BL04 - Chapter 9 Module

CHAPTER 9
OTHER PERCENTAGE TAXES
Objectives:
Describe the meaning of other percentage taxes (OPT)
State the amusement tax, tax on winnings and initial public offering
Other Percentage Taxes

Percentage tax is a tax imposed on sale, barter, exchange of goods, or
sale of services based upon gross sales, value in money of receipts derived by
the manufacturer, producer, or seller measured by certain percentage of the
gross selling price or receipts. The other percentage taxes are provided in the
Tax Code under sections 116 to 127, as amended.
1
The Other Percentage Taxes (OPT) of the tax code are as follows:
Tax rate and basis:
a. 3% Gross sales if sale is goods
b. 3% Gross receipts if sale is services
Taxpayers exempt from 3% Percentage Tax (TRAIN Law)

1. Cooperatives
2. Self-employed individuals and professionals availing of the 8% tax on gross
sales and/or receipts and other non-operating income under Sections 24(A)
(2)(b) and 24(A)(2)(c)(2)(a) of the Tax Code, as amended.
Tax Rate and Basis: 3% of Gross Receipts
2
Common carrier tax (CCT) under this provision pertains to percentage
taxes of domestic common carriers by land for the transport of passengers
only. However, CCT shall not apply to:
1. Owners of bancas; and
2. Animal drawn two-wheeled vehicles.
Banks or Banking Institutions (RR 8-2008)

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. It
refers to persons and entities engaged in the lending of funds obtained from
the public through the receipt of deposits or the sale of bonds, securities, or
obligations of any kind, an all entities regularly conducting such operations.
Non-bank Financial Intermediary (RR 8-2008)

Means a financial intermediary, as defined in Sec 2 (D) © 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.
Financial Intermediaries (RR 8-2008)

Persons or entities whose principal functions include the lending,
investing or placement of funds or evidences of indebtedness or equity
deposited with them, acquired by them, or otherwise coursed through them,
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either for their own account of for the account of others.
Money Changers and Pawnshops
Other non-bank financial intermediaries, such as money changers and

pawnshops, subject to percentage tax under sections 121 and 122,
respectively, of the Tax Code. (Section 4. 109-1 (B)(w), RR 4-2007).
Gross Receipts Tax (GRT) on Lending Investors (RR 16-2005)

Under section 4 108-3(G) of RR 16-2005, lending investors as well as
dealers un securities are subject to 12% value added tax on the basis of their
tax gross receipts.
Imposition of Gross Receipts Tax on Non-Stock Saving and Loan

Association (NSSLAs)
Under Section 3 of RA 8367, otherwise known as “Revised Non-Stock
Saving and Loan Association (NSSLA) Act of 1997” shall mean non-stock,
non-profit corporation engaged in the business of accumulating the savings of
its members and using such accumulations for loans to members to service
the needs of households by providing long term financing for home building
and development and for personal finance.
4
Microfinance NGOs
Republic Act (RA) No. 10963 (An Act Strengthening Non-Government
Organizations (NGOs) Engaged in Microfinance Operations for the Poor),
otherwise known as the “Microfinance NGOs Act” was signed into law on
November 3, 2015. The Act is in pursuance to the policy of the State to pursue
a program of poverty eradication wherein poor Filipino families shall be
encouraged to undertake entrepreneurial activities to meet their minimum
basic needs including security.
The following policies and guidelines shall be observed by all

concerned in the Implementation of RA No. 10693:
1. Microfinance NGOs with duly issued Certificate of Accreditation from
the Microfinance NGO Regulatory Council shall be eligible to avail
the 2% gross receipt tax on income from microfinance operations I
lieu of all national taxes.
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2. Preferential tax treatment shall be accorded only to NGOs whose
primary purpose is microfinance and only on their microfinance
operations catering to the poor and low-income individuals in
alignment with the main goal of the Act to alleviate poverty.
3. Certificate of Accreditation issued by the Council shall be an
essential requirement for granting the 2% preferential tax treatment
of Microfinance NGOs.
4. The word microfinance shall be included in the corporate and trade
name of the Microfinance NGO.
The following shall not be included in the taxable receipts:

1. Premiums refunded within six (6) months after payment on account of
rejection of risk ore returned for other reasons to be insured.
2. Reinsurance premiums where tax has previously been paid.
3. Premiums collected or received by any branch of a domestic corporation,
firm, or association doing business outside the Philippines on account of
ANY LIFE insurance of a nonresident insured if any tax on such premium is
imposed by a foreign country where the branch is established.
4. Premiums collected or received on account of Re-INSURANCE, if the
insured, in case or personal insurance resides outside the Philippines, if
any tax on such premiums is imposed by a foreign country where the
original insurance has been issued of perfected.
5. Portion of the premiums collected or received by the insurance companies
on variable contracts in excess of the amounts necessary to insure the
lives of the variable contract workers.
Persons Liable to Tax on IPO (RR 6-2008)

a. Issuing corporation – corporations issuing their shares to the public for the
first time are subject to percentage tax on IPO based on rates under
6
Section 127 of the Tax Code. This type on IPO is known as “Primary
Offering”. The tax herein imposed shall be paid by the issuer corporation
with respect to the shares of stock corresponding to the primary offering.
b. Shareholders – shareholders selling their existing shareholdings to the
public at the time of the IPO are likewise subject to percentage tax on IPO
based on rates under Section 127 of the Tax Code. This type of IPO is
known as “Secondary Offering”. The tax herein imposed shall be paid by
the selling shareholder with respect to the shares of stock corresponding to
the Secondary offering.
Persons not Liable to IPO (RR 6-2008)

As in the case of Section 127 (A), the taxes imposed under Section 127(B)
shall not apply to the following:
1. Dealers in securities
2. Investor in shares of stock in a mutual fund company, as defined in Section
22 (BB) of the Tax Code, as amended, in connection with the gains
realized by said investor upon redemption of said shares of stock in a
mutual fund company; and
3. All other persons, whether natural or juridical, who are spefically exempt
7
from national internal revenue taxes under existing investment incentives
and other special laws.
For further discussion please refer to the link provided: Other Percentage Tax
https://www.youtube.com/watch?v=ynrD8tEljbM
For further discussion please refer to the link provided: Stock Transaction Tax
https://www.youtube.com/watch?v=61WtqMzJinU&list=PL6BP0F-
nFtQYC0JovVh5W0nIi1wcPnnz4
For further discussion please refer to the link provided: Gross Receipt Tax
https://www.youtube.com/watch?v=8P0a2DnV0Ro
Reference Book:
Transfer & Business Taxation

(with special topics and properly filled
BIR forms)
By: Enrico D. Tabag, 2020 Edition

BL04 - Chapter 9 Module

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CHAPTER 9

OTHER PERCENTAGE TAXES

Other Percentage Taxes

Taxpayers exempt from 3% Percentage Tax (TRAIN Law)

Tax Rate and Basis: 3% of Gross Receipts

Banks or Banking Institutions (RR 8-2008)

Non-bank Financial Intermediary (RR 8-2008)

Financial Intermediaries (RR 8-2008)

Money Changers and Pawnshops

Other non-bank financial intermediaries, such as money changers and

Gross Receipts Tax (GRT) on Lending Investors (RR 16-2005)

Imposition of Gross Receipts Tax on Non-Stock Saving and Loan

The following policies and guidelines shall be observed by all

The following shall not be included in the taxable receipts:

Persons Liable to Tax on IPO (RR 6-2008)

Persons not Liable to IPO (RR 6-2008)

Transfer & Business Taxation

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