23.+Other+Percentage+Tax-REVISED+2023-classroom+discussion - Students 2

OTHER PERCENTAGE TAXES
PERCENTAGE TAX
Percentage Tax may be applicable for:
 Businesses with gross annual sales and/or receipts not exceeding P3,000,000; and
 Business that are not VAT-registered businesses
- Percentage tax is a business tax imposed on persons, entities, or transactions specified under Sections 116 to 127 of the National
Internal Revenue Code of 1997 (also known as Tax Code), as amended, and as required under special laws.
- A tax imposed on sale, barter or exchange of goods or sale of services based upon gross sales, value in money or receipts (except
insurance companies) derived by the manufacturer, producer, or seller measured by certain percentage of the gross selling price or
receipts.
A percentage tax is a national tax measured by a certain percentage of the gross selling price or gross value in money of goods sold
or bartered or of the gross receipts or earnings derived by any person engaged in the sale or services.
BASIS OF TAX
The tax is based on gross sales,
receipts or earnings except on
insurance companies where the basis
of tax is the total premium
collected/paid.
"Gross receipts" means all amounts

received by the prime or principal
contractor, undiminished by any
amount paid to any subcontractor
under a subcontract arrangement.
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.
Characteristics of Percentage Tax:

1. It is a business tax
2. It is a form of sales tax
3. It is a deduction from gross income
Note:
Percentage Tax Vs. Value-Added

Tax (VAT)
Value Added Tax, or VAT, and

Percentage Tax are both business taxes collected from the sale of goods and services. The taxes differ, however, in their
applicability. Business owners must understand which tax they are registered for and the financial implications for their business.
Percentage Tax is a direct tax – the seller is the one who shoulders the tax and files it with the BIR. Whereas, VAT is an indirect
tax – the end consumer is charged for the tax, while the seller is responsible for remitting to the BIR.
In the Philippines, the rate of VAT is 12%. To compute for VAT, deduct the input VAT from the output VAT to arrive at the VAT due
and payable.
Computing Percentage Tax is much simpler. Multiply the applicable Percentage Tax rate against the taxable base (i.e. for standard
businesses – the total value of the gross sales or receipts) and the resulting amount is the Percentage Tax due and payable to
the BIR.
THE SCOPE OF THE PERCENTAGE TAX

Coverage Type of % tax Tax rates
1. Sales of goods or other General % tax 1% percentage tax
services not exempted
Effective July 1, 2020 until June 30, 2023
OPT imposed on non-VAT registered entities and VAT registered entities

whose aggregate non-VAT exempt transactions do not exceed PHP3 Million
shall be subject to a lowered OPT rate of 1%.
2. Services specifically subject Specific % tax Various tax rates
to percentage tax
The Tax Code of the Philippines and the BIR do also provide a list of
designated businesses and activities that may also fall under the
Percentage Tax system. For example, domestic carriers, keepers of
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garages, franchise grantees of water or gas utilities, lessees or operators
of cockpits and racetracks, banks and finance companies.
Who pays percentage tax?

Type of Percentage Tax VAT registered taxpayers Non-VAT registered taxpayers
General percentage tax × √
In lieu of the VAT, OPTs are imposed
Specific percentage tax √ √
Taxpayers Specially Subject to Other Percentage Taxes (BICAP FLOW) Sections 117 to 127
B Banks F Franchises
I International Carriers L Life Insurance Premiums
C Common carriers by land O Overseas Communications
A Amusement taxes W Winnings
P PSE sales or those listed and traded through LSE or IPO
Sec. 116- Tax on Persons Exempt from VAT under Section 109 (CC)
1. Persons subject to tax
Persons who engaged in VATable sales or leases of properties, or services in the course
of trade or business:
a. Persons whose annual sales or receipts does not exceed P3,000,000 (≤P3,000,000);
AND
b. Person who are not VAT registered (Sec. 109 (CC))
Summary Rules
Annual Gross Sales/ Receipts Business Tax Applicable
More than P3M VAT
P3M and below VAT or OPT (If the taxpayer opts to pay VAT, it will be
irrevocable for 3 consecutive years)
2. Tax base
Gross quarterly sales or receipts

1) Seller of goods  Gross sales
2) Seller of services  Gross receipts
Formula:
Quarterly gross sales or receipts Pxxx
Rate 1%/3%
Percentage Tax (also called gross receipts tax) GRT PXXX
3. Tax rate
The tax rate is 1%
Note: Corporate Recovery and Tax Incentives for Enterprises (CREATE) Bill (RA 11534) Percentage tax on persons exempt from
value-added tax under Section 116 of the Tax Code has also been decreased to 1% from July 1, 2020 to June 30, 2023.
4. Optional VAT registration
Persons subject to the above tax may apply for registration as VAT subject persons not later than ten (10) days before the beginning
of the taxable quarter
5. Cancellation of VAT Registration
Any person exempt from VAT under Sec. 109 (1) (CC) who elects to register under the VAT system shall not be allowed to cancel his
registration for the next three (3) years
6. Person exempt from the 3% percentage tax

a. Self-employed individuals and professionals availing of the 8% tax on gross sales and/or receipts and other non-operating
income;
b. Cooperative except;
Duly registered cooperatives which transact business with

members and non-members, and with accumulated reserves
and undivided net savings of more than Ten Million Pesos
(P10,000,000) shall be subject to the percentage tax on all
sales of goods and/or services to non-members.
P10,000,000 (accumulated reserves and undivided net savings)

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Receipts Related activity Unrelated activity
Members Exempt business taxes Subject to business taxes
Non-members Exempt business taxes Subject to business taxes
>P10,000,000 (accumulated reserves and undivided net savings)

Receipts Related activity Unrelated activity
Members Exempt business taxes Subject to business taxes
Non-members Subject to business taxes Subject to business taxes
c. Fees, per diems, allowance, and other income received by corporate directors of which they are not employees.
 If the director receiving the director’s fees is also an employee of the same entity, the fees shall form part of the
compensation subject to withholding tax on compensation.
 However, if the director is not an employee of the income payor then the subject taxpayer is considered a professional
subject to the creditable expanded withholding tax prescribed for a professional.
 Pursuant to RMC 96-2018, Director’s fees, on the other hand, shall not be subject to business tax (VAT or percentage
tax).
d. Marginal income earners or individuals who are self-employed

and deriving gross sales/receipts ≤ P100,000 during any 12-month
period.
e. Persons who are VAT-registered, regardless of level of sales. (VAT)
f. Persons whose line of business is non-exempt (from VAT) and are

NOT VAT-registered but whose gross annual sales or receipts >
P3,000,000. (VAT)
Individual
Taxpayers (Self-
employed)availing
of the 8%
SEC. 117 – PERCENTAGE TAX ON DOMESTIC CARRIERS AND KEEPERS OF

GARAGE (COMMON CARRIER’S TAX)
1. Common carrier defined
Persons, corporations, firms or associations engaged in the business of carrying or

transporting passenger or goods or both, by land, water, or air, for
compensation, offering their services to the public and shall include
transportation contractors.
2. Persons subject to common carrier’s tax

a. Lessors or cars for rent or hire driven by the lessee;
b. Transportation contractors including persons who transport passengers for
hire; and
c. Other domestic carriers by land for the transport of passengers; and
d. Keepers of garages
Keepers of Garages
Garages are places where motor vehicles are kept for hire. The word “garage” has
been defined as follows: Garage is a building in which two or more motor vehicles,
either with or without drivers, are kept ready for hire to the public, but shall not
include street stands, public service stations, or other public places designated by
proper authority as parking spaces for motor vehicles for hire, while awaiting or
soliciting business. Thus, keepers of garages are operator of places where 0% VAT
motor vehicles are kept for hire.
The following table summarizes the rules on domestic common carriers:

Mode of transport Passenger Baggage/Mails/Cargoes
By land 3% Common Carrier Tax VAT
By water or sea VAT VAT
By air VAT VAT
3. Other common carriers subject to 3% common carrier’s tax/ percentage tax

a. Taxicabs
b. Cars for hire owned by rent-a-car companies
c. Tourist buses used for the transport of passengers
4. Persons not subject to the 3% common carrier’s tax

a. Owners of banca
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b. Owners of animal-drawn two-wheeled vehicle
5. Tax base
a. Actual quarterly gross receipts
b. minimum quarterly gross receipt
-Whichever is higher between a. and b. above
Tax: 3% of quarterly gross sales or receipts from the transport of passengers, provided the gross receipts are ≥ minimum levels
provided by law. The table below provides the minimum quarterly receipts:
Minimum Quarterly Gross Receipts Manila and other Provinces
cities
1. Jeepney for hire P2,400 P1,200
2. Public Utility Bus P3,600
Not exceeding 30 passengers P6,000 P3,600
Exceeding 30 but not exceeding 50 passengers P7,200 P6,000
Exceeding 50 passengers P7,200
3. Taxis P3,600 P2,400
4. Car for hire with chauffeur P3,000 P3,000
5. Car for hire without chauffeur P1,800 P1,800
Formula:
Tax Base (Gross Receipts) Pxxx
Rate 3%
Common Carriers Tax Pxxxx
Summary Rules
Type of Domestic Common Carrier Transporting Business Tax Applicable
By Land Persons 3% Common Carrier Tax
Cargoes/Goods VAT
By Air Persons, Goods or Cargoes VAT
By Sea Persons, Goods or Cargoes VAT
6. Tax rate
The tax rate is 3%.
7. Exemption from local taxes
The gross receipts of common carriers derived from their incoming and outgoing freight shall not be subject to the local
taxes imposed under R.A. No. 7160, otherwise known as the Local Government Code of 1991.
8. Transportation contractors and common carriers subject to VAT
a. Transportation contractors on their transport of goods or cargoes.

b. Persons who transport goods or cargoes for hire.
c. Other domestic carriers by land relative to their transport of goods or cargoes.
d. Common carrier by air and sea relative to their transport of passengers, goods or cargoes from one place in the Philippines
to another place in the Philippines
9. RMC 70-2015 (Transportation Network Companies)
Transportation Network Companies (TNC) is a pool of land transportation vehicles whose accessibility to the riding public is
facilitated through the use of common point of contract which may be in the form of text, telephone, and/or cellular calls, email,
mobile applications or by other means.
The vehicle used in transporting passengers and/or goods in the TNC may be owned by other people and/or entities other than the
TNC, and shall be referred herein as “Partners”.
3% common carrier tax
TNCs/Partner with valid “Certificate of Public Convenience (CPC)” engaged in the transport of passengers are subject to 3% common
carrier tax under Section 117 of the Tax Code.
12% VAT or 1% OPT
TNCs/Partner without valid CPC are classified as land transportation contractor subject to either 12% VAT or 3% OPT under Section
116 of the Tax Code
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SEC. 118 – PERCENTAGE TAX ON INTERNATIONAL CARRIERS (AIR AND
SHIPPING) (FOREIGN CARRIERS)
a. International air carriers doing business in the Philippines
b. International shipping carriers doing business in the Philippines
2. Tax base
Quarterly gross receipts from the transport of cargo from the Philippines to another country.
Formula:
Gross Receipts from transport of Cargo Pxxx

Rate 3%
International Common Carriers Tax PXXX
3. Gross Receipts Defined (Revenue Regulation 11-2011)
Gross receipts shall include, but shall not be limited to, the total
amount of money or its equivalent representing the contract,
freight/cargo fees, mail fees, deposit applied as payments,
advanced payments and other service charges and fees actually or
constructively received during the taxable quarter from cargoes and or
mails, 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.
4. Tax Rate
The tax rate is 3%
5. Exempt from VAT
a. Transport of passengers by international carriers doing business in the Philippines is not subject to business tax (VAT and
Percentage Tax)
b. Transport of cargo by international carries is not also subject to VAT, however, it is subject to percentage tax under Section
118 of the Tax Code, also known as Common Carrier’s Tax on International Carrier
6. Offline-line international carrier having branch/office as a sales agent in the Philippines

 Not subject to the 3% common carrier’s tax on international carriers.
Note:
-The common carrier’s tax herein do not apply to off-line international carriers having a branch/office or sales agent in the
Philippines which sells passage documents for a compensation or commission to cover off-line flights or voyage of its principal or
head office, or for other airlines or sea carriers covering flights or voyages originating from the Philippine ports or off-line flights or
voyages. (RR 15-2013). These entities may be subject to VAT.
-Income from International transport operations involving the transport of passengers, goods and cargoes from foreign country
to the Philippines (incoming flights) are income derived from services rendered outside the Philippines, hence exempt from
business taxes due to lack of tax jurisdiction (RMC 46-2008)
Summary Rules
Land Air Sea
Domestic Carriage Passenger OPT 117 VAT VAT
Domestic Carriage Cargo VAT VAT VAT
International Carriage Passenger Domestic Corp. Domestic Corp.
0%VAT, No OPT 0%VAT, No OPT
Foreign Corp. Foreign Corp.

Exempt from VAT, No OPT Exempt from VAT, No OPT
International Carriage Cargo Domestic Corp. Domestic Corp.

0% VAT, No OPT 0% VAT, No OPT
Foreign Corp. Foreign Corp.

Exempt from VAT, OPT 118 Exempt from VAT, OPT 118
Note: Off-line carriers, which sell tickets (a) covering off-line flight or voyages or (b) flights or voyages of other carriers, are not
considered engaged in business as an international carrier in the Philippines and therefore are exempt from the OPT under section
118.
Off-line flight/voyages refer to flight/voyages outside the Philippines, and which do not touch any port or point in the
Philippines.
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(RR 15-2013) The transport of passengers by
international carriers doing business in the Philippines
shall be exempt from value-added tax (VAT) pursuant to
Sections 109(1)(S) of the NIRC, as amended by RA No.
10378. The transport of cargo by international carriers
doing business in the Philippines shall be exempt from VAT
pursuant to Sections 109(1)(E) of the NIRC, as amended by
RA No. 10378, as the same is subject to Common Carrier's
Tax (Percentage Tax on International Carriers) under Section
118 of the N1RC, as amended. International carriers exempt
under Sections 109(1)(S) and 109(1)(E) of the NIRC, as
amended, shall not be allowed to register for VAT purposes.
Note:
For income tax purpose: Tax is imposed together with the income tax on international carrier of 2.5% of gross Philippine
billings. (May also be subject to a preferential income tax rate (lower 2.5%) or exempt from income tax based on a
tax treaty or reciprocity (RA10378 and RR 15-2013)
(RMO 43-2016) The Office of the Commissioner of Internal Revenue shall undertake the issuance of the ICSD (BIR Form No.
ICC3) and the ICGC (BIR Form No. ICC4) after the verification of payments of the 2.5% income tax and gross Philippine
billings and 3% carrier’s tax prior to the departure of the international carriers (shipping and airline). The Commissioner or
his duly authorized representative shall sign the above certificates to be submitted by international carriers to the Bureau of
Customs.
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SEC. 119 – TAX ON FRANCHISES
a. Franchises on radio/or television broadcasting companies whose annual gross receipts of the preceding year does not
exceed P10,000,000 and which did not choose to be registered under the VAT system; and
b. Franchises on gas and water utilities
2. Tax base
Gross receipts derived from the business covered by the law granting the franchise
Formula:
Gross Receipts Pxxx
Rate x%
Franchise Tax PXXX
3. Tax rates
a. Franchise on radio and/or TV broadcasting 3% or pay VAT at their option
with gross annual receipts ≤P10M
Gross receipts derived from the business covered by the law granting
the franchise.
b. Franchise on gas and water utilities 2%
the franchise.
c. Franchise Tax on PAGCOR 5%
Gross revenues from gaming operations
d. Transmission operation of National Grid 3%

Corporation of the Philippines
the franchise.
Excerpt from RMC 33-2013: PAGCOR is subject to a franchise tax of five percent
(5%) of the gross revenue or earnings it derives from its operations and licensing of
gambling casinos, gaming clubs and other similar recreation or amusement places,
gaming pools, and other related operations.
4. Optional VAT registration

a. Radio and TV broadcasting companies whose annual gross receipts of the
preceding year does not exceed P10,000,000 shall have the option to be
registered within 10 days before the beginning of the calendar quarter as VAT
taxpayer and pay VAT thereon
b. Once the option is exercised, it shall not be revoked
5. Franchise grantees subject to VAT

a. Telephone and telegraph
b. Radio and/or television broadcasting > P10,000,000 for the preceding year
c. Toll road operations
d. All other franchisees, other than those covered by Sec. 119 of the Tax Code,
regardless of how their franchise may have been granted
Summary Rules Applicable to Radio and / or Television Broadcasting Companies

