Session 13: Excise Tax,

Documentary Stamp
Tax and Local Tax
October 14, 2018
Excise Tax
Taxation
 Definition
Is another type of indirect tax imposed on the
producer but passed on to the consumer.
Is imposed only on limited and specific types of
goods.
Generally imposed on HARMFUL or NON-ESSENTIAL
GOODS manufactured or produced in the Philippines
for domestic sale, consumption or for any other
disposition including imported goods.
This tax is imposed under NIRC in addition to the
VAT.
 Purposes
To curtail consumption of certain commodities which are
considered harmful to the individual as well as the community as a
whole. The excessive excise tax on cigarettes is intended to
discourage the consumption of health-harmful products.
To protect domestic industries from competition caused by similar
imported products. The excise tax of 20% based on gross selling price
on importation of jewelry is intended to provide greater competitive
price edge to locally produced jewelry.
To distribute the tax burden in proportion to benefit derived from a
particular government service. Example: P5.35 per liter excise tax on
leaded premium gasoline is a burden to those who are considered
affluent to have a car. Car owners are enjoying the most benefit for
the use of road constructed through tax money.
To raise revenue
 Classifications
SPECIFIC – an excise tax based on weight or volume
capacity or any other physical unit of
measurement.
• Example: P1.00 excise tax per piece of cigar
produced.
AD-VALOREM – an excise tax based on selling price
or other specified value of the
goods.
• Example: Twenty percent (20%) of the wholesale
price imposed on importation of
non-essential goods.
 Increasing fuel excise tax
• TRAIN proposes to increase the excise of petroleum
products, which has not been adjusted since 1997.
• An excise tax is an indirect tax on selected goods to
discourage too much consumption of scarce resources and
limit the bad effects of some products, such as pollution
and congestion.
• It is a progressive form of taxation since those who
consume more will pay more.
• The government proposes to stagger the increase in the to
P3 immediately after implementation, P2 the year after,
and P1 in the third year.
• Afterwards, the excise shall be increased annually based
on the inflation rate. In the event that Dubai crude oil
exceeds $100 per barrel, the increase in the excise will be
temporarily frozen so as to not unduly affect the public.
Increasing fuel excise tax
Increasing Automobile Excise
Tax
• TRAIN simplifies the excise tax on automobiles,
but lower-priced cars continue to be taxed at
lower rates while more expensive cars are
taxed at higher rates.
• When we consider the TRAIN as a package, the
increase in take home pay from the personal
income tax reduction will be more than enough to
offset the increase in prices resulting from
adjustments in excise taxes.
• For a typical buyer, the additional take home pay
from the PIT reform will more than fully offset
the increase in amortization.
Increasing Automobile Excise
Tax
 Introducing a Sugar-Sweetened
Beverages (SSB) Excise Tax
Why impose a tax on SSBs?
● Most of the sugar-sweetened beverage, with some
notable exceptions provide unnecessary or empty
calories with little or no nutrition. SSBs are not a
substitute for healthy foods such as fruits and rice.
● SSBs are relatively affordable especially to children
and the poor who are the most vulnerable to its
negative effects on health.
● SSB products are easily accessible and can be found
in almost any store, unlike other sweetened products.
Most often, the poor and the children are not aware of
their consequences.
The SSB excise tax will help
promote a healthier
Philippines.
 Invasive Cosmetic Procedures
New Section 150-A

There shall be levied, assessed, and collect a tax

equivalent to five percent (5%) based on the gross
receipts derived from the performance of services, net
of excise tax and value-added tax, on invasive cosmetic
procedures, surgeries, and body enhancements
directed solely towards improving, altering, or
enhancing the patient’s appearance and do not
meaning fully promote the proper function of the body
or prevent or treat illness or disease:
 Invasive Cosmetic Procedures
New Section 150-A

