Value Added and Percentage Taxation Taxation

Percentage Taxation Kinds of Percentage Taxes

Common Carriers Passengers(Land) 3%
International Cargoes 3%
Carriers 20 days from the end of the Month
Radio & Television 3%
P Franchise Gas & Water Utilities 2%
E
Overseas Overseas Calls 10%
R
Communication Jai-alia and race tracks 30%
C Tax Cockpits, cabarets,
E 18% 25 days from the end of the Quarter
Amusement night or day clubs
N Professional Basketball Games 15%
Tax
T Boxing Exhibitions 10%
A
Winnings Horse Races (Bettor)/Owner 10%
G Double, forecast, quinella 20 days from the date of Withholding
E and trifecta bets 4%
Life Insurance 2%
T Agent of Foreign Insurance 4%, 5%
A
Short-term 5%
X Banks & Non- 20 days from the end of the Month
Long-term 1%
E Bank Financial
Other Income 7%
S Intermediaries
Non-bank 5%,1%;5%

Stock Local Stock Exchange ½ ofof1%

6/10 1% 5 banking days from the date of collection
Transaction Tax Initial Public Offering 4%,2%,1% 30 days from the date of listing in the LSE
Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 1 – Common Carriers Tax Solution:

Love bus Transport Company, Monumento-Baclaran, Net Gross receipts (500,000) x 12% 60,000
operates ten (10) units of buses with a capacity of 50 Repairs (30,000 x 12%) x 500/2,500 720
passengers. During the month, it had the following data Spare Parts (60,000 x 12%) x 500/2,500 1,440
in its book.
Insurance Premium
(15,000 x 10 x 12%) x 500/2,500 3,600 5,760
Receipt from passenger P2,000,000
VAT payable 54,240
Receipt from cargoes 500,000
Expenses for repair of transport units (VAT) 30,000
Percentage Tax Payable (2,000,000 x 3%) 60,000
Salaries of personnel 300,000
Purchase of spare parts 60,000
Registration with LTO 10,000
Premium on insurance per unit 15,000

Required:
1) VAT payable
2) Percentage tax payable
Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 2 – Franchise Tax
Solution:
The Socsksargen Group of Companies is engaged in different
lines of business in region XII. Soc Corporation (not VAT
registered) is engage in the business of radio and television Socs Corporation (360,000 x 3%) 10,800
broadcasting. Ksar Corporation is a franchisee to supply Ksar Corporation (4,800,000 x 2%) 96,000
water in the whole province of Sultan Kudarat and Gen Tax on Franchisees 106,800
Corporation has a franchise to generate and distribute
electricity in the entire covered by General Santos City. During
the month, it had the following receipts.
Socs Corporation P 360,000
Ksar Corporation 4,800,000
Gen Corporation 8,250,000
What is the total franchise tax due?

Illustrative Problem 3 – Franchise Tax (Water)

Malansa Company is a holder of a franchise to sell water.
Sale of water to the public (P3,000,000 x 2%) 60,000
During the month, it had the following data:
Gross receipt from the sale of water to the public P 3,000,000
Penalties imposed and collected on
illegal connection 150,000
Rent of its heavy equipment to a private
subdivision Developer 50,000
Sale of scrap materials 20,000
What is the franchise tax due?
Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 4 – Franchise Tax (Radio stations) Solution:

DYYY is a franchise to operate a radio station. The data in Percentage Tax (700,000 x 3%) 21,000
its book are as ff.
Gross receipt last year P8,000,000 Sales (700,000 x 12%) 84,000
Gross receipts during the month 700,000 Purchases (P300,000 x 12%) 36,000
Payment to VAT supplies of VAT Payable 48,000
goods and service 300,000
Payment to non-VAT suppliers of
goods and service 200,000

The business tax payable if its not VAT-registered /VAT-

registered:
Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 5 – Overseas Communication Tax Solution:

The Bayani Telephone Company, a franchisee to operate Outgoing overseas calls 8,500
a landline telephone, billed Tellly Babad the following:
Tax Rate 10%
Amount collected on overseas calls
Overseas Communication Tax 850
Incoming calls
(5% toll charges billed to local receiver) P 4,300
Outgoing overseas calls 8,500
Domestic long-distance calls 1,200
Monthly bills on subscribers 525

The overseas communication tax on Telly Babad is –

Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 6 – Premiums Tax Due Solution:
Filipinas Life Insurance Company had the following data
on collections of premiums and disbursements during
the month: Life Insurance
Life Insurance Non-life Percentage Tax (195,000 x 2%) 3,900
Insurance
Cash Collections P 150,000 P 145,700 Non-life Insurance
Checks 45,000 34,600 Sales (180,300 x 12%) 21,636
Accounts receivable 25,200 58,900 Purchases (P43,000 x 12%) 5,160
VAT Payable 16,476
Payments of expenses to VAT businesses 43,000
Payments of expenses to non-VAT businesses 35,000

The amount indicated pertaining to VAT transactions do

not include the value-added tax.

Required:
1. The Premium Tax dues is –
2. The VAT payable is –
Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 7 – Tax on Agents of foreign Solution:
insurance
Premium on Life Insurance (2,100,000 x 2%) 42,000
A domestic insurance company gave the following Premium on Non-life insurance (4,000,000 x 4%) 160,000
information for the month: Premium on Property Insurance (P1,000,000 x 4%) 40,000
Gross receipts from its insurance policies: Percentage Tax Payable 242,000
Premium on life insurance P 2,100,000
Premium on non-life insurance 1,500,000

Gross receipts as agent of a foreign insurance

company:
Premium on non-life insurance P 4,000,000
Premium on property insurance 1,000,000

What is the percentage tax due for the month?

 Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 8 – Amusement Taxes Solution:

The PBA is a professional basketball organization which holds the Gross receipts for derby
games in the big dome. In May of the current year, it had the following
gross receipts: (2,500,000 x 18%) 450,000
From the gates P 2,000,000 Admission and others
Radio and television rights 1,000,000 (3,725,000* x 15%) 558,750
Advertisement inside the Big Dome 150,000 Percentage Tax Payable 1,008,750
Sales by Canteen inside the Big Dome
maintained by the Big Dome 500,000
Ambulant vendors also provided by the *From the gates P 2,000,000
company had a gross receipts of 75,000 Radio and television rights 1,000,000
Advertisement inside the Big Dome 150,000
Expenses for the maintenance 45,000
Sales by Canteen inside the Big Dome
During the month, it was leased to a private group of persons who
sponsored an international derby inside the Big Dome. The gross maintained by the Big Dome 500,000
receipts from gates amounted to P2,500,000. Ambulant vendors also provided by the
Company had a gross receipts of 75,000
It also hosted the UAAP Volleyball Championship between Ateneo Total admission and others 3,725,000
Lady Eagles and De La Salle Lady Archers. Gross receipts from the
gates amounted to P 250,000.

What is the total amusement tax due?

Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 9 – Amusement tax due
Solution:
1.
Pana Lo operates a cockpit. Inside the cockpit, he also
Cockpit operation P500,000
operates a restaurant. Data for a particular quarter
follow: Sale of food 100,000
Gross receipts: Sale of liquor 150,000
Cockpit operation P500,000 Total receipts P750,000
Restaurant operation: Amusement Tax Rate x 18%
Sale of food 100,000 Amusement Tax Due 135,000
Sale of liquor 150,000
2.
Compute: Cockpit operation P500,000
1. The amusement tax due from Pana Lo Amusement Tax Rate x 18%
2. Using the data in No. 1, except that the restaurant Amusement Tax Due 90,000
is not owned by Pana Lo but is owned by another
person, not VAT-registered and whose annual 3.
gross receipts never exceeded P1,919,500, the Sale of food 100,000
amusement tax due from Pana Lo
Sale of liquor 150,000
3. Continuing No. 2, the percentage tax due from the
Total receipts P250,000
restaurant owner
Percentage Tax Rate x 3%
Percentage Tax Due 7,500
Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 10 – Tax on Winnings Solution:

Total winnings P 10,000

A horseracing aficionado has the following winnings during a
particular race a day: Cost of winning tickets (500)
Total winnings P 10,000 Net Winnings 9,500
Tax rate x 10%
Cost of winning tickets 500
Tax on winnings 950

What is the tax on winnings?