Annual Gross Receipts Business Tax Applicable
More than P10,000,000 Prior Year VAT
P10,000,000 and below Prior Year VAT or OPT
If the taxpayer opts to pay VAT, it will be irrevocable.
Summary of Business Taxes for Franchise Grantees

Grantor Type of Franchise Business Tax
1. Government Radio/TV Broadcasting Co. 3%OPT or 12% VAT if VAT reg. or if gross receipts >P10M
for the preceding year
Gas and water utilities 2% OPT regardless of gross receipts
PAGCOR 5% OPT on gross revenue or earnings (PD 1869/RMC 22-
2013)
All other types of franchises 12% VAT or 3% OPT if non-vat reg. and gross receipts
≤P3,000,000
2. Private Co.’s All type of franchises 12% VAT or 3% OPT if non-vat reg. and gross receipts
≤P3,000,000
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TAX TREATMENT OF PAGCOR AND ITS LICENSEES AND CONTRACTEES
GAMING TAX
Republic Act No. 11590 (An Act Taxing Philippine Offshore Gaming Operations) (POGO)
(Signed on September 22, 2021)
This is issued to inform all concerned on the salient provisions of Republic Act (RA) No. 11590 (An Act Taxing Philippine Offshore
Gaming Operations, amending for the Purpose Sections 22, 25, 27, 28, 106, 108, and Adding New Sections 125- A and 288(G) of the
National Internal Revenue Code Of 1997, as Amended, and for Other Purposes).
As defined in RA No. 11590, offshore gaming licensee refers to offshore gaming operator, whether organized abroad or in the
Philippines, duly licensed and authorized, through a gaming license, by the PAGCOR or any special economic zone authority, tourism
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zone authority or freeport authority to conduct offshore gaming operations, including the acceptance of bets from offshore
customers.
On the other hand, a service provider refers to any juridical person, that is duly created or organized within or outside the
Philippines, or natural person, regardless of citizenship or residence, which provides ancillary services to an offshore gaming licensee,
or any gaming licensee or operator with licenses from other jurisdictions. The ancillary services may include customer and technical
relations and support, information technology, gaming software, data provision, payment solutions and live studio and streaming
services.
The taxes applicable to offshore gaming licensees, their service providers and alien individuals employed by them are summarized
below.
Moreover, the following shall be considered subject to zero percent (0%) VAT:
1. Sales of goods and properties to offshore gaming licensees subject to Gaming Tax
2. Services rendered to offshore gaming licensees subject to Gaming Tax, by service providers, including accredited service
providers.
The PAGCOR or other implementing agency, shall engage the services of a third-party audit platform that would determine the gross
gaming revenues/receipts of each offshore gaming licensee for submission to BIR by PAGCOR or other implementing agency.
REPUBLIC ACT (“RA”) NO. 11590 AMENDS THE NATIONAL INTERNAL REVENUE
CODE (“NIRC” OR THE “TAX CODE”) TO PROVIDE THE TAXING RULES FOR
OFFSHORE GAMING OPERATIONS.
Taxation of Offshore Gaming Licensees
Under RA No. 11590, offshore gaming licensees shall refer to the offshore
gaming operator, whether organized abroad or in the Philippines duly licensed
and authorized, through a gaming license, by the Philippine Amusement and
Gaming Corporation (“PAGCOR”) or any special economic zone authority or
tourism zone authority or freeport authority to conduct offshore gaming
operations. An offshore gaming licensee shall be considered engaged in doing
business in the Philippines. An offshore gaming licensee-gaming agent, on the
other hand, refers to the representative in the Philippines of an offshore based
operator who shall act as a resident agent for the offshore gaming licensee. The
gaming agent shall not be involved with the business operations of the offshore
gaming licensee and shall derive no income therefrom.
Offshore gaming licensees are subject to a gaming tax of five percent (5%)
on the entire gross gaming revenue or receipts or the agreed predetermined
minimum monthly revenue or receipts from gaming, whichever is higher, in lieu
of all other direct and indirect internal revenue taxes and local taxes. Gross
gaming revenue or receipts shall mean gross wagers less payouts.
As for the non-gaming revenues, Philippine-based offshore gaming licensees

shall be subject to an income tax equivalent to twenty-five (25%) of the taxable
income derived during each taxable year from all sources within and without the
Philippines. On the other hand, non-gaming revenues of foreign-based offshore
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gaming licensees shall be subject to an income tax equivalent to twenty-five (25%) of the taxable income derived during each
taxable year.
Sales to and services rendered to offshore gaming licensees subject to gaming tax shall be subject to the zero percent (0%) value-
added tax.
Taxation of Alien Individuals Employed by an Offshore Gaming Licensee and Service Providers
Alien individuals, regardless of residency, who are employed and assigned in the Philippines, regardless of the term and class of
working or employment permit or visa, by an offshore gaming licensee or its service provider shall pay a final withholding tax
(“FWT”) of twenty-five percent (25%) on their gross income. The minimum FWT due for any taxable month from the said persons
shall not be lower than twelve thousand five hundred pesos (PHP 12,500).
All foreign employees of offshore gaming licensees and their service providers, regardless of the nature of employment, shall have a
tax identification number (“TIN”). The offshore gaming licensees and the service providers that employ or engage a foreign national
without the TIN shall be liable for a fine of twenty thousand pesos (PHP 20,000) for every foreign national, and in proper instances,
revocation of their primary and other government licenses and/or temporary ban in employing or engaging foreign nationals for their
operations.
Disposition of Revenues from Gaming Tax on Offshore Gaming Licensees
Sixty percent (60%) of the total revenue collected from the gaming tax shall be allocated and used exclusively in the following
manner:
Allocated for/to Percentage Allocation

Universal Health Care Act 60%
Health Facilities Enhancement Program of the DOH 20%
Sustainable Development Goals (SDGs) as determined by NEDA 20%
REVENUE MEMORANDUM CIRCULAR NO. 25-2022 ISSUED ON MARCH 11, 2022

CLARIFIES THE TAXABILITY OF ELECTRONIC SABONG (E-SABONG) OPERATIONS AS
REGULATED BY THE PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR).
The different types of income earned/generated from e-Sabong
operation are classified in the Circular. The e-Sabong entities shall
observe and comply with the following:
a. Register the business at the Revenue District Office
(RDO) having jurisdiction over the principal place of
business/head office (or residence in case of
individuals), taking into consideration the provisions
under Revenue Memorandum Circular No. 57-2020
prescribing the updated policy and checklist of
documentary requirements of business registration,
and pay the registration fee to any Authorized Agent
Bank (AAB) located within the RDO.
A BIR Certificate of Registration (CoR) shall be issued

by the RDO, reflecting the tax types required of the
concerned taxpayer for filing and payment, which
shall be displayed conspicuously in the business
establishment.
b. File applicable tax returns on or before the due dates;
pay correct internal revenue taxes; and submit
information returns and other appropriate tax
compliance reports in accordance with existing rules
and regulations.
c. Keep books of accounts and other business/accounting
records within the time prescribed by applicable laws,
and such shall be made available anytime for
inspection and verification by authorized Revenue
Officer/s for the purpose of ascertaining compliance
with existing tax rules and regulations.
d. Withhold the required creditable/expanded
Withholding Tax, Final Tax on compensation of
employees, and other Withholding Taxes, if applicable.
They are obliged to remit the same to the BIR at the
time or times required, and issue to the concerned
payees the necessary Certificate of Tax Withheld.
The BIR shall have the authority to inspect totalizators and other
betting devices used in the collection, consolidation and recording of
wagers made in online or remote/offsite betting activities on locally
licensed games.
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The Gaming Income from e-Sabong Operation by an e-Sabong Operator, shall be subject to a five percent (5%) Franchise Tax,
which shall be in lieu of all internal revenue taxes except Value-Added Tax (VAT) or Percentage Tax, depending on the threshold. In
the event that the e-Sabong operator has contracted with PAGCOR for the provision of goods and services in connection with
PAGCOR's gaming operations, then, such provision of goods and services to PAGCOR is subject to VAT at zero-rate. The Franchise
Tax shall be remitted by the e-Sabong Operator directly to the BIR.
The five percent (5%) Franchise Tax due from the e-Sabong
Operator shall be separate and distinct from the five percent
(5%) Franchise Tax due from PAGCOR arising from the
licensing and regulatory fees that PAGCOR receives from the
e-Sabong Operator.
The Service Income and other Income from e-Sabong by an e-

Sabong Operator, or the income or earnings realized by the e-
Sabong Operator from all other activities whose authorization does
not derive from the e-Sabong license issued by PAGCOR shall be
subject to regular Income Tax, VAT or Percentage Tax depending
on the threshold, Withholding Tax and other taxes, as may be
deemed appropriate. The 5% Franchise Tax in lieu of all internal
revenue taxes shall not apply.
Commission Income received by a Third-Party e-Sabong Master

Agent/Agent/Promoter/Coordinator shall be subject to regular Income
Tax, VAT or Percentage Tax depending on the threshold, Withholding
Tax and other taxes, as may be deemed appropriate. The e-Sabong
Operator shall withhold and remit the corresponding Creditable
Withholding Taxes (5%/ 10% for individual payees and 10%/ 15% for
non-individual payees) due for the account of the Master Agent/Agent/Promoter/Coordinator.
Income received by the Cockpit Owner/Operator for the use of the cockpit arenas/venues from the e-Sabong Operator shall be
subject to regular Income Tax, VAT or Percentage Tax, depending on the threshold, Withholding Tax and other taxes, as may be
deemed appropriate. The e-Sabong Operator shall withhold and remit the corresponding 5% Creditable Withholding Taxes due for
the account of the Cockpit Owner/Operator.
Income received by a Third Party Off-Cockpit Betting Station (OCBS)

Host from the OCBS and Third-Party Game Cock Owner from the e-
Sabong Operator in relation to the eSabong operation shall be subject to
regular Income Tax, VAT or Percentage Tax, depending on the
threshold, Withholding Tax and other taxes, as may be deemed
appropriate. The eSabong Operator shall withhold and remit the
corresponding 2% Creditable Withholding Taxes due for the account of
the Third-Party OCBS Host/Game Cock Owner.
Other income derived or received by any person/s or entity/ies in

relation to the operation/s of e-Sabong not included in the above-
mentioned enumeration shall be subject to appropriate taxes, including
but not limited to Final Withholding Taxes and the like, under the
National Internal Revenue Code of 1997, as amended.
In addition to the penalties and sanctions imposed by the appropriate

regulatory government agencies, the income derived by unauthorized
e-Sabong Operators and the entities providing ancillary services to its
unauthorized e-Sabong operations shall not be covered under the
fiscal regime as provided for in the PAGCOR charter but rather subject
to appropriate taxes and penalties as provided under the National
Internal Revenue Code of 1997, as amended.
Tax Compliance Requirement of e-Sabong Entities
1. Register the business at the Revenue District Office (RDO) having jurisdiction over the principal place or business/head
office (or residence in case of individuals) and pay the registration fee to any Authorized Agent Bank (AAB) located within
the RDO.
2. File applicable tax returns on or before the due dates; pay correct internal revenue taxes; and submit information returns
and other appropriate tax compliance reports in accordance with existing revenue rules and regulations.
3. Keep books of accounts and other business/accounting records within the time prescribed by applicable laws, and such shall
be made available anytime for inspection and verification by authorized Revenue Officer/s for the purpose of ascertaining
compliance with existing tax rules and regulations.
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4. Withhold the required creditable/expanded
withholding tax, final tax on compensation of
employees, and other withholding taxes, if
applicable. They are obliged to remit the same to
the BIR at the time or times required, and issue to
the concerned payees the necessary Certificate of
Tax Withheld.
Penalties for Unauthorized e-Sabong Operations
In addition to the penalties and sanctions imposed by the

appropriate regulatory government agencies, the income
derived by unauthorized e-Sabong Operators and the
entities providing ancillary services to its unauthorized e-
Sabong operations shall not covered under the fiscal
regime as provided for in the PAGCOR charger but rather
subject to appropriate taxes and penalties as provided
under the National Internal Revenue Code of 1997, as
amended.
SEC. 120 – TAX ON OVERSEAS DISPATCH, MESSAGE OR CONVERSATION

ORIGINATING FROM THE PHILIPPINES
Tax on overseas dispatch, message, or conversation originating from the Philippines by
telephone, telegraph, telewriter exchange, wireless, and other communication equipment or
service.
Note: Domestic calls are subject to VAT.
The tax imposed shall be payable by the person paying for the services rendered and shall be paid to the person rendering the
services (Payor of the service).
2. Persons exempt to tax

a. Government of the Philippines
b. Diplomatic services/ Embassies or consular office of a foreign government
c. International organizations pursuant to international agreements
d. News services/agencies
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 and immunities pursuant to an
international agreement; and
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.
Note: The messages must deal exclusively with the collection or dissemination of news
item.
3. Tax base
Amount paid for the services rendered
Formula:
Payment for Services Pxxx
Rate 10%
Overseas Communication Tax PXXX
4. Tax rate
The tax rate is 10%.
5. Examples of communication facilities

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a. Telephone
b. Telegraph
c. Telewriter exchange
d. Wireless and other communication equipment services
SEC. 121 – TAX ON BANKS AND NON-BANK FINANCIAL INTERMEDIARIES

PERFORMING QUASI-BANKING FUNCTIONS
1. Persons subject to the tax
a. Banks
b. Non-bank financial intermediaries performing quasi-banking functions.
2. Definition of terms
a. Bank
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. A bank may either be a commercial bank, a thrift bank, a development bank, a rural bank or a specialized
government bank.
Bank or Banking Institutions – refer to those entities as defined under Section 3 of Republic Act No. 8791, otherwise known
as the General Banking Law of 2000, or more specifically, to entities engaged in the lending of funds obtained in the form of
deposits.
The term “banks” or “banking institutions” are synonymous and interchangeable and specifically include universal banks,
commercials banks, thrift banks (savings and mortgage banks, stock savings and loan associations, and private development
banks), cooperative banks, rural banks, Islamic banks and other classifications of banks as may be determined by the Monetary
Board of the BSP. (RR No. 8-08)
b. Non-bank financial intermediary defined

The term “non-bank financial intermediary” means a financial intermediary, as defined in Sec. 2 (D) (c) 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.
Non-bank Financial Intermediaries – refer to persons or entities whose principal function 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, either for their own account or for the account of others. This includes all entities regularly engaged in the lending of
funds or purchasing of receivables or other obligations with funds obtained from the public through the issuance, endorsement
or acceptance of debt instruments of any kind for their own account, or through the issuance of certificates, or of repurchase
agreements, whether any of these means of obtaining funds from the public is done on a regular basis or only occasionally. (RR
NO. 8-08)
c. Quasi-Banking Activities
The term “quasi-banking activities” means borrowing funds from twenty (20) or
more personal or corporate lenders at any time, through the issuance,
endorsement, or acceptance of debt instruments of any kind other than deposits
from the borrower’s account, or through the issuance of certificates of
assignment or similar instruments, with recourse, or repurchase agreement for purposes of relending or purchasing receivables and
other similar obligation: Provided however, that commercial, industrial and other non-financial companies, which borrow funds
through any of these means for the limited purpose of financing their own needs or the needs of their agents or dealers, shall not be
considered as performing quasi-banking functions.
Note:
1. Banks refer to persons and entities engaged in lending funds obtained from public.
2. Non-bank financial intermediaries are persons or entities whose principal functions include lending, investing or placement of
funds or evidences of indebtedness or equity deposited with them, acquired by them, or otherwise coursed through them,
whether for their own account or for the account of others
3. This rule applies to Money changers
3. Tax base and tax rates

Tax base Tax rates
Gross receipts on interest, commissions and discounts from lending activities; income from
financial leasing:
Remaining maturity period of instrument is 5 years or less (not in excess of 5 years) 5%
Remaining maturity period of instrument is more than 5 years (in excess of 5 years) 1%
Dividends and equity shares in net income of subsidiaries 0%
Royalties, rentals of property, real or personal, profits from exchange and all other items treated
7%
as gross income under the Tax Code
Net trading gains within the taxable year on foreign currency, debt securities, derivatives and
7%
other similar financial instrument
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4. In case maturity is shortened through pre-termination
In case the maturity period is shortened thru pre-termination, the maturity period shall be reckoned to end as of the date of pre-
termination for purposes of classifying the transaction and applying the correct rate of tax accordingly.
Note: BSP is not a bank nor a non-bank financial intermediary. In the performance of its proprietary functions, it shall not be
subject to percentage tax. However, it can subject to VAT if it engages in any of the transactions under Section 105 of the Tax Code.
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SEC. 122 – TAX ON FINANCE COMPANIES/TAX ON OTHER NON-BANK
FINANCIAL INTERMEDIARIES (GROSS RECEIPTS TAX)
a. Finance companies; and

b. Non-bank financial intermediaries not performing quasi-banking
functions
The term “other non-bank financial intermediaries” above shall include

pawnshops and non-stock savings and loan associations.
Note: MONEY CHANGERS AND PAWNSHOPS: Other non-bank financial intermediaries, such as money changers and pawnshops,
subject to percentage tax under Section 121 and 122, respectively, of the Tax Code. (Sec. 4.109-1(B)(w), RR 4-2007)
The term “finance companies” shall refer to corporations except banks, investment houses, savings and loans associations,
insurance companies, cooperatives, and other financial institutions organized or operating under other special laws, which are
primarily organized for the purpose of extending credit facilities to consumers and to industrial, commercial or
agricultural enterprises, by direct lending or by discounting or factoring commercial papers or accounts receivables, or by
buying and selling contracts, leases, chattel mortgages, or other evidences of indebtedness, or by financial leasing of movable as
well as immovable properties.
The term “other non-bank financial intermediaries” above shall include pawnshops and non-stock savings and loan
associations.