Provided, That this tax shall not apply to procedures

necessary to ameliorate a deformity arising from, or
directly related to, a congenital or developmental
defect or abnormality, a personal injury resulting
from an accident or trauma, or disfiguring disease,
tumor, virus or infection: Provided, further, That
cases or treatments covered by the National Health
Insurance Program shall not be subject to this tax.”
Documentary Stamp
Tax
Taxation
 Concept and Nature
• Documentary stamp tax is imposed on certain
transactions supported by documents.
• Documentary stamp tax is one form of an
excise tax that covers certain type of
transactions effected in the Philippines
• Documentary stamp tax is usually affixed on
the face of the documents to serve as an
evidence of the transactions subjected to tax.
• The transactions and not the document is the
one being taxed.
 Persons Liable to Pay
Documentary Stamp Tax
• Person making, signing, issuing, accepting or
transferring the documents.
• Whenever one party to the taxable document
is exempted from tax, the other party who is
not exempted shall be liable to pay the
documentary stamp tax.
 NIRC
Section 174
Original Issue of Shares of
Stock
₱ 1.00/₱ 200.00
Section 175
Sales, Agreements to Sell,
Memoranda of Sales,
Deliveries or Transfer of
Shares or Certificates of
Stock with par value
₱ 0.75/₱ 200.00
TRAIN
Section 174
Original Issue of Shares of
Stock
₱2.00/₱ 200.00 (100%
Increase)
Section 175
Sales, Agreements to Sell,
Memoranda of Sales,
Deliveries or Transfer of
Shares or Certificates of
Stock with par value
₱ 1.50/₱ 200.00 (100%
Increase)
 NIRC
Section 175
Sales, Agreements to Sell,
Memoranda of Sales,
Deliveries or Transfer of
Shares or Certificates of Stock
without par value
25% of DST paid on original
issue
Section 177
Certificates of Profits or
Interest in Property or
Accumulations
₱ 0.50/₱ 200.00
TRAIN
Section 175
Sales, Agreements to Sell,
Memoranda of Sales, Deliveries
or Transfer of Shares or
Certificates of Stock without
par value
50% of DST paid on original
issue (100%)
Section 177
Certificates of Profits or
Interest in Property or
Accumulations
₱ 1.00/₱ 200.00 (100%)
 NIRC TRAIN

Section 178 Section 178

Bank Checks, Drafts, Bank Checks, Drafts,
Certificates of Deposit Certificates of Deposit not
not Bearing Interest, and Bearing Interest, and
Other Instruments Other Instruments
₱ 1.50/piece of check ₱ 3.00/piece of check
(100%)
Section 179
All Debt Instruments Section 179
₱ 1.00/₱ 200.00 of FV or All Debt Instruments
a fraction of 365 days for ₱ 1.50/₱ 200.00 of FV or
instruments with term of a fraction of 365 days for
less than 1 year instruments with term of
less than 1 year (50%)
 NIRC TRAIN

Section 180 Section 180

All Bills of Exchange All Bills of Exchange
(between points within the (between points within the
Philippines) or Drafts Philippines) or Drafts

₱ 0.30/₱200.00 ₱ 0.60/₱200.00 (100%)

Section 181 Section 181

Acceptance of Bills of Acceptance of Bills of
Exchange or Order Drawn in Exchange or Order Drawn in
a Foreign Country but a Foreign Country but
Payable in the Philippines Payable in the Philippines
₱ 0.30/₱200.00 ₱ 0.60/₱200.00 (100%)
 NIRC TRAIN

Section 182 Section 182

Foreign Bills of Exchange Foreign Bills of Exchange
and Letters of Credit and Letters of Credit
₱ 0.30/₱200.00 ₱ 0.60/₱200.00

