1,200
Car for hire:
With chauffeur 3,000 3,000
Without chaffeur 1,800 1,800
 Computation of Percentage Tax:
3% common carrier tax transporting
passengers by land.
0% VAT transporting passengers by air or sea
from the Philippines;
12% VAT transporting passengers by air/sea
or transporting goods/cargoes by land/air/sea.
 What is a Franchise?
Franchise is a law that authorizes a person,
whether natural or juridical, to do business
involving public utility.
What is the other option for
Radio/TV Franchisees?
The company may opt to
register as VAT taxpayer.
Provided, once the option is
exercised, it shall not be
st
revoked. (1 par., Sec. 119, NIRC
as amended by R.A. No. 8424)
What is Amusement Tax?

A percentage tax collected from

the proprietor, lessee or
operator of duly designated
places or activities fro
pleasurable diversion or
entertainment.
What are places and activities
subject to Amusement Tax?
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. (Sec.
125, NIRC as amended by R.A. No.
8424)
Conditions for Exemption of Boxing
Exhibitions:
Boxing exhibition wherein world or
oriental championship is at stake;
At least one of the contenders is a
Filipino citizen;
Promoted by Filipino citizens or by a
corporation at least 60% Filipino owned
 Tax Rates:
Coverage Basis Rate
Persons exempt from VAT under Sec. 116
Domestic carriers and keepers of garages 3%
International air/shipping carriers
Franchise Grantees: Gross Sales/Receipts
Electric , gas and water utilities 2%
Radio and television companies (annual gross receipts do
3%
not exceed P10 million and did not register as VAT taxpayer)
Proprietors, lessee or operator of the following:
Boxing exhibitions 10%
Professional basketball games 15%
Gross Receipts
Cockpits
18%
Cabarets, Night or Day Clubs
Jai-alai and race track (operators shall withheld tax on
30%
winnings)
 Coverage Basis Rate
On royalties, rentals of properties, real or personal,
Banks and non-bank
profits from exchange and all other items treated as
financing intermediaries gross income under Sec. 32 of the Code
On interest, discounts and other items of gross 5%
income paid to finance companies and other
Finance Companies
financial intermediaries not performing quasi-
banking functions
Interest, commissions and discounts paid from their
loan transactions from finance co. as well as income
from financial leasing shall be taxed based on the
remaining maturities of instruments:
Short term maturity (less 2 yrs.) 5%
Medium term (over 2 yrs.; not over 4 yrs.) 3%
Long term maturity:
o Over 4 years but not over 7 years 1%
o Over 7 years
0%
On dividends
 Coverage Basis Rate
Every stock broker who dispose shares of stock
listed and traded through the LSE other than dealer 1/2 of
in securities 1%
Gross selling price or gross value of
Corporate issuer/stock broker, whether domestic of shares of stocks sold, bartered,
foreign, engaged in disposition thru IPO/secondary exchanged or otherwise disposed
public offering of shares of stock in closely held
corporations
Up to 25% 4%

Over 25% but not over 33 1/3% 2%

Over 33 1/3% 1%
Agents of foreign insurance companies: (except
reinsurance premium)
Insurance agents authorized under the
Insurance Code to procure policies of
10%
insurance for companies not authorized to
transact business in the Philippines.
Total premium collected
Owners of property obtaining insurance
directly with foreign insurance companies
5%
Life Insurance Companies (except purely
cooperative companies or associations)
 Coverage Basis Rate
Winnings:
Winnings from double, forecast/quinella and
4%
trifecta bets in horse races Gross receipts
Dividends or horse race winnings 10%
 Table of Requirements:
Deadline
Return Form
Manual eFPS
Monthly Percentage Tax BIR Form 2551 M Not later than Group A - 25 days:
20th day: Group B - 24 days:
Group C - 23 days:
Group D - 22 days:
Group E - 21 days:
following the end following the end
of each month of the month
Quarterly Percentage Tax BIR Form 2551 Q Not later than Not later than 20th
20th day: day:
following the end following the end
of each quarter of the quarter
Percentage Tax For BIR Form 2552 For tax on sale of stocks listed /traded thru LSE
within 5 banking days from the date of collection
Transactions Involving For tax on stocks sold or exchanged thru IPO -
Shares of Stocks Listed within 30 days from the date of listing
and Traded Through the For tax on stocks sold or exchanged thru secondary
LSE or Thru IPO and/or offering - within five (5) banking days from the
date of collection
Secondary Offering
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