Tax base Tax rates
Gross receipts derived from interest, commissions, discounts and all other items treated as gross income
5%
under the Tax Code (From Others)
Interest, commissions and discounts from lending activities, as well as income from financial leasing:
(From Lending)
Remaining maturity of instrument is 5 years or less 5%
Remaining maturity of instrument is more than 5 years 1%
3. In case maturity is shortened through pre-termination
In case the maturity period is shortened thru pre-termination, the

maturity period shall be reckoned to end as of the date of pre-
termination for purposes of classifying the transaction and applying the
correct rate of tax accordingly.
TAX TREATMENT OF “ PASSED ON GROSS RECEIPT TAX” UNDER SECTION 121

AND 122 (RMC 62-2016)
The “passed-on” GRT should form part of the tax base upon which the GRT is based for gross receipt tax purposes, based on the
definition of gross receipts, that is based on actual or constructive receipt of income. Since bank, non-bank financial
intermediaries, financing companies and other financial intermediaries not performing quasi-banking functions doing business in
the Philippines are directly liable for GRT on gross receipts derived by them from business operations, the “passed-on” GRT shall
be considered as receipt of gross income specified under Section 32 (A) of the Tax Code.
Passed on GRT: Tax Rate

Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-banking Functions 7%
Tax on Finance Companies/Tax on Other Non-Bank Financial Intermediaries 5%
The “passed-on” GRT are considered as other fees and charges. The classification of passed on GRT as other fees and charges is
consistent with the implementing rules issued by the BSP through BSP Circular No. 370 (Updated Rules Implementing the Truth in
Lending Act to Enhance Loan Transaction Transparency dated July 20, 2011. Pertinent portions of which reads, Finance charge
includes interest, fees, service charges, discounts, and such other charges incident to the extension of credit.
Can the “Passed-on” GRT be claimed by the customer/client/borrower as a deduction for income tax purposes?
Yes. Passed on GRT (as other fees) under Section 34 of the Tax Code, subject, however, to the requirements for the deductibility
under Section 2.58.5 of RR No. 2-98, as amended by RR No. 12-2013.
What is the proper tax treatment by Banks and non-bank financial intermediaries on the “passed-on” GRT for income
tax purposes?
Banks and non-bank financial intermediaries can claim the GRT paid as deductible expense for income tax purposes pursuant to
Section 34 (C) of the Tax Code subject to the actual remittance of the GRT as provided under Section 128 of the Tax Code.
On the other hand, the interest charge to the client-borrower and the “passed-on” GRT shall be considered as receipt of income as
specified under Section 32 of the Tax Code.
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GROSS RECEIPT TAX (GRT) ON LENDING INVESTORS (RR 16-2005)
 Lending investors as well as dealers in securities are subject to 12% value added tax on the basis of their gross
receipts.
 Lending investors, includes all persons other than banks, non-bank financial intermediaries, finance companies and other
financial intermediaries not performing quasi-banking functions who make a practice of lending money for themselves or
others at interest.
IMPOSITION OF GROSS RECEIPT TAX (GRT) ON NON-STOCK SAVING AND

LOAN ASSOCIATION (NSSLAS) (RA 8367)
 RA 8367, otherwise known as “ Revised Non-Stock Saving and Loan Association (NSSLA) Act of 1997.
 NSSLA 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.
 They are regulated by the BSP and are classified as Non-Bank Financial Intermediaries (NBFIs) under the BSP Manual of
Regulations.
 (RMC 9-2016), NSSLAs are classified as Other Non-Bank Financial Intermediaries not performing quasi-banking operations,
hence, subject to GRT under Section 122 of the Tax Code.
 For income tax purposes, NSSLAs shall be exempt from income tax with respect to income it receives, including
interest on its deposits with any bank. However, any income derived by it from any of its properties, real or personal,
or any activity conducted for profit, regardless of the disposition thereof, is subject to the applicable income tax
and other internal revenue taxes imposed under the Tax Code.
MICROFINANCE NGOS (RMO 2-2018 )

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 (or “Council”)
shall be eligible to avail of the 2% gross receipt tax on income from microfinance operations in lieu of all national
taxes;
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;
5. The preferential rate of 2% tax based on gross receipts from microfinance operations should only refer to lending activities
and insurance commission which are bundled and forming integral part of the qualified lending activities of the Microfinance
NGOs;
6. All other income by the Microfinance NGOs which are not generated from the lending activities and insurance commissions,
shall be subject to all applicable taxes;
7. Duly registered and accredited Microfinance NGOs, as well as their clients, shall be required to have a Taxpayer Identification
Number (TIN);
8. Microfinance NGOs already registered with the BIR shall update their registration with the concerned Revenue District Office
(RDO) using BIR Form No. 1905 to reflect their accreditation as Microfinance NGOs;
9. Every Microfinance NGO shall maintain books of accounts and other pertinent records and shall be subject to periodic
examination by revenue enforcement officers of the BIR. In case Microfinance NGO engages in other businesses, it shall
maintain separate books of accounts for the same;
10. Every Microfinance NGO shall apply for Authority to Print (ATP) Receipts/Invoices (BIR Form No. 1906). In case Microfinance
NGO engages in other business, it shall apply for ATP for use of the other business.
11. Microfinance NGOs shall use BIR Form No. 2551 in filing and paying the 2% preferential tax rate; and
12. Microfinance NGOs shall be constituted as a withholding agent for the government if they act as an employer and that any of
their employees received compensation income subject to withholding tax on compensation, or if they make payments
to individuals or corporations subject to withholding taxes at source.
Microfinance NGO with Certificate of Accreditation from the Council as “Microfinance NGO” to qualify for the two percent (2%)
tax based on its gross receipts from microfinance operations in lieu of all national taxes and shall have the following tax types:
1. Withholding compensation – if with employee
2. Withholding expanded – if with payments subject to withholding tax at source
SPECIAL CONSIDERATIONS:
1. Lending Investors – gross receipts are subject to 12% VAT

2. Micro-Finance NGOs – gross receipts are subject to 2% gross receipts tax
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SEC. 123 – TAX ON LIFE INSURANCE PREMIUMS (PREMIUMS TAX)
a. Any person/entity offering life insurance in the Philippines, except purely
cooperative companies or associations.
b. The entity is doing business in the Philippines (DC or RFC)
c. Premium collection pertains to life insurance
Note:
The entity is doing business in the Philippines (DC or RFC)
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.
2. Tax base
a. Total premiums collected, whether such premiums are paid in money, notes, credits or any substitutes for money
b. Gross premiums shall include re-issuance fees, reinstatement fees, renewal fees, penalties paid to the insurance company in
connection with the insurance policy, and premiums on health and accident insurance.
3. Tax rate
The tax rate is 2%
Formula:
Premiums Collected Pxxx
Rate 2%
Premiums Tax PXXX
4. The following premiums are exempt from the premium tax:

a. Premiums received by purely cooperative companies or associations;
b. Premiums refunded within six (6) months after payment on account of rejection of risk, or returned for any other reason to
a person insured;
c. Premiums paid upon reinsurance by a company that has already paid the tax;
d. 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 the insured who is a non-resident, if any tax on such premium is imposed by
the foreign country where the branch is established;
e. 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 premium is imposed by the foreign country where the original insurance has been issued
or perfected; and
f. 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 owners.
g. Management fees, rental income, or any other income earned by the life insurance company from services which can be
pursued independently of the insurance business activity;
h. Investment income earned by the life insurance company from investing the premiums
Note: If investment income arises from funds solicited for purposes other than for the payment of premiums, the same shall
be subject to the GRT under Section 121 of the Tax Code.
Note:
Other items subject to the premium tax (RMC No. 49-2010)

a. Premium on Health and Accident Insurance, whether received by a
life or non-life insurance company
b. Re-issuance fees, reinstatement fees, renewal fees as well as
penalties paid to the life insurance company which are incidental to
or in connection with the insurance policy contracts issued
c. Investment income realized from the investment of funds
obtained from others allowed and approved by the Insurance
Commission.
Items earned by life insurance company subject to VAT or percentage tax as

the case may be (RMC No. 49-2010)
a. Insurance and reinsurance commissions, whether life or non-life
b. Management fees
c. Rental income
d. Other income earned which can be pursued independently of the insurance
business activities
Investment income realized from the investment of premiums earned
The interest income earned by the life insurance companies from investing the premiums received in marketable securities,
bonds and other financial instruments is considered exempt from further imposition of business tax since the premiums which
have been the source of the funds invested had already been subject to the premium tax (RMC No. 49-2010).
5. Persons subject to VAT

a. Non-life insurance companies including surety, fidelity, indemnity
and bonding companies are subject to VAT
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b. Pre-need companies
c. Health Maintenance Organizations (HMOs).
6. Insurance and Reinsurance commissions
Insurance and reinsurance commissions, whether life or non-life, are subject to VAT
Summary on Tax Rules: Life insurance Non-life insurance

Direct premiums 2% premiums tax VAT
Re-insurance premiums Exempt Exempt
Insurance commission (covers insurance and reissuance commission RR 16-2005) VAT VAT
SEC. 124 – TAX ON AGENTS OF FOREIGN INSURANCE COMPANIES

a. Every fire, marine, or miscellaneous insurance agent authorized under the Insurance Code to
procure policies of insurance as be may have previously been legally authorized to transact,
on risk located in the Philippines for companies not authorized to transact business in the
Philippines; and
b. Owners of property who obtain insurance directly with foreign companies,
Note:
Agents of non-resident foreign corporation engaged in insurance business; and Owners of property
directly obtaining insurance from Nonresident Foreign Corporation engaged in insurance business.
2. Tax base
Total premiums collected
3. Tax rate
a. For fire, marine, or miscellaneous insurance agent 4% of total premium collected

b. For owners of property who obtain insurance directly with foreign companies 5% of premiums paid
Exemption: Does not apply to reinsurance premiums.
SEC. 125 – AMUSEMENT TAXES

Proprietor, operator or lessee of:

a. Cockpits
b. Cabarets, night and day club
c. Boxing exhibitions
d. Professional basketball games
e. Jai-alai and racetracks
Transactions Tax base Tax rates

BOXING GAME Gross receipts 10%
BASKET BALL GAMES (PROFESSIONAL) Gross receipts 15%
COCKPITS OR SABUNGAN Gross receipts 18%
MUSIC LOUNGE / KARAOKE Gross receipts 18%
CABARETS, NIGHT CLUBS Gross receipts 18%
RECEIPTS FROM JAI-ALAI & RACETRACKS Gross receipts 30%
 Note: The term “cabaret, nights and day clubs” includes videoke bars, karaoke bars, karaoke televisions,
karaoke boxes and music lounge. (RMC No. 18-2010)
Note:
a. Gross receipts include admission charges, rents, and income from television, radio, and
motion picture rights.
b. If the proprietor, lessee, or operator of the amusement place also operates, at the same
time within the premises, a bar or restaurant, the receipts of the bar or restaurant shall
form part of gross receipts subject to the amusement tax above.
c. If such bar or restaurant in (b) is operated by a third person, the gross receipts thereof
shall be subject either to VAT or to the 3% OPT under Section 116.
d. Amusement places include videoke bars, karaoke bars, karaoke televisions, karaoke boxes, and music lounges.
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 Exempt boxing exhibition
1. Boxing exhibitions wherein World or Oriental Championships in any division is at stake shall be exempt from
amusement tax
2. Provided that at least one of the contender is a citizen of Philippines, and
3. said exhibitions are promoted by citizen’s of the Philippines or by a corporations or associations at least 60% of
the capital is owned by such citizens.
Formula:
Gross Receipts Pxxx
Rate x%
Amusement Tax PXXX
3. Meaning of gross receipts

For the purpose of 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 right, if any.
Section 125-A: Gaming Tax of Offshore Gaming Licensees (“OGLs”)

Persons Subject: Offshore gaming licensees
An offshore gaming licensee is an offshore gaming operator, whether organized abroad or in the Philippines, duly licensed and
authorized to conduct offshore gaming operations, including the acceptance of bets from offshore customers (Sec. 22(II), NIRC).
Tax: 5% of the entire gross gaming revenue or receipts, or the agreed pre-determined minimum monthly gaming revenue or
receipts, whichever is higher. Such 5% gaming tax shall be in lieu of all other direct and indirect internal revenue taxes and local
taxes.*
*However, PAGCOR or any special economic zone, tourism zone, or freeport authority may impose regulatory fees which shall not
cumulatively exceed 2% of the gross gaming revenue or receipts of all offshore gaming licensees, or a pre-determined minimum
guaranteed fee, whichever is higher (Sec. 125-A, NIRC).
This shall be directly remitted to the BIR not later than the 20th day following the end of each month.
Formula:
Gross wagers X
Less: Payouts (x)
Gross Gaming Revenue (GGR) Pxx
Vs APMMR Pxx
HIGHER amount between GGR and APMMR Pxx

Gaming Tax Rate 5%
Gaming Tax Pxxx
 Gross Wagers – refer to the total amount of money that offshore gaming customers.
 Payouts – refer to the total amount paid out to offshore gaming customers for winning.
 Agreed Pre-determined Minimum Monthly Revenue from gaming operations – refers to the amount that is derived
after dividing the minimum monthly fee or its equivalent, as imposed by a Philippine Offshore Gaming Operation (POGO)
Licensing Authority, by the rate of prescribed regulatory fee.
Note:
(1) Gross gaming revenue or receipts shall mean gross wagers less payouts.**
**PAGCOR or any special economic zone, tourism zone, or freeport authority shall engage the services of a third-party audit
platform that would determine the gross gaming revenues or receipts of offshore gaming licensees (Sec. 125-A, NIRC).
(2) Non-gaming revenue. The non-gaming revenues of a duly-licensed offshore gaming licensee shall be subject to an income tax
equivalent to twenty-five percent (25%) of taxable income. Such non-gaming revenues of OGLs shall also be subject to the VAT or
OPT, whichever is applicable.
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SEC. 126 – TAX ON WINNINGS
a. Owners of the winning horse; and
b. Bettor in a horse race or jai-alai

Transactions Tax base Tax rates
Person who wins in horse races (Straight bets of Actual amount paid for every winning ticket after deducting the cost of
10%
bettor) the ticket
Double, forecast/quinella and trifecta bets
(Combination bets of bettor)
Double- horses must win the two consecutive

races.
Actual amount paid for every winning ticket after deducting the cost of
Forecast- horses must finish 1st and 2nd in correct 4%
the ticket
order.
Quinella – a bet where at least the first two
finisher must be picked in either order.
Trifecta- horses must finish 1st, 2nd, and 3rd in
exact order.
Owners of winning race horses Prize 10%
“Owners” of the winning horse:

Prize Xxx
Multiply by: 10%
Tax on Winnings Xxx
“Bettor” in a horse race or jai-alai:

Gross winnings (Ordinary Winnings) Xxx
Less: Cost of the winning tickets (xxx)
Xxx
Multiply by: 10%
Tax on Winnings Xxx
Gross winnings (Special Winnings applicable only to bettors)- Double, Forecast, Quinella, Trifecta Xxx
Less: Cost of the winning tickets (xxx)
Xxx
Multiply by: 4%
Tax on Winnings Xxx
.
4. Collection of tax
a. Tax on winnings shall be deducted from the “dividends” corresponding to each winning ticket or the “prize” of each winning
racehorse.
b. Tax on winnings shall be withheld by the operator, manager or person in charge of the horse races before paying the
dividends or prizes.
5. Remittance of tax to BIR
The operator, manager or person in charge of horse races shall remit the taxes to the BIR within 20 days from the date the tax was
deducted and withheld.
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Sec. 127 (A) – Tax on Sale, Barter, or Exchange of Shares of Stock Listed and
Traded Through the Local Stock Exchange
A. Sale, Barter, or Exchange of Shares Listed and Traded Through the Local Stock Exchange (Sec. 127 (A), NIRC)
1. Persons subject:
The tax is imposed on the seller or transferor of the shares of stock, whether
individuals (citizen or alien), corporation (domestic or foreign), or other taxpayer
such as estates, trust funds and pension funds.
However, the following are not liable for the tax on such sales, namely:
a. Dealer in securities;
b. Investors in shares of stock in mutual fund company upon redemption
of said shares of stock in a mutual fund;
c. All other persons, whether natural or juridical, who are specially exempt
from national internal revenue taxes under existing investment
incentives and other special laws.
Rate and Basis of the Tax: (6/10 of 1%) of the gross selling price.
Duty of the Stockbroker: To withhold the tax and remit the same to the AAB
or RDO where the broker is registered within 5 days from the date of collection.
2. Taxes imposed herein shall not apply to the following:

a. Dealers in securities provided that, they shall be subject to Value-Added Tax (VAT) on the basis of their gross receipts and
Income Tax from their sale or exchange of securities.
b. Investors in shares of stock in a mutual fund company in connection with the gains realized by said investor upon
redemption of said shares of stock in a mutual fund company pursuant to Section 32(B)(7)(h) of the NIRC; and
c. All other persons, whether natural or juridical, who are specifically exempt from national internal revenue taxes under
existing investment incentives and other special laws.
3. Transfer of shares of stocks

a. The transfers of shares of stocks under Section 2(B) of the Regulations are subject to DST imposed under Section 175 of the
NIRC, as amended, as implemented by RR No. 13-2004, upon execution of the deed transferring ownership or rights
thereto, or upon delivery, assignment or indorsement of such shares in favor of another. No transfer of shares of stock
shall be recorded unless DST thereon has been duly paid for in accordance with Section 200 of the NIRC, as
amended.
b. No sale, exchange, transfer or similar transaction intended to convey ownership of, or title to any share of stock shall be
registered in the books of the corporation unless the receipts of payment of the taxes herein imposed in the instances
herein specified and the Certificate Authorizing Registration (CAR) and/or Tax Clearance Certificate (TCL) under pertinent
RR and issuances are filed with and recorded by the stock transfer agent or secretary of the corporation. It shall be the duty
of the aforesaid persons to inform the BIR any case of non-payment of tax.
Documentary Stamp Tax (DST)

Documents/Transactions Tax Rate
In general
Original issue of shares of stocks P2.00 / P200
Sales, Agreements to Sell, Memoranda of Sales, P1.50 / P200
Deliveries or Transfer of Shares of Certificates of Stock
with par value
In case stock without par value 50% of DST paid on original issue (50% x 2/200)
Note:
Sale, barter or exchange of shares of stocks listed and traded through the local stock exchange (RA 9648) (6/10 of 1%
of Selling Price) (Stock Transaction Tax)  Not Subject to DST (Documentary Stamp Tax)
Summary:
SUMMARY RULE ON SALE OF SHARES OF STOCK
Seller Place of sale Issuer Tax applicable DST
Dealer in Securities N/A N/A VAT and Basic income tax Yes
Par value- P1.50 / P200
No Par Value (50% x P2/P200)
Not Dealer in Securities Within LSE N/A Percentage tax No

Not Dealer in Securities Outside LSE Domestic corporation Capital gains tax Yes
Not Dealer in Securities N/A Foreign corporation Basic income tax Yes
.
RR 16-2012 prescribes the tax treatment of sales, barters, exchanges or other dispositions of shares of stock of
publicly-listed companies whose public ownership levels fall below the mandatory Minimum Public Ownership (MPO)
level
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All publicly-listed companies are required, at all times, to maintain a minimum percentage of listed securities held by the
public (or “public float”) of the higher rate of 10% of the publicly-listed companies’ issued and outstanding shares,
exclusive of any treasury shares or at such percentage as may be prescribed by the Securities and Exchange Commission (SEC)
or Philippine Stock Exchange (PSE).
Publicly-listed companies which are non-compliant Capital Gain Tax

with the MPO (Tax Base - Net Capital Gain: Tax rate 15%)
Publicly- listed companies which are compliant with Percentage tax (Stock transaction tax)
the MPO (6/10 of 1% of the gross selling price or gross value in money of the
shares of stock).
.
SEC. 127 (B) – TAX ON SHARES OF STOCK IN CLOSELY HELD CORPORATION

SOLD OR EXCHANGED THROUGH INITIAL PUBLIC OFFERIng
1. Person subject to tax
a. the issuing corporation in a primary offering, or
b. the selling shareholder of the shares in a secondary offering during an
IPO.
Note: Any initial public offering and secondary offering of shares of stock
issued by a real estate investment trust (REIT) or derivatives thereof
shall be exempt from the stock transaction tax imposed under Section
127 (B) of the Tax Code.
Closely-held corporation means any corporation at least fifty percent

(50%) in value of the 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.
Note: For purposes of determining stock ownership, stock shall be

considered owned (a) indirectly thru a corporation, partnership, estate, or
trust (b) directly or indirectly thru family members including the spouse,
and (c) thru options to acquire stock.
Initial Public Offering (IPO) – refers to a public offering of shares of

stock made for the first time in the local stock exchange.
Primary offering – refers to the original sale made to the investing public by the issuer corporation of its unissued shares of
stock.
Secondary offering – refers to an offer for sale to the investing public by the existing shareholders of their securities which is
conducted during an IPO, or after an IPO.
Follow-on/follow-through offering of shares – refers to an offering of shares to the investing public subsequent to an IPO.
Note:
1. A follow-on follow through transaction by the issuing corporation is not subject to both income tax and business
tax. Nonetheless, it is subject to applicable documentary stamp tax.
2. A follow-on follow-through transaction by a shareholder is subject to stock transaction tax under section 127 (A)
of the tax code of 6/10 of 1% of gross selling price or gross value in money of the shares of stock sold.
3. A follow-on follow-through transaction by the issuing corporation is not subject to both income tax and business tax
but subject to applicable documentary stamp taxes.
2. Tax base
Gross selling price or gross value in money
Formula:
Gross selling price Pxxx
Rate x%
Stock Transaction Tax PXXX
3. Tax Proportion shares sold, bartered, exchanged, etc. to total outstanding shares after the listing in the local stock exchange
rates
Ratio(proportion) Percentage
tax
Shares sold, bartered, exchanged ÷ Total outstanding shares up to 25% 4%
Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%
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4. Determination of the persons liable to pay the tax
a. Primary Offering (ISSUING CORPORATION) — The tax
herein imposed shall be paid by the issuer corporation with
respect to the Shares of Stock corresponding to the
Primary Offering.
b. Secondary Offering (SELLER) — The tax herein imposed
shall be paid by the selling shareholder(s) with respect to
the Shares of Stock corresponding to the Secondary
Offering.
5. Payment of tax (Who pays the tax?)

a. In case of primary offering – The corporate issuer
shall file the return and pay the tax within 30 days from
the date of listing of the shares in the local stock
exchange
b. In case of secondary offering – The stock broker
shall collect the tax and remit the same to BIR within 5
banking days from the date of collection
6. Gain not subject to capital gains tax and regular income

tax
Any gain derived from the sale, barter or exchange or other

disposition of shares of stock under Sec. 127 shall be exempt from
capital gains tax and from the regular individual and corporate
income tax
7. Not deductible for income tax purposes
The tax paid on initial public offering and secondary offering shall not be deductible for income tax purposes.
Summary of Applicable Taxes in the Issuance or Sale of Shares of Stock

Issuing
Term Used Corporation Shareholder
Issuance of shares Not subject to VAT, OPT and Income Tax Capital gains tax; 15% and subject
before IPO but subject to DST to DST
Issuance of shares Primary Offering OPT:4%;2%;1% (Repealed) OPT:4%;2%;1% (Repealed)
during IPO
Issuance of shares Follow on Follow Not subject to VAT, OPT and Income Tax OPT: 6/10 of 1% of Selling Price Not
after IPO Through but subject to DST subject to DST
Note:
Upon Effectivity of RA 11494 (Bayanihan Act II), Repeal of Section 127 (B) of the Tax Code, as amended by RA 11494
(Bayanihan II)
REVENUE REGULATIONS NO. 23-2020: Section 6 of Republic Act No. 11494 (Bayanihan to Recover as One Act) relative to the
repeal of tax on the Initial Public Offering (IPO) of shares of stocks provided under Section 127(B) of the National Internal
Revenue Code (NIRC) of 1997, as amended. The tax on shares of stocks sold, bartered, exchanged or other disposition through
lPO is repealed.
Thus, every sale, barter, exchange or other disposition through IPO of shares of stock in closely held corporations shall no
longer be subject to the tax imposed under Section 127(B) of the NIRC, as amended, upon the effectivity of RA No. 11494.
RA 11494 took effect on September 15, 2020.
Summary of Applicable Taxes in the Issuance or Sale of Shares of Stock
Issuing Corporation
Term Used Applicable Tax
Issuance of shares before IPO Not subject to VAT, OPT and Income
Tax but subject to DST
Issuance of shares during IPO Primary offering STT: 4%; 2%; 1%
Repealed under Bayanihan II
Issuance of shares after IPO Follow on follow through Not subject to VAT, OPT and Income
Tax bust subject to DST
Shareholder
Term Used Applicable Tax
Sale of shares before IPO or Sale of Capital Gains Tax
shares of unlisted DC
Sale of shares during IPO Primary offering STT: 4%; 2%; 1%
Repealed under Bayanihan II
Sale of shares after IPO or Sale of Follow on follow through STT of 6/10 of 1% of GSP
shares Listed in the LSE
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SPECIAL CONSIDERATIONS:
1. Lending Investors – gross receipts are subject to 12% VAT
2. Micro-Finance NGOs – gross receipts are subject to 2% gross receipts tax
GOVERNMENT MONEY PAYMENTS

Purchases made by:
1. Government-Owned and Controlled Corporations (GOCCs)
2. National Government Agencies (NGAs)
3. Local Government Units (LGUs)
4. Other Government Instrumentalities
RETURNS AND PAYMENTS OF PERCENTAGE TAXES
QUARTERLY PERCENTAGE TAX RETURN –

The Quarterly Percentage Tax Returns of taxpayers, whether large or non-large, shall be filed, and taxes paid, not later than 25
days after the end of the taxable quarter.
Note:
1. Filing under Section 116 may be consolidated or separately (Head Office and Branches)
2. Quarterly filing began January 1, 2018
REQUIRED ATTACHMENTS
1. Certificate of Creditable Tax Withheld at Source, if applicable;
2. Duly approved Tax Debit Memo, if applicable;
3. Copy of Certificate of Registration issued by Cooperative
Development Authority for cooperatives and from the National
Electrification Administration for electric cooperatives;
4. For amended return, proof of the payment and the return previously
filed.
Note: All background information must be properly filled out

 The last 5 digits of the 14-digit TIN refers to the branch code
 Non-VAT Individual Taxpayers subject to Percentage Tax under
Section 116 of the Tax Code, as amended, and whose gross
sales/receipts and other non-operating income do not exceed the
VAT threshold has the option to be taxed at either the:
1. Graduated Income Tax rates (with this, deduction may either be the
Itemized or OSD); OR
2. 8% flat Income Tax rate in lieu of the graduated income tax rates
and percentage tax under Section 116 of the Tax Code, as amended.
 All returns filed by an accredited tax agent on behalf of a taxpayer

shall bear the following information:
A. For Individual (CPAs, members of GPPs, and others)

a.1 Taxpayer Identification Number (TIN); and
a.2 BIR Accreditation Number, Date of Issue, and Date of Expiry.
B. For members of the Philippine Bar (Lawyers)