Section 183 Section 183

Life Insurance Policies Life Insurance Policies

Not Over ₱ 100K = Exempt Not Over ₱ 100K =

Exempt
Over ₱ 100K but not over ₱
300K = ₱ 10.00 Over ₱ 100K but not over
₱ 300K = ₱ 20.00 (100%)
 NIRC TRAIN
Section 183
Section 183
Life Insurance Policies (100%
Life Insurance Policies increase)
Over ₱ 300K but not over ₱
Over ₱ 300K but not over ₱ 500K – ₱ 50.00
500K – ₱ 25.00

Over ₱ 500K but not over ₱ Over ₱ 500K but not over ₱
750K – ₱ 50.00 750K – ₱ 100.00

Over ₱ 750K but not over ₱ Over ₱ 750K but not over ₱
1M – ₱ 75.00 1M – ₱ 150.00
 NIRC TRAIN
Section 183 Section 183
Life Insurance Policies Life Insurance Policies
Over ₱ 1M - ₱ 100.00 Over ₱ 1M - ₱ 200.00
(100%)

Section 186
Section 186
Policies of Annuities
Policies of Annuities
₱ 0.50/₱200.00
₱ 1.00/₱200.00 (100%)
 NIRC TRAIN

Section 186 Section 186

Pre-Need Plans Pre-Need Plans
₱ 0.20/₱200.00 ₱ 0.40/₱200.00 (100%)

Section 188 Section 188

Certificates Issued Certificates Issued
₱ 15.00/Certificate ₱ 30.00/Certificate (100%)
 NIRC TRAIN

Section 189 Section 189

Warehouse Receipts
Above ₱ 200.00 = ₱15.00
Section 190
Jai-Alai, Horse Race, Tickets,
Lotto or Other Authorized
Number Games
₱ 1.00 and below =₱ 0.10
Above ₱ 1.00 =
₱ 0.10/₱ 1.00
Warehouse Receipts
Above ₱ 200.00 = ₱30.00
(100%)
Section 190
Jai-Alai, Horse Race, Tickets,
Lotto or Other Authorized
Number Games
₱ 1.00 and below =
₱ 0.20 (100%)
Above ₱ 1.00 =
₱ 0.20/₱ 1.00 (100%)
 NIRC TRAIN

Section 191 Section 191

Bills of Lading or Receipts
Over ₱ 100.00 but not
over ₱ 1K = ₱1.00
Over ₱ 1K = ₱10.00
Section 192
Proxies for Voting at any
Election
₱ 15.00/proxy vote
Bills of Lading or Receipts
(100%)
Over ₱ 100.00 but not
over ₱ 1K = ₱2.00
Over ₱ 1K = ₱ 20.00
Section 192
Proxies for Voting at any
Election
₱ 30.00/proxy vote
(100%)
 NIRC TRAIN

Section 193 Section 193

Powers of Attorney Powers of Attorney
₱ 5.00/issued power of ₱ 10.00/issued power of
attorney attorney (100%)

Section 194 Section 194

Leases and Other Hiring Leases and Other Hiring
Agreements Agreements
First ₱ 2K = ₱ 3.00 First ₱ 2K = ₱ 6.00 (100%)

Over ₱ 2K = Over ₱ 2K =
₱ 1.00/₱ 1K ₱ 2.00/₱ 1K (100%)
 NIRC
Section 195
Mortgages, Pledges and
Deeds of Trust
First ₱ 5K = ₱ 20.00
Over ₱ 5K = ₱ 10.00/₱ 5K
Section 197
Charter Parties and Similar
Instruments if gross tonnage
of ship, vessel or steamer is
1,000 tons and below
First 6 months =
₱ 500.00 + ₱ 50.00 for each
month or fractions of a
month in excess of 6
months
TRAIN
Section 195 (100%)
Mortgages, Pledges and
Deeds of Trust
First ₱ 5K = ₱ 40.00
Over ₱ 5K = ₱ 20.00/₱ 5K
Section 197 (100%)
Charter Parties and Similar
Instruments if gross tonnage
of ship, vessel or steamer is
1,000 tons and below
First 6 months =
₱ 1K + ₱ 100.00 for each
month or fractions of a
month in excess of 6 months
 NIRC TRAIN