Illustrative Problem 11 – Stock transaction tax

Yveth sold the following shares of stocks of a domestic 1) Listed & traded
corporation, thru her broker. Stock of A – SP 180,000
Cost Selling Stock of B – SP 320,000
Price Date of Sale
Total Selling Price 500,000
Stock of A Corporation P 100,000 P 180,000 10-03-12 Percentage tax rate 6/10 of 1%
Stock of B Corporation P 320,000 P 320,000 10-20-12 Percentage tax 3,000

The total percentage tax if the stocks are: 2) Not listed & traded – NONE
1) Listed & traded
2) Not listed & traded
Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative problem 12
Solution:
ABC Corporation, a closely-held corporation, has an authorized
capital stock of 100,000 shares with a par value of P1.00 per share
Determine ratio and proportion (25,000/50,000) 50%
as of January 1, 2013; 25,000 thereof is subscribe and paid up by
the following stockholders:
Andi 5,000 Number of shares on IPO (25,000 x P1.50 x 1%)375
Bianca 5,000
Determine ratio and proportion (5,000/50,000) 10%
Carla 5,000
Diana 5,000
Number of share sold by stockholder
Enciang 5,000
(5,000 x P1.50 x 4%) 300
Total shares outstanding 25,000
ABC Corporation finally decides to conduct an IPO and initially
offers 25,000 of its unissued shares to the investing public at P1.50
per share. After the IPO in March 2013, ABC Corporation’s total
issued shares increased from 25,000 to 50,000 shares.
At the IPO, Andi likewise decided to sell her entire 5,000 shares to
the public at P1.50 per share. Thus, 5,000 shares have been offered
in the primary offering and 5,000 shares in the secondary offering.

Required:
1. Percentage tax on ABC Corporation’s newly issued shares –
2. Percentage tax on the secondary offering of Andi’s shares –
Value Added and Percentage Taxation Taxation
Percentage Taxation Kinds of Percentage Taxes
Illustrative Problem 13 – Gross Receipts Tax Solution:
ABC Bank has the following income/loss for the following months: Interest income (50,000*5%) 2,500
March April Rentals (50,000*7%) 3,500
Interest income with maturity of less Gross Receipts Tax – March 6,000
than 5 years P 50,000 P100,000
Rentals 50,000 50,000 Interest income (100,000*5%) 5,000
Net trading gain /loss (10,000) 20,000 Rentals (50,000*7%) 3,500
Net Trading Gains (20,000-10,000)*7% 700
How much is the gross receipts tax for the month of March and April? Gross Receipts Tax – April 9,200

Illustrative Problem 14 – Gross Receipts Tax

Banco Deposito had the following data for the first month of the current
year:
Less than 5 years maturity (5M*5%) 250,000
Interest, commission and discounts from lending activities
More than 5 years maturity (3M*1%) 30,000
(remaining maturity of instrument is 5 years) P 5,000,000
Dividends – EXEMPT
Income from financial leasing (remaining maturity
Rentals (500K*7%) 35,000
of instruments is more than 5 years) 3,000,000
Net trading gains (300K*7%) 21,000
Dividends and equity shares in net income of subsidiaries 1,000,000
Gross receipts tax 336,000
Rentals of properties 500,000
Net trading gains within the taxable year on foreign currency 300,000

How much is the gross receipts tax?