b.1 Taxpayer Identification Number (TIN);
b.2 Attorney’s Roll Number;
Note: (NEW) Section 125-A: Gaming Tax of Offshore
b.3 Mandatory Continuing Legal Education (MCLE) Compliance Number; and Gaming Licensees (“OGLs”)
b.4 BIR Accreditation Number, Date of Issue, and Date of Expiry.
This shall be directly remitted to the BIR not later than the
20th day following the end of each month.
RETURN AND PAYMENT OF PERCENTAGE TAXES
1. In general, every person subject to OPT shall file a quarterly return (BIR Form No. 2551Q) showing the amount of his gross
sales, receipts, or earnings, and pay the tax due thereon within twenty-five (25) days after the end of each taxable quarter.*
*For eFPS filers, theQuarterly Percentage Tax Returns (BIR Form No. 2551Q) shall be e-filed in a consolidated return on a
staggered basis according to the taxpayer’s industry classification. The aggregate percentage taxes due shall be e-paid within
twenty-five (25) days after the end of each taxable quarter subject to the pertinent provisions of Section 128(A) of the Tax
Code (Rev. Reg. No. 17-2010).
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However, the following percentage taxes have filing and payment rules which differ from the abovementioned rule:
a. Overseas communication tax under Section 120 of the Tax Code – the tax shall be paid to the person rendering the service,
and such person is required to collect and pay the tax within twenty (20) days after the end of each quarter;
b. Gaming Tax on services rendered by offshore gaming licensees (OGLs) – the gaming tax shall be directly remitted to the BIR
not later than the 20th day following the end of each month.
2. The following taxpayers, however, are required to file the monthly return (BIR Form No. 2551M) in addition to the quarterly
return: (Guidelines to BIR Form No. 2551M.)
a. Taxpayers whose gross annual sales and/or receipts do not exceed ₱3,000,000, and who are not VAT-registered taxpayers;
b. Domestic carriers and keepers of garages;
c. Operators of international air and shipping carriers doing business in the Philippines;
d. Franchise grantees of gas or water utilities;
e. Franchise grantees of radio and/or television broadcasting companies whose gross annual receipts of the preceding year do
not exceed ₱10,000,000, and are not VAT-registered taxpayers;
f. Banks, non-bank financial intermediaries, and finance companies;
g. Life insurance companies; and
h. Agents of foreign insurance companies.
i. Offshore gaming licensees.
BIR Form No. 2551M shall be filed not later than the 20th day following the end of each month.
3. Person Retiring from Business
Any person retiring from a business subject to the percentage tax shall notify the nearest internal revenue officer, file his return,
and pay the tax due thereon within twenty (20) days after closing his business.
Person whose VAT registration is cancelled: In the case of a person whose VAT registration is cancelled and who becomes
liable to the 3% tax on VAT-exempt persons, the tax shall accrue from the date of cancellation and shall be paid within 20 days
after the end of each taxable month
4. The following percentage taxes have filing and payment rules which differ from the above-mentioned rules:
a. Tax on winnings under Section 126 of the Tax Code – the tax shall be withheld by the operator, manager, or person in
charge of the horse races, and must be remitted to the BIR within twenty (20) days from the date of withholding;
b. Stock transaction tax under Section 127(A) of the Tax Code – the tax shall be withheld by the stockbroker who effected the
sale, and shall be remitted to the collecting bank or Revenue District Office where the broker is registered within five (5)
banking days from the date of collection; (BIR Form No. 2552 shall be used in the filing and payment of the stock
transaction tax under Section 127(A) of the Tax Code.)
c. Taxpayers who are required to withhold OPT shall withhold and remit taxes on a monthly basis using BIR Form No. 1600-PT
(Remittance Return of OPT Withheld). This return shall be filed and the tax paid on or before the tenth (10th) day of the
month following the month in which withholding was made (see discussion on withholding of OPT below).
d. Advance OPT –
1) Sale of Sugar
A seller of sugar (other than “raw cane sugar”) whose gross annual sales do not exceed ₱3.0 Million and who is not VAT-registered,
shall pay a percentage tax equivalent to 3% of gross monthly sales or receipts. In general, such percentage tax shall be paid in
advance by the owner or seller before any warehouse receipt or quedans are issued, or before the sugar is withdrawn from any sugar
refinery or mill.
2) Transport of naturally grown and planted timber products
The advance percentage tax shall be determined by applying the rate of 3% on the corresponding value per cubic meter of the
different species of naturally grown and planted timber products in accordance with the schedules issued by the BIR;
3) Sale of jewelry, gold, and other metallic minerals to non-resident individuals not engaged in business in the
Philippines and/or non-resident foreign corporations.
Change in Status
a. In the case of a person whose VAT registration is cancelled, and who becomes liable to the tax imposed in Section 116 of the Tax
Code, the tax shall accrue from the date of cancellation, and shall be paid in accordance with the provisions of Section 128 of the
Tax Code.
b. For those who are not VAT-registered and who have chosen to be taxes under the 8% income tax rate option, but have
subsequently becomes liable to VAT:(*)
1. He is required to update his registration immediately within the month following the month he exceeded the VAT threshold.
And he shall be liable to VAT prospectively starting on the first day of the month following the month when the threshold is
breached.
2. The taxpayer shall pay the required OPT covering the sales/receipts from the beginning of the taxable year or
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commencement of business/practice of profession until the time the taxpayer becomes liable for VAT. He shall into be
imposed any penalty if the OPT is timely paid on the immediately succeeding month/quarter. (**)
(*) A non-VAT taxpayer who initially presumed that his gross sales/receipts plus other non-operating income for the taxable year
will not exceed the P3,000,000 VAT threshold but has actually exceeded the same during the taxable year, shall immediately update
his registration to reflect the change in tax profile from non-VAT to VAT taxpayer (RR 8-2018)
(**) Thus, there may be an instance when a taxpayer files two (2) business tax returns in a month or quarter- i.e. OPT and VAT
returns (RR 8-2018)
Where to File Return
Every person liable to the OPT may, at his option, file a separate return for each branch or place of business, or a consolidated return
for all branches or places of business with the authorized agent bank, Revenue District Officer, Collection Agent, or duly authorized
Treasurer of the city or municipality where said business or principal place of business is located, as the case may be.
Withholding of OPT
A) Withholding By the Government
Bureaus, offices, and instrumentalities of the government, including GOCCs as well as their subsidiaries, provinces, cities, and
municipalities making money payments to private individuals, corporations, partnerships, and/or associations are required to deduct
and withhold the percentage taxes due from the payees on account of such money payments.
No money payments shall be made by any government office or agency, unless the taxes due thereon shall have been deducted and
withheld.
The required return shall be filed and payments made within ten (10) days following the end of the month the withholding was made
or the withholding tax has accrued.
B) Optional Withholding of OPT
Under Sec. 5.128 of Rev. Regs. No. 2-98 (as inserted by Rev. Regs. No. 14-2003), a person supplying goods or services and are
subject to the 3% percentage tax under Section 116 of the Tax Code has the option to remit his OPT through the withholding
and remittance of the same by the payor.
Such option must be manifested by filing the “Notice of Availment of the Option to Pay the Tax Through the Withholding Process”,
which must be furnished to the payor and the RDOs of both payor and payee. The option, once chosen, remains as the manner of
remitting the tax unless said option is cancelled by the payee.
The OPT withheld shall be remitted by the payor, using BIR Form No. 1600-PT, to the appropriate collection agents (authorized agent
bank (“AAB”) or revenue collection officer (“RCO”)) of the BIR.
OTHER PERCENTAGE TAXES (SUMMARIZED)
Percentage Tax Tax Basis Tax Rate BIR Form No. Due Dates
Sec. 116 – Tax on Gross Quarterly Sales or Receipts 3% BIR Form No. 25th days after
persons exempt 2551 Q the end of each
from VAT under Sec. quarter
109 (C) (annual
gross sales or
receipts do not
exceed P3,000,000)
Sec. 117 – Actual or Minimum Gross Receipts whichever is higher 3% BIR Form No. 25th days after
Percentage tax on Areas of Business 2551 Q the end of each
domestic carriers Operations quarter
and keepers of Minimum Quarterly Gross Manila and Provinces
garages (Transport Receipts other cities
of passengers) – 1. Jeepney for hire P2,400 P1,200
land 2. Public Utility Bus
Not exceeding 30 passengers P3,600 P3,600
Exceeding 30 but not
exceeding 50 ….passengers P6,000 P6,000
Exceeding 50 passengers P7,200 P7,200
3. Taxis P3,600 P2,400
4. Car for hire with chauffeur P3,000 P3,000
5. Car for hire without P1,800 P1,800
chauffeur
.
Sec. 118 – Quarterly Gross Receipts 3% BIR Form No. 25th days after
Percentage tax on 2551 Q the end of each
International quarter
air/shipping carriers
doing business in the
Philippines
Sec. 119 – Tax on Gross Receipts: BIR Form No. 25th days after
franchises Franchises on gas and water utilities 2% 2551 Q the end of each
quarter
Franchises on Radio and television broadcasting companies whose 3% BIR Form No.
annual gross receipts of the preceding year do not exceed P 10,000,000 2551 Q
and did not opt to register as VAT taxpayer Gross Receipts
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Transmission operation of National Grid Corporation of the Philippines 3%
Except from RMC 33-2013, PAGCOR is subject to a franchise tax. 5% BIR Form No. The return shall
Gross revenue or earnings 2553 (Return of be filed on or
Percentage Tax before the due
Payable Under date for
Special Laws) payment of the
tax as stated in
the special law.
Sec. 120 – Tax on Amount paid for such services ( by the person who used the 10% BIR Form No. 25th days after
overseas dispatch, communication facilities) 2551 Q the end of each
message or quarter
conversation Exempted from Sec. 120 are:
originating from the 1. Government
Philippines 2. Diplomatic services
3. International organizations
4. News services
Sec. 121 – Tax on Gross receipts on interest, commissions and discounts from lending BIR Form No. 25th days after
banks and non-bank activities ; income from financing leasing: 2551 Q the end of each
financing quarter
intermediaries
performing quasi –
Remaining Maturity period of instrument is 5 years or less (Not in
banking functions 5%
excess of 5 years)
Remaining Maturity period of instrument is More than 5 years (In
1%
excess of 5 years)
Dividends and equity shares and net income of subsidiaries 0%
Royalties, rentals of properties, real or personal, profits from exchange
7%
and all other items treated as gross income under Sec. 32 of the Code
Net trading gains within the taxable year on foreign currency, debt
7%
securities, derivatives and other similar financial instruments
Gross receipts derived from interest, discounts, commission and other BIR Form No. 25th days after
Sec. 122 – Tax on items of gross income paid to finance companies and other financial 2551 Q the end of each
Finance 5%
intermediaries not performing quasi banking functions (From Other quarter
Companies/Other Sources)
Non-Bank Financial
Interest, commissions and discounts paid from their loan transactions
Intermediaries
from finance companies as well as income from financial leasing:
(From Lending)
Remaining Maturity period is 5 years or less 5%
Remaining Maturity period is more than 5 years 1%
BIR Form No. 25th days after
2551 Q the end of each
Sec. 123 – Tax Life quarter
Insurance
Total premiums collected 2%
Companies (except
purely cooperative
companies or
associations)
Sec. 124 – Tax on Total premiums collected/paid BIR Form No. 25th days after
Agents of foreign 2551 Q the end of each
insurance companies Generally (agents of foreign insurance companies (fire/marine or 4% quarter
(Fire, marine or miscellaneous agent)
miscellaneous
insurance): (except
reinsurance Owners of property obtain insurance directly with foreign insurance
premium) companies 5%
BIR Form No. 25th days after

Gross receipts
2551 Q the end of each
Jai-alai and race track 30%
quarter
Sec. 125 – Cockpits, cabarets, night or day clubs 18%
Amusement taxes
Professional basketball games 15%
Boxing exhibitions 10%

Tax: 5% of the entire gross gaming revenue or receipts, or the 20th day
agreed pre-determined minimum monthly gaming revenue or receipts, following the
whichever is higher. Such 5% gaming tax shall be in lieu of all other end of each
Sec. 125 A –
direct and indirect internal revenue taxes and local taxes.*
Gaming Tax on 5%/ Not month.
services rendered by exceed 2%
*However, PAGCOR or any special economic zone, tourism zone, or
Offshore Gaming ecozone
freeport authority may impose regulatory fees which shall not
Licensees (OGL)
cumulatively exceed 2% of the gross gaming revenue or receipts of
all offshore gaming licensees, or a pre-determined minimum
guaranteed fee, whichever is higher (Sec. 125-A, NIRC).
BIR Form No. 20 days from the
Actual amount paid for every winning ticket after deducting the cost of 1600-WP date the tax was
10%
Sec. 126 – Tax on the ticket deducted and
winnings withheld
Winnings from double, forecast/quinella and trifecta bets 4%
Prize of winning race horse owners 10%
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Sec. 127 (A) Every BIR Form No. 5 banking days
stock broker who 2552 from the date of
effected a sale, collection
barter, exchange or
other disposition of
shares of stock listed Gross selling price or gross value in money of shares of stocks sold, 6/10 of 1
and traded through bartered, exchanged or otherwise disposed %
the Local Stock
Exchange (LSE)
other than the sale
by a dealer in
securities
(B)A BIR Form No.
corporate 2552
issuer/stock broker,
whether domestic of
foreign, engaged in 30 days from the
Gross selling price or gross value of in money of shares of stocks sold,
the sale, barter, date of listing of
bartered, exchanged or otherwise disposed in accordance with the
exchange or other the shares of
proportion of stocks sold, bartered or exchanged or after listing in the
disposition through stock in the local
stock exchange
Initial Public stock exchange
Offering (primary)
(IPO)/Secondary
 Up to 25 % 4%
Public Offering of 5 banking days
shares of stock in from the date of
closely held collection
corporations (secondary)
 Over 25% but not over 33 1/3% 2%
 Over 33 1/3 % 1%
Annualization Form 1604-F shall be filed Form 1604-E shall be filed Form 1604-C shall be filed on
on or before January 31 of on or before March 1 of the or before January 31 of the
the following year. following year. following year.
Lists all the WTs withheld

from all its payees (i.e. its
vendors or suppliers) for the
entire previous taxable year.
Deadlines for issuing the BIR FORM 2306 - To be BIR FORM 2307 -The BIR BIR FORM 2316 –
certificate and payment issued to payee on or Form 2307 should be issued To be issued to payee on or
before January 31 of the to the payee on or before before January 31 of the
year following the year in the 20th day of the month succeeding year in which the
which income payment was following the close of the compensation was paid, or in
made. However upon request taxable quarter when the cases where there is termination
of the payee the payor must accrual or payment was of employment, it is issued on
furnish such statement to the made, which ever came first. the same day the last payment
payee simultaneously with Upon request of the payee, of wages is made.
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the income payment. however, the payor must
furnish such statement to
the payee simultaneously
with the income payment. Note: Duplicate Copy of BIR
Form 2316 Duly Signed by the
Note: Important notes and Employees Covered by
reminders Substituted Filing Copy to BIR
As the payor or issuer of the (on or before February 28)
certificate, you need to
summarize the details of all The employer must give the
2307 issued for the quarter original copy to the employee,
and must tally to the 1601EQ while a duplicate copy is to be
and QAP (Quarterly Alphalist submitted by the employer to the
of Payees). concerned BIR office no later
than Feb. 28 of the succeeding
year.
Note: Annually Note: Quarterly
BIR FORMS
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REVIEW QUESTIONS
Determine the appropriate business tax of each of the following types of transactions/business described below: If the
transaction/business is subject to:
A 12% VAT
B Zero rate (0%) VAT
C OPT
D Excise tax
E 12% VAT and Excise Tax
F Exempt from Business Tax
1. Sale of cotton
2. Importation of fertilizers
3. Traders of fresh fruits whose gross receipts exceeds P3,000,000
4. Trader of goods whose gross receipt exceeds P3,000,000
5. A seller of service whose gross receipts exceeds P3,000,000
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6. An individual taxpayer whose gross receipts for the year amounted to P100,000
7. Domestic common carriers transporting passengers. Gross receipts for the year amounted to P2,800,000
8. Domestic common carriers transporting passengers. Gross receipts for the year amounted to P4,000,000
9. Domestic common carriers transporting goods or cargoes. Gross receipts for the year amounted to P2,600,000
10. Domestic common carriers (VAT registered) transporting goods or cargoes. Gross receipts for the year amounted to
P2,250,000
11. Domestic common carriers transporting goods or cargoes. Gross receipts for the year amounted to P6,000,000
12. Lazada, an online shopping company
13. Dormitories
14. Professional fees
15. Review schools for government licensure examination
16. International air carrier transporting passengers only
17. International air carrier transporting goods only
18. International carrier transporting passengers and goods/cargoes
19. Demurrage fees, detention fees and other charges of international carrier (excluded in the computation of Gross
Philippine Billings)
20. Gross receipts of PAGCOR from its operations and licensing of gambling casinos, gaming clubs and other similar
recreation or amusement places, gaming pools and other related operations.
21. Nonresident foreign licensors
22. Night clubs
23. A radio television broadcasting franchisee. Gross receipts for the preceding year amounted to P12,000,000
24. A VAT registered radio television broadcasting franchisee. Gross receipts for the preceding year amounted to P8,000,000
25. A telephone franchisee grantee offering local and overseas communication services. Gross receipts for the year
amounted to P25,000,000.
26. A telephone franchisee grantee offering local and overseas communication services. Gross receipts for its first year of
operations amounted only to P2,500,000.
27. Philippine commercial banks
28. Lending/Financing Companies
29. Interest income derived by a credit cooperative from its lending to non-members
30. Sale of low-cost housing by VAT registered real estate companies
31. Lease of commercial spaces
32. Philippine Basketball Association, a professional basketball league
33. Operator of Jai-Alai
34. St. Vincent Dormitory
35. The Manila Hotel
36. New Wave Resort
37. VAT registered exporter
38. Hog dealer
39. Meralco
40. Non-VAT registered exporter
41. Gasoline stations
42. Sale of wines by an importer
43. Sale of liquor by dealer
44. Sale of sugar cane
45. Drug stores
A. SEC. 116- TAX ON PERSONS EXEMPT FROM VAT UNDER SECTION 109 (CC)
Problem 1: Budoy is a CPA practioner. His gross receipts, expenses and other data for 20x8 taxable year are provided below:
Gross receipts P1,800,000
Cost of direct services 1,075,000
Operating expenses 425,000
Rental income (net of CWTax) 570,000
Dividend income from a closely held domestic corporation 50,000
Interest income from peso bank deposit 80,000
Interest income from FCDS deposit 20,000
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Required:
1. Determine the total business tax due and payable for 20x8 assuming Budoy is Non-VAT registered.
2. Determine the total business tax due and payable for 20x8 assuming Budoy opted to be taxed at 8%.
3. Determine the total output tax for 20x8 assuming Budoy is VAT registered.
1. Gross sales/receipts and other non-operating income = P1.8M + (P570,000/95%) = P2.4M

Business Tax = P2.4M x 1% under Sec. 116 = P24,000
2. Business Tax Due = P0; The taxpayer opted to be taxed at 8% (qualified) which is in lieu of the Basic Income Tax Due and
Business Tax Due under Section 116 of the Tax Code, as amended under TRAIN Law.
3. VAT = P2.4M x 12% = P288,000
Problem 2: Analiza, a self employed resident citizen provided the following data for the 1st quarter of 20x8 taxable year:
Sales P1,275,000
Cost of sales 625,000
Business expenses 350,000
Royalty from books 40,000
Gain on direct sale to buyer of shares of stock of a domestic corporation held as capital asset 70,000
Loss on sale of land in the Philippines held as capital asset with cost of P1,500,000 when the zonal value is 500,000
P1,200,000
Required:
1. Determine the total business tax due and payable for the first quarter.
2. Determine the total business tax due and payable for the first quarter, if applicable, assuming opted to be taxed at 8%.
1. 1% OPT on VAT exempt sales (GR<3,000,000 and Non-VAT registered) = P1,275,000 x 1% = P12,750
2. Business Tax Due = P0; The taxpayer opted to be taxed at 8% (qualified) which is in lieu of the Basic Income Tax Due
and Business Tax Due under Section 116 of the Tax Code, as amended under TRAIN Law.
Problem 3: Carla (resident citizen), earning compensation income and from self-employment, provided the following data for the
1st quarter of 20x8 taxable year:
Compensation income P780,000
Sales 1,275,000
Cost of sales 625,000
Royalty from books 40,000
Gain on direct sale to buyer of shares of stock of a domestic corporation held as capital asset 70,000
Loss on sale of land in the Philippines held as capital asset with cost of P1,500,000 when the zonal value is 500,000
P1,200,000
Required:
1. Determine the total business tax due and payable for the first quarter
2. Determine the total business tax due and payable for the first quarter, if applicable, assuming Carla opted to be taxed at 8%
1. Gross sales/receipts and other non-operating income = P1,275,000