Section 197 Section 197 (100%)

Charter Parties and Charter Parties and
Similar Instruments if Similar Instruments if
gross tonnage of ship, gross tonnage of ship,
vessel or steamer is 1,001 vessel or steamer is 1,001
tons to 10,000 tons tons to 10,000 tons

First 6 months = First 6 months =

₱ 1K + ₱ 100.00 for each ₱ 2K + ₱ 200.00 for each
month or fractions of a month or fractions of a
month in excess of 6 month in excess of 6
months months
 NIRC TRAIN

Section 197 Section 197

Charter Parties and Charter Parties and
Similar Instruments if Similar Instruments if
gross tonnage of ship, gross tonnage of ship,
vessel or steamer is more vessel or steamer is more
than 10,000 tons than 10,000 tons

First 6 months = First 6 months = (100%)

₱ 1.5K + ₱ 150.00 for ₱ 3K + ₱ 300.00 for each

each month or fractions month or fractions of a
of a month in excess of 6 month in excess of 6
months months
 NIRC TRAIN

Section 196 Section 196

Deeds of Sale, Conveyances Deeds of Sale, Conveyances
and Donations of Real and Donations of Real
Property Property

No amount On first ₱ 1K = ₱15.00

In excess of ₱ 1K or fractional
part thereof = ₱ 15.00/₱ 1K

Transfers exempt from donor’s

tax under Section 101 (a) and
(b) of the Tax Code shall be
exempt from DST
 Exercises
• Band Company is in need of P50,000,000 to
finance the construction of its new processing
plant. The board of directors has decided to
issue bonds to partly finance the completion
of the expansion project. During the current
taxable year, the company has issued 2,000
bonds with a face value of P10,000 per bond
certificate for P23,000,000. Determine the
documentary stamp tax.
 Exercises
• Bright World Company was authorized to issue
2,000,000 shares of common stock, having a
par value of P10. During the current taxable
year, the company issued 800,000 shares for a
total consideration of P9,500,000. Determine
the documentary stamp tax liability.
 Exercises
• Mr. Arthur Tindog is a holder of 2,500 shares
of DDD Company, a publicly listed company in
the Philippine Stock Exchange. He purchased
the stocks six months ago for a total
consideration of P325,000. The stock has a par
value of P100. During the current month, Mr.
Tindog sold all the stocks for P180 per share in
the local stock exchange. Determine the
documentary stamp tax liability.
 Exercises
• Midsayap Commercial Premier Bank issued 50
pieces of checkbooks each of which contains
100 sequentially numbered checks to its prime
clients. The bank spent P150 for the printing
of each checkbook. Determine the
documentary stamp tax.
 Exercises
• Mr. Mario Declaro, a farmer residing in the
locality of Midsayap, availed himself of a loan
from Triumph Financing Company for
P300,000. Mr. Declaro executed a promissory
note to cover the loan agreement for
P300,000 in favor of the financing company.
Determine the documentary stamp tax
liability.
 Exercises
• Mr. Hou Tiel constructed a 5-storey hotel
located at the center of the metropolitan area
of Midsayap at a total cost of P30.0 million.
He covered the property with fire insurance
policy of P35.0 million with Golden Insurance
Company and paid an annual premium of
P800,000. Determine the documentary stamp
tax.
 Exercises
• Mr. Phong Kho is the owner of a shipyard near
the vicinity of Pier 8 of Midsayap Port. The
shipyard is open to customers who receive and
send cargoes for shipment. For the end of the
taxable quarter, Mr. Kho has issued 15
booklets of warehouse receipts containing 100
tickets per booklet for a total revenue of
P87,500. Of the total number of receipts
issued, 10 receipts were issued for cargoes
with a value of P100. Determine the
documentary stamp tax.
 Exercises
• Mr. Shuga Roll is the proprietor of the horse
race track in Midsayap. When the quarter
ended, the business entity had sold 450
tickets with various face amounts per ticket.
The lowest cost per ticket is P10 and the
highest is P200. The total amount collected
from the sales of horse race tickets was
P67,500. Determine the documentary stamp
tax liability.
Local Tax: Real
Property Tax
Taxation
 Principles
Real property shall be appraised at its current
and fair market value.
Real property shall be classified for assessment
purposes on the basis of its actual use.
Real property shall be assessed on the basis of a
uniform classification within each local
government unit.
The appraisal, assessment, levy and collection of
real property tax shall not be let to any private
person
The appraisal and assessment of real property
shall be equitable.
 Rates of Levy
• In the case of a province, at the rate not
exceeding one percent (1%) of the assessed
value of the real property
• In the case of a city or a municipality within
the Metropoliatn Manila Area, at the rate not
exceeding two percent (2%) of the assessed
value of real property.
 Additional Tax
• Additional Levy on Real Property for the
Special Education Fund
• Annual tax of one percent (1%) on the assessed
value of real property which shall be in addition to
the basic real property tax
• Additional Ad Valorem Tax on Idle Lands
• Annual tax on idle lands at the rate not exceeding
five percent (5%) of the assessed value of the
property which shall be in addition to the basic
real property tax.
 Payment of Real Property
Taxes in Installments
• 1st Quarter – on or before March 31
• 2nd Quarter - on or before June 30
• 3rd Quarter – on or before September 30
• 4th Quarter – on or before December 31