Business Tax = P1,275,000 x 1% under Sec. 116 = P12,750
The compensation income is not subject to business tax.
2. Business Tax Due = P0; The taxpayer opted to be taxed at 8%(qualified) which is in lieu of the Basic Income Tax Due and
Business Tax Due under Section 116 of the Tax Code, as amended under Train Law.
Problem 4: (Tax on persons exempt from VAT)
Case 1 (Corporate Taxpayers) ABC Company is engaged in the business of buying and selling of goods. The company is not a
VAT registered taxpayer. The gross sales for the first year of operation amount to P520,000.
a. By what business tax is subject to? How much is the tax due?
b. How about if the company decides to voluntarily register under the VAT system in his second year of operation?
c. Assuming during the year, the gross annual sales amounted to P4,000,000. The company was registered as a non-VAT
taxpayer, is the business subject to VAT or to 3% Non-VAT?
a. ABC Company is subject to a percentage of 1% on Persons Exempt from VAT because he is not a VAT-
registered taxpayer and at the same time his gross receipts during his first year of operation does not exceed
P3,000,000.
Therefore, the percentage tax due of ABC Company is P5,200 (P520,000x1%)
b. If ABC Company decides to voluntarily register under the VAT system, shall be subject to value-added tax
regardless of the amount of his annual gross receipts.
c. VAT, However, as a consequence of its failure to register under the VAT system, it cannot pass to
customers the applicable output VAT and is not entitled to input vat credit.
Case 2: (Individual Taxpayers; Purely SEP)
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Case A: Mr. Santos is engaged in the following during 20x8 taxable year:
Ordinary Course of Business Gross Receipts Business Tax

Trucking business P1,000,000 1% OPT
Lease apartment (monthly rental P18,000) 600,000 1% OPT
Lease apartment (monthly rental P15,000) 3,800,000 VAT exempt
Practice of accountancy 100,000 1% OPT
Required: What is the applicable business tax?
Case B: Mr. Santos is engaged during 20x8 taxable year:
Ordinary Course of Business Gross Receipts Business Tax Income Tax Rate
Lease apartment (monthly rental P15,000) P3,800,000 VAT exempt Graduated tax rate
Required:
1. What is the applicable business tax?
2. What is the applicable income tax rate?
Case C: Mr. Santos is engaged during 20x8 taxable year:
Lease apartment (monthly rental P17,000) P3,000,000 1% OPT 8% or Graduated tax
rate
Required:
1. What is the applicable business tax?
Case D: Mr. Santos is engaged during 20x8 taxable year:
Lease apartment (monthly rental P17,000) P2,000,000 None (2M-250K) x 8%
Required:
1. Assuming Mr. Santos opted to be taxed at 8%. What is the applicable business tax?
Case E: Mr. Santos is engaged during 20x8 taxable year:
Lease apartment (monthly rental P17,000) P2,000,000 VAT Graduated tax rate
Required:
1. Assuming Mr. Santos is VAT registered. What is the applicable business tax?
Case F: Mr. Santos is engaged during 20x8 taxable year:
Taxi operator P5,000,000 3% common carrier tax sec. 117 Graduated tax rate
Required:
1. Assuming Mr. Santos is VAT registered. What is the applicable business tax?
Case 3: (SEP earning mixed income)
Mr. Santos (non-VAT registered) is self-employed involved in trading merchandising and a part-time professor of ABC College. Data
for 20x8 taxable year were provided as follows:
Compensation income P800,000
Gross sales 2,800,000
Purchases on account from VAT suppliers (net) 1,200,000
Payments made to VAT suppliers 800,000
Purchases on account from non-VAT suppliers 200,000
Payments made to non-VAT suppliers 80,000
Operating expenses 1,200,000
Required:
1. What is the applicable business tax and the amount due that Mr. Santos should pay for the year?
Answer:
 Applicable business tax: 1% OPT under Section 116
 Amount of business tax due: P28,000 computed as P2,800,000 x 1%. NOTE: The Compensation Income is not
subject to a business tax.
2. Assume the same data in Question 1, except that Mr. Santos opted to be taxed at 8%. How much is the amount of business tax
that Mr. Santos should pay under Section 116?
Answer:
 None. NOTE: The 8% tax is in LIEU of income and business tax under Sec. 116. This amount represents two taxes,
income tax in lieu of the graduated income tax table and business tax under Section 116. P250,000 deduction is not
applicable to SEP earnings mixed income.
P a g e | 39
B. Sec. 117 – Percentage Tax on Domestic Carriers and Keepers of Garage (Common Carrier’s Tax)
Problem 1: Hatawna Bus Company (a domestic common carrier) has the following data for the first quarter of the current year:
Gross receipts, passenger operations P8,000,000
Gross revenue from cargo operations 5,000,000
Expenses, passenger operations 4,750,000
Expenses, cargo operations 2,500,000
Gross receipts – rental of facilities 2,000,000
Additional information:
25% of its gross revenue from cargo operations were still outstanding as of the end of the quarter.
Required: Determine the total business tax due for the first quarter.
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Problem 2: Bilis Track Company, a domestic common carrier engaged in the transport of goods and cargoes provided the following
data for 20x8 taxable year:
Gross revenues, 20x8 P2,400,000
Receivable, December 31, 20x7 500,000
Receivable, December 31, 20x8 600,000
Operating expenses 1,250,000
Required: Determine the following

1. The business tax due of Bilis Track Company, assuming the company is a non-vat registered entity.
2. The business tax due of Bilis Track Company, assuming the company is a vat registered entity.
1. Taxpayer is non-vat registered

Gross revenue P2,400,000
Add: AR, beginning 500,000
Less: AR, end (600,000)
Collections P2,300,000
X 1%
Business Taxes under Sec. 116 P23,000
 The basis of business tax in this particular problem shall be collections because the taxpayer is engaged in sale of
services.
 The taxpayer is non-vat registered and the total gross receipts ≤P3,000,000, hence, subject to 1% OPT under
Section 116 of the Tax Code, as amended.
2. Taxpayer is vat registered

Gross revenue P2,400,000
Add: AR, beginning 500,000
Less: AR, end (600,000)
Collections P2,300,000
X 12%
Business Taxes P276,000
 The basis of business tax in this particular problem shall be collections because the taxpayer is engaged in sale of
services.
 Although the total gross receipts ≤ P3,000,000, the taxpayer is VAT registered. Hence, subject to 12% VAT.
C. SEC. 118 – PERCENTAGE TAX ON INTERNATIONAL CARRIERS (AIR AND SHIPPING) (FOREIGN CARRIERS)
Problem 1: (Tax on common carriers) What taxes shall be imposed on the following?
a. Transport of passengers, goods or cargoes of domestic air carriers from one place in the Philippines to another place in the
Philippines.
b. On-line international air carriers on their outbound fares and freight.
c. Domestic air carriers on services involving transport of passengers, goods and cargoes from the Philippines to a foreign country.
d. Domestic air carriers on services involving transport of passengers, goods, and cargoes from a foreign country to the Philippines.
e. Domestic air carrier from domestic port to a foreign port but before proceeding to the foreign port loads passengers and/or
cargoes from a domestic port and unloads them in another domestic port.
f. International air carriers on services involving transport of goods on their outbound international operations.
g. Domestic sales of goods, supplies, equipment, fuel and services to international air Transportation Company engaged in
international air transport operations.
P a g e | 40
a. 12% Vat
b. 3% percentage tax
c. 0% VAT
d. Not subject to business taxes due to lack of tax jurisdiction
e. 12% on gross receipts from a domestic port to another domestic port.
f. 3% percentage tax
g. 0% VAT provided that the same to limited to or attributable to the transport of goods and passengers from a port in the
Philippines diretly to a foreing port without docking or stopping any other port in the Philippines to unload passengers and or cargoes
loaded in and from another domestic port.
Problem 2: Lipad Away Air Lines (a resident international carrier) has the following data for the current year:
Gross receipts, Philippines (passenger operations) P10,000,000
Gross receipts, Philippines (cargo operations) 6,000,000
Gross receipts, Japan (passenger operations) 8,000,000
Gross receipts, Japan (cargo operations) 5,000,000
Expenses, Philippines (passenger operations) 4,000,000
Expenses, Philippines (cargo operations) 2,000,000
Expenses, Japan (passenger operations) 4,500,000
Expenses, Japan (cargo operations) 1,250,000
Required: Determine the following:

1. The income tax due for the year
2. The income tax due assuming the company is subject to a preferential income tax rate of 2% under an existing international
agreement or treaty
3. The business tax due for the year
Problem 3: (Tax on international carriers) Paris is bound for Los Angeles, California, USA. A ticket is sold to him by the
Philippine Airlines from Manila to point of final destination. However, he will disembark as a transit passenger in Tokyo, and embark
of another place belonging to the same airline in Tokyo for the United States. All arrangements are done by the selling airlines
Manila Office. He was issued two (2) boarding passes in Manila. One for the flight from Manila to Tokyo and other for Tokyo to
California. Which amount will serve as the basis for purposes of the 3% common carrier’s tax, the gross receipts for the journey
from Manila to Tokyo, or the gross receipts for the entire journey from the point of uplift to the point of final destination?
Notes (Passenger vs Goods)

Passengers - exempt
Applicable to goods:
If there is a change in plane belonging to the same airline at a certain point which is not the final destination of the passenger,
for any reason other than force majeure, the flight is still "continuous and uninterrupted"; the basis of the gross receipts
reportable for percentage tax purposes will be the cost of the ticket corresponding from the point of origin (Manila) to the final
destination of the passenger (BIR Ruling 88-164).
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Hence, for purposes of computing the percentage tax, the gross receipts shall be based on the cost of the ticker for the
entire journey, i.e. from Manila to United States
D. SEC. 119 – TAX ON FRANCHISES
Problem 1: (Tax on franchisees) Too Large Corporation, a franchisee, is engaged in the business of servicing water utilities to
several towns in Luzon. Its annual gross receipts range from P8,500,000 to P9,000,000.
a. How much is the franchise tax if the gross receipts from the sale of water utilities during the month amount to P2,000,000?
b. How much is the business tax payable by Too Large Company if other than the receipts from the sale of water, is also earned
P4,000,000 for the repair of major source of electricity in that region?
a. Operators of gas and water utilities are subject to a Franchise Tax of 2% on the gross receipts. Thus, if the
gross receipts during the month amount to P2,000,000, Too Big Company shall be liable to pay a tax of
P40,000 (P2,000,000 x 2%).
b. Payments for services rendered, other than the business covered by the law granting the franchise, are
subject to the VAT tax.
E. SEC. 120 – TAX ON OVERSEAS DISPATCH, MESSAGE OR CONVERSATION ORIGINATING FROM THE PHILIPPINES
Problem 1: (Overseas communication tax and VAT on domestic calls) ABC Company is operating an export-import business.
From time to time, it calls and sends fax messages to its suppliers abroad. Oftenly, the company sends also messages to its
customers in the different key cities of the country. Its monthly bills from the PLDT for January , February, and March were P20,000,
P14,500 and P25,700, respectively. The regular monthly bill is P500. If out of the total telephone bill during the quarter, 60% were
from overseas messages or conversation, how much overseas communication tax is payable by ABC Company? How about the 40%
which is composed of the local calls and the basic monthly bills?
7. January February March

Monthly telephone bill P20,000 P14,500 P 25,700
Percent of overseas call 60% 60% 60%
Receipts from overseas call 12,000 8,700 15,420
Divide by 11 11 11
Overseas communication tax 1,090.90 790.90 1,401.82
Note: The bills on the overseas communications include already the 10% tax.
The basic monthly bills including the long distance call charges are subject to value-added tax, to wit:
Telephone bill during the quarter P 60,200.00
Less: Gross receipts from overseas communication
January 12,000
February 8,700
March 15,420 36,120
Amount subject to VAT 24,080
Multiply by 3/28
Input tax 2,580
F. SEC. 121 – TAX ON BANKS AND NON-BANK FINANCIAL INTERMEDIARIES PERFORMING QUASI-BANKING
FUNCTIONS
Problem 1: ( Gross receipt tax) Pilipino Bank, a domestic bank had the following data:
For the month of January:
Equity shares in the net income of subsidiaries, gross of applicable tax P600,000
Trading loss for the month on foreign currency, debt securities, derivatives and other similar financial
instruments 100,000
For the month of February:
Rentals from personal and real property, gross of applicable tax P500,000
Royalties, net of applicable tax 372,000
Dividend income from investments in stocks, gross of applicable tax 500,000
Equity shares in the net income of subsidiaries, gross of applicable tax 600,000
Trading gains for the month on foreign currency, debt securities, derivatives and other similar financial
instruments, gross of applicable tax 600,000
Gross receipts on interest, commissions and discounts from lending activities net of applicable tax, on
instruments with maturities of:
Four years and less 450,000
Seven years 990,000
Required: Compute the gross receipt tax for the month of January and February.
. Pilipino Bank, a domestic bank had the following data for theprevious month. Compute the percentage tax for the month.
P a g e | 42
Rentals from personal and real and property, gross of applicable tax P500,000(7%)
Royalties, net of applicable tax 372,000(7%)
Dividend income from investments in stocks, gross of applicable tax 500,000(0%)
Equity shares in the net income of subsidiaries, gross of applicable tax 600,000(0%)
Net trading gains within the taxable year on foreign currency, debt securities, derivatives and other
similar financial instruments, gross of applicable tax 500,000(7%)
Gross receipts on interest, commissions and discounts from lending activities net of applicable tax, on
instruments with maturities of:
Foury ears and less 450,000(5%)
Seven years 990,000(1%)
Answer:P131,684
(P500,000x7%)
+(P372,000x7%)+(P500,000x0%)+(P600,000x0%)+(P500,000x7%)+(P450,000x5%)+(P990,000x1%)
Problem 2: Banco De Oro Bank has the following data for the first half of 20x8:
First Quarter Second Quarter
Interest and commission income from lending activities with maturity of 3 years P4,000,000 P2,800,000
Interest and commission income from lending activities with maturity of 5 years 3,500,000 3,300,000
Interest and commission income from lending activities with maturity of 7 years 6,000,000 7,200,000
Other income from rentals of facilities and other assets 775,000 825,000
Income from financial leasing (remaining maturity is more than 5 years) 1,200,000 950,000
Dividends and equity shares in net income of subsidiaries 500,000 400,000
Net trading gain (loss) (150,000) 325,000

1. Gross receipts tax for March 31, 20x8
2. Gross receipts tax for June 30, 20x8
P a g e | 43
G. SEC. 122 – TAX ON FINANCE COMPANIES/TAX ON OTHER NON-BANK FINANCIAL INTERMEDIARIES (GROSS
RECEIPTS TAX)
Problem 1: (Pretermination of a long-term loan) M executed on November 10, 20X3 a long-term loan from Bank B in the
amount of P500,000 payable within 10 years with the first installment due on or before November 10, 20X4 and the succeeding
yearly installment on the same date on the subsequent years.
On November 10, 20X8, the loan was preterminated and the interest paid and other fees received from 20X4 to 20X8 amounting to
P100,000 annually, were received and declared by Bank B correctly.
Required: How much is the gross receipts tax payable?
8. Remaining Amount of
Year maturity interest, etc. Tax rate Tax
20x4 9 100,000 1% 1,000
20x5 8 100,000 1% 1,000
20x6 7 100,000 1% 1,000
20x7 6 100,000 1% 1,000
20x8 5 100,000 5% 5,000
Total gross receipts tax 9,000
Upon pretermination, the loan agreement shall be reclassified and the correct gross receipt tax, including prior years, shall be
recomputed on the basis of new category as shown hereunder:
2004 4 100,000 5% 5,000

2005 3 100,000 5% 5,000
2006 2 100,000 5% 5,000
2007 1 100,000 5% 5,000
2008 Less than 1 yr 100,000 5% 5,000
25,000
Total gross receipts tax 25,000

Less: Gross receipts tax previously paid 9,000
Tax due 16,000
Problem 2: (Pass on GRT) ABC Bank extended a P2,000,000, 20% per annum short-term loan to Makababa Company and shifted
the 5% GRT due on the interest collectible from Makababa Company for loans extended by ABC Bank to Makababa Company
Required:
1. How much is the gross receipt tax?
2. Assuming the creditor is a non-bank financial intermediary not performing quasi-banking functions, how much is the gross
receipt tax?
3. How much should the creditor include in its gross income as result of the foregoing transaction?
4. How much can the creditor (Bank) claim as deductible expense?
5. How much can Makababa Company claim as deductible expense?
1. (2M x 20%) = 400,000 x 5% P20,000

+ passed on GRT (20,000x7%) 1,400
Answer P21,400
2. (400K x5%) + (20,000 x 5%) = P21,000

3. 420,000
4. 21,400
5. 420,000
H. SEC. 123 – TAX ON LIFE INSURANCE PREMIUMS (PREMIUMS TAX)
Problem 1: Indicate if the following collections are included in the gross receipts under the VAT of a non-life insurance company.
a. Premiums refunded within six (6) months after payment on account of rejection of risk or returned for No
other reasons to the person insured (returned premium).
b. b. Premium on reinsurance of a company that has already paid the tax. No
c. Premiums on account of any reinsurance if the risk insured against covers property located outside the No
Philippines.
d. Documentary stamp and local taxes passed on by the insurance company to the insured; and No
e. VAT passed on the insured. No
Problem 2: XYZ Company (Domestic Corporation) is engaged in insurance business. It has the following data for the current
month (exclusive of applicable tax).
Total premiums collected Life insurance P2,000,000
Total premiums collected from non-life
insurance business 3,000,000
Purchase of supplies for use in non-life
insurance business 500,000
P a g e | 44
a. How much is the tax on total premiums collected?
b. How much is the VAT payable?
a. (2,000,000 x 2%) = P40,000
b. (3,000,000 x 12%) – (500,000 x 12%) = P300,000
I. SEC. 124 – TAX ON AGENTS OF FOREIGN INSURANCE COMPANIES
Problem 1: (Tax on Agents of Foreign Insurance Companies) XYZ Company Life is engaged in insurance business. It also
serves as an agent of a marine foreign insurance company. It has the following data for the current month (exclusive of applicable
tax).
Total premiums collected as an agent of a foreign insurance company P2,000,000
Owners of property obtain insurance directly with foreign insurance companies 3,000,000
How much is the tax on total premiums collected as an agent of a foreign insurance company?
(2,000,000 x 4%) = P80,000

(3,000,000 x 5%) = P150,000
Total P230,000
J. SEC. 125 – AMUSEMENT TAXES
Problem 1: Mr. Taylon operates a cockpit. Results of operations for 20x8 were provided as follows:
Gross receipts:
Cockpit operations P4,000,000
Restaurant operations 1,850,000
Purchases:
Supplies for cockpit operations (net of vat) 750,000
Supplies for restaurant operations (invoice amount) 224,000
Required: Determine the following

1. Total business tax due of Mr. Taylon
2. Amusement tax due of Mr. Taylon assuming the restaurant is operated by ABC Company, a non-vat registered entity whose
annual gross receipts is lower than the VAT threshold.
3. Using the assumption in the preceding number, how much is the business tax due of ABC Company.
4. Assuming ABC Company is a VAT registered entity, how much is its VAT payable for the year?
Problem 2: (Amusement tax) Mr. Martin Niko is an operator of a day and night club. The club’s gross receipts for the quarter are
as follows:
Admission fee P100,000
Service fee 50,000
Food sales 150,000
Beverage sales 200,000
Required: Compute for the business tax for the quarter.

Gross receipts (P100,000 + P50,000 + P150,000 + P200,000) P 500,000
Multiplied by applicable business tax rate 18%
Business tax for the quarter P 90,000
Problems 3: (Amusement tax) Tic Kim, a Filipino, promoted a boxing match featuring Anit Ayao (Filipino). Gross receipts related
to the boxing match are as follows:
Admission fees P2,000,000
Radio and TV coverage 1,000,000
Required:
1. The amusement tax if the boxing match is a National Boxing Championship would be
2. The amusement tax if the boxing match is a World Boxing Championship would be
1. P3,000,000 x 10% = 300,000

2. Exempt
K. SEC. 126 – TAX ON WINNINGS
Problem 1: (Tax on Winnings) Mr. U had the following records of his horse races in the current month of 20X1:
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Horse Type of Gross winnings Cost of
winnings Winnings
A Trifecta P90,000 P40,000
B Ordinary 250,000 50,000
C Double 60,000 10,000
D Ordinary 175,000 25,000
Required:
1. How much percentage taxes were paid by Mr. U?___
2. Assuming that Mr. U is a bettor, how much percentage taxes were withheld to Mr. U?____
1. P57,500
2. P39,000 winning – cost 4/10/4/10 =
L. Sec. 127 (A) – Tax on Sale, Barter, or Exchange of Shares of Stock Listed and Traded Through the Local Stock
Exchange
M. Sec. 127 (B) – Tax on Shares of Stock in Closely Held Corporation Sold or Exchanged Through Initial Public Offering
Problem 1: Determine the applicable business tax due of the following:

1. Jun Jun invested 10,000 sahers of P400,000 in the shares of stock of Panaman Corporation, a closely held corporation. During
the year, Jun Jun sold 50% of his shares to Pedro for P50 per share.
2. Michael invested 5,000 shares for P250,000 in the shares of stock of Anscor Corporation, a closely held corporation. During the
year Michael sold all his shares to Villar for P35 per share.
3. Assume the same data in #1 except that Jun June is a registered dealer of securities.
4. Gor is a shareholder of GGG Corporation, a listed entity. During 20x8, he sold his 5,000 shareholdings for P120,000 which he
purchased for P20 per share.
5. Assume the same data in the preceding number except that Gor sold the shares for P18 per share.
Problem 2: Be Strong Company, a closely held corporation, has an authorized share capital of P1,000,000 with par value of P10 per
share. As of December 31, 20x7, outstanding shares amounted to P250,000. The company offered its share to the public for the
first time on June 30, 20x8. 10,000 shares were sold at initial pubic offering for P150,000. On October, 20x8, Leo (existing
shareholder) sold his 1,000 shares for P20,000.

1. Business tax due on June 30, 20x8
2. Business tax due on October 20x8
1. P3,000 OPT. Ratio = 10/35 = 28.5%; IPO rate = 2%; Tax due on = P150,000 x 2% = P3,000
2. P120 OPT P20,000 x .006 = P120
Problem 3: (Stock Transaction Tax) Divisoria Corporation, a closely held corporation, has an authorized share capital of
200,000,000 shares with par value of P2 per share as of January 1, 20X3. Of the 200,000,000 authorized shares, 60,000,000
thereof were subscribed and paid by the following shareholders at par value:
Reyes Santos 10,000,000
PP Cruz 10,000,000
Roland Uy 10,000,000
Lito Atienza 10,000,000
Pepito Tan 10,000,000
P a g e | 46
Samuel Gomez 10,000,000
Total shares issued and outstanding 60,000,000
In 20X4, Samuel Gomez sold its 2,000,000 shares to Clifford Valdez (sale of shares directly to a buyer) at P2.25 per share.
In January 20X5, Divisoria Corporation finally decides to conduct an initial public offering (IPO) and initially offers 30,000,000 of its
unissued shares at P2.50 per share to the investing public (thru a local stock exchange) bringing the corporation’s total issued
shares of 90,000,000 shares.
Likewise, at the time of IPO, Pepito Tan decided to sell his 4,000,000 shares to the public at P3 per share. Thus, 30,000,000 shares
have been offered at IPO thru “ primary offering” (by the issuing corporation) and 4,000,000 shares thru “ secondary offering” (by
the shareholder).
On June 20X5 (subsequent to IPO), Divisoria issued additional new 4,000,000 shares to the public also at P2.50 per share. A month
later, Reyes Santos sold its 2,000,000 shares to the public (through local stock exchange) at P2.75 per share.
Required:
1. Determine the applicable tax and the amount of tax due on the sale made by Samuel Gomez in 20X4.
2. Determine the applicable tax and the amount of tax due of Divisoria on its initial public offering of its unissued shares in January
20X5.
3. Determine the applicable tax and the amount of tax due of Pepito Tan on the sale of his existing shares during the IPO.
4. Determine the applicable tax and the amount of tax due of Divisoria on additional issuance of shares subsequent to IPO.
5. Determine the applicable tax and the amount of tax due of Reyes Santos corresponding to the sale of his shares of stocks in the
local stock exchange in July 20X5.
1. (2,000,000 x 2.25) = P4,500,000

(2,000,000 x 2) (4,000,000)
500,000 x15% = P75,000 CGTax
2.
Ratio (30,000,000/90,000,000) = 33% tax rate 2%
30,000,000 x P2.50 = P75,000,000 x 2% = P1,500,000
3.
Ratio (4,000,000/ 90,000,000) = 4.44%  tax rate 4%
(4,000,000 x3 x 4%) = P480,000
Under RR 6-2008, existing shareholders selling their shares to the local stock exchange “ during IPO” are likewise subject to
percentage tax in the same manner as the issuing corporation. Nonetheless, the applicable tax rate for IPO for the issuing
corporation and the shareholder shall be computed independently.
4. Zero. The sale of Divisoria of its own shares in June 20x5 is known as a “follow-on follow-through offering”. Under RR 6-2008,
“following on follow through offering made by the issuing corporation shall be exempt from business tax but subject to applicable
documentary stamp taxes.
5. (2,000,000 x 2.75) 6/10 *1% = P33,000
PREPARATION OF PERCENTAGE TAX RETURN
Floyd (self-employed) is a non-vat registered taxpayer who operates a convenience store. The following were provided for 2020:
Sale of processed food items P280,000
Sale of non-food items 220,000
Purchases of processed food items 100,000
Purchases of non-food items 80,000
Salaries of helpers 48,000
Compute the correct percentage tax due and prepare the percentage tax return.
A. P15,000 B. P32,000 C. P50,000 D. P27,200
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OTHER PERCENTAGE TAXES
Problem 1: (Sec. 116) Determine which of the following is subject to VAT, 3% percentage tax on VAT-exempt persons or neither
VAT nor 3% percentage tax on VAT-exempt persons.
a. Seller of VAT-subject goods, not VAT-registered, gross annual sales do not General Percentage Tax
exceed P3,000,000
1% percentage tax
OPT imposed on non-VAT registered entities

and VAT registered entities whose aggregate
non-VAT exempt transactions do not exceed
PHP3 Million shall be subject to a lowered OPT
rate of 1%.
b. Service contractor, VAT-registered, gross annual receipts do not exceed VAT
P3,000,000
c. Milling for others, not VAT-registered, gross annual receipts exceed VAT
P3,000,000
d. Seller of fresh fish, gross annual sales exceed P3,000,000 Neither
e. VAT-registered seller of both VAT-subject goods and VAT-exempt goods VAT
(optional registered VAT-exempt sales)
P a g e | 49
f. Mr. X is the owner of a small variety store. His gross sales in any one year do not exceed the VAT threshold amount. He is
not VAT-registered. The following data are taken from the books of the variety store for the month ending November 30,
2018:
Merchandise inventory, December 31, 2018 P150,000
Gross sales 250,000
Purchases from VAT-registered 150,000
How much is the percentage tax due and payable?
(250,000 x 3%) = P7,500

(250,000 x 1%) = P2,500
g. A taxpayer is non-VAT because his VATable sales do not exceed the VAT threshold of P3,000,000. He initially opted to pay
8% income tax in the first three (3) quarters of 2018 because his gross sales amounted to P3,000,000 only. During the
same taxable year, however, his annual gross sales reached P4,000,000.
First Quarter Second Third Quarter October November December

(Jan. – Feb. ) Quarter (July -Sept.)
(Mar. -June)
Sales P1,000,000 P1,000,000 P1,000,000 P500,000 P1,200,000 P1,500,000
Required:
1. How much is the percentage tax, if any?
2. How much is the VAT, if any?
1% percentage tax
OPT imposed on non-VAT registered entities and VAT registered entities whose aggregate non-VAT exempt transactions do
not exceed PHP3 Million shall be subject to a lowered OPT rate of 1%.
1. (3,500,000 x 3%) = P105,000 / (3,500,000 x 1%) = P35,000

2. (1,200,000 + 1,500,000 x 12%) = P324,000
 Note: Update Registration from Non-VAT to VAT (On or Before November 30)
Problem 2: (Sec. 117) Determine which of the following is subject to VAT, 3% common carrier’s tax or neither VAT nor 3%
common carrier’s tax.
a. Transport of passengers by domestic common carrier by land, gross receipts exceeded P3,000,000 3% CCT
b. Transport of goods and cargoes by domestic common carrier by land, VAT-registered, gross receipts VAT
do not exceed P3,000,000
c. Transport of passengers, goods and cargoes by domestic common carrier by sea, not VAT- VAT
registered, gross receipts exceeded P3,000,000
d. Transport of passengers, goods and cargoes by domestic common carrier by air, not VAT-registered, Sec. 116
gross receipts do not exceed P3,000,000
e. Transport of passengers, goods and cargoes by Calesa Neither
f. Transport of passengers, goods and cargoes by Banca Neither
g. AAA transport Co., VAT-registered, is a domestic common carrier by land and sea within the Philippines. It had the
following data in a month:
On land carriers:
Gross receipts from cargoes P500,000
Gross receipts from passengers 700,000
On sea carriers:
Gross receipts from cargoes 900,000
Gross receipts from passengers 1,000,000
Required:
1. How much is the percentage tax?
2. How much is the output value-added tax, if VAT-registered?
1. (700,000 x 3%) = P21,000

2. (500,000 + 900,000 + 1,000,000) x 12% = P288,000
Problem 3: (Sec. 118) Determine whether or not the following shall be subject to the common carrier’s tax on international
carriers
a. All Nippon Airlines, maintaining flight operations to and from the Philippines, on freight and cargo Yes
fees, cargo originating from the Philippines (passage documents sold in Japan)
b. Japan Air Lines, maintaining flight operations to and from the Philippines, on freight and cargo fees, No
cargo originating from the Japan (passage documents sold in the Philippines)
c. All Nippon Airlines, maintaining flight operations to and from the Philippines, gross receipts from No
sale of tickets to passengers originating from the Philippines (passage documents sold in the
Philippines)
d. United Airlines, no flight operations to and from the Philippines, on gross receipts from transport of No
cargo from Singapore to Tokyo (passage documents sold in the Philippines by its sales agent)
e. The following data were provided by an air carrier:
P a g e | 50
Freight and cargo fees (cargo originating from the Philippines in a continuous and uninterrupted flight P5,000,000
to Japan (passage documents sold in Japan)
Mail fees (mail originating from Japan in a continuous and uninterrupted flight to the Philippines 4,000,000
(passage documents sold in the Philippines)
Advance payments for cargo originating from the Philippines in a continuous and uninterrupted flight 3,000,000
to Singapore (passage documents sold in Singapore)
Receipts from sale of tickets to passengers originating from the Philippines in a continuous and 2,000,000
uninterrupted flight to Hongkong (tickets sold in the Philippines)
Expenses, Philippines 1,500,000
Required:
1. How much is the common carrier’s tax due from the air carrier assuming it is an international carrier doing business in
the Philippines?
2. How much is the VAT due from the air carrier assuming it is a domestic air carrier?
1. (5,000,000 + 3,000,000) x 3% = P240,000

2. (5M + 3M + 2M) = P10M x 0% =Zero / P0
Problem 4: (Sec. 119) Determine what business tax will the following be subject to
a. Franchise grantee of radio and/or television broadcasting, not VAT-registered, gross receipts on 3% FT
sale of air time, P10,000,000
b. Franchise grantee of radio and/or television broadcasting, VAT-registered, gross receipts on sale VAT
of air time, P10,000,000
c. Franchise grantee of radio and/or television broadcasting, not VAT-registered, gross receipts on VAT
sale of airtime, P15,000,000
d. Franchise grantee of radio and/or television broadcasting, not VAT-registered, on gross receipts Sec. 116
from lease of office spaces, P3,000,000
e. Franchise grantee of radio and/or television broadcasting, VAT-registered, on gross receipts from VAT
lease of office spaces, P3,500,000
f. Franchise grantee of radio and/or television broadcasting, not VAT-registered, on gross receipts VAT
from lease of office spaces, P3,500,000
g. Franchise grantee of radio and/or television broadcasting payments received from persons who 10%. Sec.
used its communication facilities to make overseas calls, P3,000,000 120
h. Franchise grantee of gas and water utilities on gross receipts from sale of water and gas, 2% FT
P3,000,000
i. Franchise grantee of gas and water utilities on gross receipts from sale of water and gas, 2% FT
P3,500,000
j. Franchise grantee of gas and water utilities, not VAT-registered on gross receipts from lease of Sec. 116
office space, P3,000,000
k. Franchise grantee of gas and water utilities VAT-registered, on gross receipts from lease of office VAT
spaces, P3,000,000
l. Franchise grantee of gas and water utilities, not VAT-registered, on gross receipts from lease of VAT
office spaces, P3,500,000
m. PAGCOR and its licenses and franchisees on gross revenue or earnings from its operations and 5% FT
licensing of gambling casinos, gaming clubs and other similar recreation or amusement places,
gaming tools, and other related operations.
n. As a franchisee, Mr. BBB, had the following data on revenues and receivables, taxes not included:
Receivables
Revenues Beginning Ending
From operations
Covered by the franchise P2,000,000 P300,000 P400,000
Not covered by the franchise 600,000 50,000
Required: How much is franchise tax due if he is a franchise grantee of:

1. Water and gas utilities
2. Electric utility
1. (1,900,000 x 2%) = P38,000

2. 0
SITUATIONAL (Business Tax)
ABS-GMA, not VAT-registered, is a radio-TV broadcasting franchise grantee. The previous year, its gross receipts did not exceed
P10,000,000. In the first month of the current year, it had the following data:
Gross receipts, sale of airtime P2,000,000
Payments received from user of radio station’s communication facilities for overseas communication 500,000
Rentals of office spaces 3,500,000
1. How much was the franchise tax due?