Note: Payments of real property taxes shall first

be applied to prior years delinquencies,
interests and penalties, if any, and only after
said delinquencies are settled may tax
payments be credited for the current period.
 Tax Discount for Advanced
Prompt Payment and Interest
on Unpaid Real Property Tax
• Tax Discount for Advanced Prompt Payment
• Discount not exceeding twenty percent (20%) of
the annual tax due.
• Interest on Unpaid Real Property Tax
• Interest at the rate of two percent (2%) per
month on the unpaid amount or a fraction thereof,
until the delinquent tax shall have been fully paid.
• In no case shall the total interest on the unpaid
tax or portion thereof exceed thirty-six (36)
months.
 Review Check:
• The head priest of the religious sect Tres
Personas Solo Dios, as the corporation sole,
rented out a 5,000 sq. m. lot registered in its
name for use as school site of a school
organized for profit. The sect used the rentals
for the support and upkeep of its priests. Is
the rented lot taxable or not? Why?
 Review Check
• Lualhati Educational Foundation, Inc., a stock
educational institution organized for profit,
decided to lease for commercial use a 1,500
sq. m. portion of its school. The school
actually, directly, and exclusively used the
rents for the maintenance of its school
buildings, including payment of janitorial
services. Is the leased portion subject to real
property tax?
 Local Tax:
Professional Tax
Taxation
 Professional Tax
• Imposed on each person engaged in the
exercise or practice of his profession requiring
government examination at an amount of
three hundred pesos (P300.00)
• Payable annually, on or before the thirty-first
(31st) day of January
• Any person subject to the professional tax
shall write in deeds, receipts, prescriptions,
reports, books of account, plans and designs,
surveys and maps, as the case may be, the
number of the official receipt issued to him.
 Local Tax:
Community Tax
Taxation
 Rates
• Individuals
• Basic Community Tax – P5.00
• Additional Tax – For every P1,000 of income -
P1.00. However, shall in no case exceed P5,000.
• Corporations
• Basic Community Tax – P500.00
• Additional Tax – For every P5,000 worth of real
property or gross receipts/earnings derived from
business – P2.00. However, shall in no case exceed
P10,000.
 Exemptions
• Diplomatic and consular representatives
• Transient visitors when their stay in the
Philippines does not exceed three (3) months.
Collection of Taxes, Fees and
Charges
• Accrued on the first day of January of each
year.
• Payable within the first twenty (20) days of
January.