A. P75,000 B. P60,000 C. P50,000 D. P20,000
(2,000,000 x 3% = P60,000)
2. How much was the overseas communications tax?

A. P250,000 B. P200,000 C. P75,000 D. P50,000
P a g e | 51
(500,000 x 10% = P50,000)
3. How much is output VAT, if any?

A. P720,000 B. P660,000 C. P420,000 D. None
TAXING PHILIPPINE OFFSHORE GAMING OPERATIONS
1. ABC Corp. a PAGCOR-licensee to operate offline gaming in the Philippines employs aliens. The following are the terms of
employment of its Chinese employees:
Name Position Period Amount of Salary

Ti Mo Ti President 1 year P2,500,000
Ko Ti Ko Consultant 6 months 1,500,000
La La Ko Dealer 3 months 100,000
Sa Sa To Interpreter 1 month 200,000
Which is TRUE?
A. Ti Mo Ti is subject to withholding tax on compensation
B. All are subject to 25% final tax
C. Ko Ti Ko is subject to expanded withholding tax
D. La La Ko and Sa Sa To are exempted from taxation because their income is below Php 250,000
Explanation: All are subject to 25% final tax under RR 20-2021
2. AAA Corp., a PAGCOR-licensee POGO operator employed the following:

• Atoy (resident alien)
• Batoy (non-resident alien)
• Catoy (resident citizen)
Assuming they all receive P200,000 as monthly compensation, the monthly final tax required to be withheld by ABC Corp. is?
A. P150,000
B. P50,000
C. P0
D. P100,000
Solution: Aliens employed by POGO entities are subject to 25% final tax (Php 400,000 x 25%)
3. ABC Corp. an Offshore Gaming licensee of PAGCOR made available the following financial information:
• Actual gross gaming revenues - P100,000,000
• Agreed pre-determined minimum revenue with PAGCOR from gaming operations – P200,000,000
• Costs and expenses from gaming revenues – P50,000,000
• Gross Revenues from non-gaming operations – P50,000,000
• Costs and expenses from non-gaming revenues – P30,000,000
The tax due on gaming operations is?

A. P10,000,000
B. P5,000,000
C. P12,500,000
D. P37,500,000
Solution: 5% of higher of actual gaming revenue and the agreed pre-determined minimum revenue (P200M x 5% = P 10M)
4. The tax due on non-gaming operations is?

A. P10,000,000
B. P5,000,000
C. P2,500,000
D. P1,000,000
Solution:
Gross revenues from non-gaming operations 50,000,000
Less: Cost and expenses from non-gaming operations 30,000,000
Taxable income 20,000,000
Regular Rate 25%
Income tax due P5,000,000
Problem 5: (Sec. 120) Mr. CCC is a businessman with transactions in and out of the Philippines. Local and overseas calls for a
period involved (tax not included):
Overseas calls:
For calls originating from the Philippines
Paid by the subscriber in the Philippines (personal calls amounted to P45,000) P65,000
Paid by the receiver of the calls outside the Philippines (business calls) 14,500
For calls coming into the Philippines
Paid by Mr. CCC 15,000
Paid by callers 23,000
P a g e | 52
Local calls, paid by Mr. CCC
Other than long distance (personal calls) 7,000
Long distance (business calls) 20,000
Required:
1. How much is the value-added tax billed to Mr. CCC?
2. How much is the percentage tax billed to Mr. CCC?
1. (7,000 + 20,000) = P27,000 x 12% = P3,240

2. P65,000 x 10% = P6,500
Problem 6: (Sec. 121) A domestic bank had the following data in a month.
Rentals from safety deposit boxes and real property acquired through mortgage P300,000
foreclosure, gross of applicable tax
Service fees, net of applicable tax 186,000
Dividends and equity shares in the net income of subsidiaries 500,000
Amount received from lending activities, net of applicable tax, on instrument with
maturities of:
Five years and less 760,000
More than five years 891,000
Net trading gain during the month 500,000
Net trading loss during the month (within the same year) 300,000
Required: Compute the percentage tax for the month.
Rentals from safety deposit boxes and real property P300,000 7% 21,000
acquired through mortgage foreclosure, gross of
applicable tax
Service fees, net of applicable tax 186,000 ÷93% x 7% 14,000
Dividends and equity shares in the net income of 500,000 0% 0
subsidiaries
Amount received from lending activities, net of
applicable tax, on instrument with maturities of:
Five years and less 760,000 ÷95% x 5% 40,000
More than five years 891,000 ÷99% x 1% 9,000
Net trading gain during the month 500,000 200,000 x7% 14,000
Net trading loss during the month (within the same (300,000)
year)
P98,000
Problem 7: (Sec. 122) A pawnshop has the following receipts:

Gross receipts from interest, commissions, discounts P100,000
Other items treated as gross income under the Tax Code 150,000
Interests, commissions and discounts from lending activities (remaining maturity of 120,000
instruments is more than 5 years)
Interests, commissions and discounts from financial leasing (remaining maturity of 140,000
instruments is 5 years)
Required:
1. How much is the gross receipts tax?
2. Assuming the above taxpayers is a non-bank financial intermediary performing quasi-banking function, how much is the
gross receipts?
Gross receipts from interest, commissions, discounts P100,000 5% 5,000

Other items treated as gross income under the Tax Code 150,000 5% 7,500
Interests, commissions and discounts from lending 120,000 1% 1,200
activities (remaining maturity of instruments is more
than 5 years)
Interests, commissions and discounts from financial 140,000 5% 7,000
leasing (remaining maturity of instruments is 5 years)
20,700
Gross receipts from interest, commissions, discounts P100,000 5% 5,000

Other items treated as gross income under the Tax Code 150,000 7% 10,500
Interests, commissions and discounts from lending 120,000 1% 1,200
activities (remaining maturity of instruments is more
than 5 years)
Interests, commissions and discounts from financial 140,000 5% 7,000
leasing (remaining maturity of instruments is 5 years)
23,700
Problem 8: (Sec. 123) Determine which business taxes will the following be subject to:
a. Premium on Health and Accident Insurance received by a life insurance company 2%
b. Premium on Health and Accident Insurance received by a non-life insurance company 2%
P a g e | 53
c. Insurance and reinsurance commissions received by a life insurance company, not VAT registered, Sec. 116
annual gross receipts do not exceed P3,000,000
d. Insurance and reinsurance commissions received by a non-life insurance company, VAT registered, 12% VAT
annual gross receipts do not exceed P3,000,000
e. Insurance and reinsurance commissions received by a life insurance company, not VAT registered, 12% VAT
annual gross receipts exceed P3,000,000
f. Interest income earned by the life insurance companies from investing the premiums received in Exempt
marketable securities, bonds and other financial instruments
g. Non-life insurance premiums received by a non-life insurance company, VAT-registered, gross receipts 12% VAT
do not exceed P3,000,000
h. Non-life insurance premiums received by a non-life insurance company, not VAT registered, gross 12% VAT
receipts exceed P3,000,000
i. Non-life insurance premiums received by a non-life insurance company, not VAT-registered, gross Sec. 116
receipts do not exceed P3,000,000.
j. Health and accident insurance premiums received by a life insurance company, gross receipts exceed 2%
P3,000,000
k. Health and accident insurance premiums received by a non-life insurance company, gross receipts 2%
exceed P3,000,000
l. The Nativity Insurance Company with life and non-life insurance business, had the following data on premiums and expenses for
a month:
Life insurance business, on premiums:
Cash received P520,000
Accounts receivable 365,000
Post-dated checks 315,000
Non-life insurance business, on premiums:
Cash received, excluding VAT of P96,000 800,000
Accounts receivable, excluding of VAT 342,000
Payment on operational expenses, including rentals, all to VAT registered persons 672,000
Required:
1. How much is the percentage tax payable?
2. How much is the value-added tax payable, if VAT-registered?
1. (520,000 + 365,000 + 315,000) = P1,200,000 x 2% = P24,000

2. (800,000 + 342,000) x 12%= Output tax P137,040
Input tax = 672,000 x 12/112 = 72,000 x 1,142,000/ 2,342,000 = P35,108
VAT = P137,040 – P35,108 = P101,932
Problem 9: (Sec. 125) Ms. AAA is a caterer and a videoke bar operator. In a taxable period, she had the following data, tax not
included:
Sales:
From operations of the XYZ Catering Service:
Cash sales P400,000
Accounts receivable (catering) 250,000
Credit card sales 243,000
From operations of the ABC Videoke Bar:
Cash sales 1,360,000
Credit card sales 624,200
Payment for catering service, based on gross receipts (80% of which are to VAT taxpayers) 60%
Required:
1. How much is the amusement tax payable?
2. How much is the value added tax payable?
1. (1,360,000 + 624,200) = P1,984,200 x 18%

=P357,156
2. (400,000 + 243,000) x 12% = Output 77,160
Input tax (643,000 x 80% x 60% x 12%)= Input
37,037
VAT payable = P 40,123
Problem 10: (Sec. 125) The following data are presented to you:
Gross receipts, sale of tickets P500,000
Gross receipts, sale of food and drinks inside the amusement place 1,000,000
Gross receipts, sale of souvenir items inside the amusement place 300,000
Compute the amusement tax assuming the amusement place is a:

1. Race track.
2. Cockpit.
3. Videoke bar.
4. Venue where professional basketball games are held.
5. Venue where boxing exhibitions featuring Philippine championship.
6. Venue where world boxing championship is held involving a Filipino boxer and promoted by a domestic corporation.
1. (1,800,000 x 30%) = P540,000
P a g e | 54
2. (1,800,000 x 18%) = P324,000
3. (1,800,000 x 18%) = P324,000
4. (1,800,000 x 15%) = P270,000
5. (1,800,000 x 10%) = P180,000
6. Exempt
Problem 11: (Sec. 126) Mr. U had the following records of his horse races in the current month of 20X1:
Horse Type of Gross winnings Cost of
winnings Winnings
A Trifecta P90,000 P40,000
B Ordinary 250,000 50,000
C Double 60,000 10,000
D Ordinary 175,000 25,000
Required:
1. How much percentage taxes were paid by Mr. U?___
2. Assuming that Mr. U is a bettor, how much percentage taxes were withheld to Mr. U?____
1. P57,500
2. P39,000 winning – cost 4/10/4/10 =
Problem 12: (Sec. 127 A) Sarah has shares of stock of Manila Trading Corporation valued at P500,000 which are held as
investment. She sold them for P300,000.
Required:
1. How much is the percentage tax on the sale of the shares listed and traded in the local stock exchange assuming the sale is
on January 5, 2018?
2. How much is the capital gains tax assuming the shares are sold January 5, 2018 directly to a buyer and not through the
stock exchange?
3. How much is the value-added tax assuming the shares are held as inventory and Sarah is a VAT-registered dealer in
securities?
1. 6/10 x 1% = P1,800
2. (200,000), CGT, None
3. (200,000), VAT, None
Problem 13: (Sec. 127 B) RFB Corporation, a closely-held corporation, has an authorized capital stock of 100,000,000 shares with
par value of P1.00 per share as of January 1, 2018. Of the 100,000,000 authorized shares, 25,000,000 thereof is subscribed and
fully paid up by the following stockholders:
Mr. CE 5,000,000
Mr. FY 5,000,000
Mr. MN 5,000,000
Mr. AT 5,000,000
Mr. GC 5,000,000
RFB Corporation finally decides to conduct an IPO and initially others 25,000,000 of its unissued shares to the investing public at
P1.50 per share. After the IPO in March 2014, RFB Corporation’s total issued shares increased from 25,000,000 to 50,000,000
shares. At the IPO, one of the existing stockholders, Mr. GC, has likewise decided to sell his entire 5,000,000 shares to the public at
P1.50 per share. Thus, 25,000,000 shares have been offered in the primary offering and 5,000,000 shares in the secondary offering.
Required:
1. How much is the percentage tax on the primary offering?
2. How much is the percentage tax on the secondary offering of Mr. GC’s shares?
3. Assuming Mr. AT does not sell his entire shares during the IPO but instead sells them at P2.00 per share after the IPO, how
much is the percentage tax due?
1. (25,000,000 x 1.5) = 37,500,000 x 1% = 375,000

2. (5,000,000 x 1.5 x 4%) = 300,000
3. (5,000,000 x 2) = 10M x 6/10 x 1% = 60,000
Ratio(proportion) Percentage
tax
Shares sold, bartered, exchanged ÷ Total outstanding shares up to 25% 4%
Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%
1. 25/50
2. 5/50
P a g e | 55

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OTHER PERCENTAGE TAXES

"Gross receipts" means all amounts

For the purpose of the amusement

Characteristics of Percentage Tax:

Percentage Tax Vs. Value-Added

Value Added Tax, or VAT, and

THE SCOPE OF THE PERCENTAGE TAX

OPT imposed on non-VAT registered entities and VAT registered entities

Who pays percentage tax?

Specific percentage tax √ √

Gross quarterly sales or receipts

The tax rate is 1%

4. Optional VAT registration

5. Cancellation of VAT Registration

6. Person exempt from the 3% percentage tax

Duly registered cooperatives which transact business with

P10,000,000 (accumulated reserves and undivided net savings)

>P10,000,000 (accumulated reserves and undivided net savings)

d. Marginal income earners or individuals who are self-employed

e. Persons who are VAT-registered, regardless of level of sales. (VAT)

f. Persons whose line of business is non-exempt (from VAT) and are

SEC. 117 – PERCENTAGE TAX ON DOMESTIC CARRIERS AND KEEPERS OF

Persons, corporations, firms or associations engaged in the business of carrying or

2. Persons subject to common carrier’s tax

The following table summarizes the rules on domestic common carriers:

3. Other common carriers subject to 3% common carrier’s tax/ percentage tax

4. Persons not subject to the 3% common carrier’s tax

The tax rate is 3%.

7. Exemption from local taxes

8. Transportation contractors and common carriers subject to VAT

a. Transportation contractors on their transport of goods or cargoes.

9. RMC 70-2015 (Transportation Network Companies)

3% common carrier tax

12% VAT or 1% OPT

Gross Receipts from transport of Cargo Pxxx

3. Gross Receipts Defined (Revenue Regulation 11-2011)

The tax rate is 3%

5. Exempt from VAT

6. Offline-line international carrier having branch/office as a sales agent in the Philippines

Foreign Corp. Foreign Corp.

International Carriage Cargo Domestic Corp. Domestic Corp.

Foreign Corp. Foreign Corp.

Gross revenues from gaming operations

d. Transmission operation of National Grid 3%

4. Optional VAT registration

5. Franchise grantees subject to VAT

Summary Rules Applicable to Radio and / or Television Broadcasting Companies

If the taxpayer opts to pay VAT, it will be irrevocable.

Summary of Business Taxes for Franchise Grantees

As for the non-gaming revenues, Philippine-based offshore gaming licensees

Disposition of Revenues from Gaming Tax on Offshore Gaming Licensees

Allocated for/to Percentage Allocation

REVENUE MEMORANDUM CIRCULAR NO. 25-2022 ISSUED ON MARCH 11, 2022

A BIR Certificate of Registration (CoR) shall be issued

The Service Income and other Income from e-Sabong by an e-

Commission Income received by a Third-Party e-Sabong Master

Income received by a Third Party Off-Cockpit Betting Station (OCBS)

Other income derived or received by any person/s or entity/ies in