BUSINESS TAXES

Under the Tax Code, the three (3) Major Business

Internal Revenue Taxes are:

1. Value Added Tax (VAT)

2. Percentage Taxes; and
3. Excise Taxes

Percentage Taxes
1.

A tax of Three Percent (3%) shall be subjected on the gross

sales or receipts of any person whose sales or receipts are
exempt under Sec. 109(V) of the Tax Code from paying the
Value Added Tax (VAT) because their annual sales do not
exceed P 1,919,500 and who are not required to pay a
percentage tax

2.

Cooperatives shall be exempt from the 3% percentage tax

3.

Any business or business pursued by an individual where

the aggregate gross sales or receipts do not exceed P
100,000 during any 12-month period shall be considered
principally for subsistence or livelihood and not in the
course of business.

4.

Individual taxpayers shall still register but shall be exempt

from the payment of registration fee and percentage taxes.

Percentage Taxes
5.

Tax on Domestic Carriers and Keepers of Garages

6.

7.

Tax Rate is 3% based on Gross Receipts

Who are considered Domestic Carriers and Keepers of

Garages?
a. Cars for rent or hire driven by lessee
b. Transportation contractors, including those who
transport passengers for hire, and other domestic
carriers by land transport of passengers (except bancas
and owners of animal drawn two wheeled vehicles)

Percentage Taxes
8.

Minimum Gross Receipts in each particular case:

Quarterly
Monthly
Jeepney for Hire
1. Manila and other cities
P 2,400
P 800
2. Provincial
1,200
400
Public Utility Bus
1. Not exceeding 30 passengers
3,600 1,200
2. Exceeding 30 but not
exceeding 50 passengers
6,000
2,000
3. Exceeding 50 passengers
7,200
2,400
Taxis
1. Manila and other cities
3,600
1,200
2. Provincial
2,400
800
Car for Hire (with chauffeur)
3,000
1,000
Car for Hire (without chauffeur)
1,800
600

Percentage Taxes
9.

Tax on International Carriers

10. Tax Rate is:

- 3% based on Gross Receipts of international air carriers
doing business in the Philippines
- 3% based on Gross Receipts of international shipping
carriers doing business in the Philippines

Percentage Taxes
11. Franchises Tax
12. Tax Rate is:
- 3% based on Gross Receipts of all franchises on radio
and/or television broadcasting companies whose annual
gross receipts of the preceding year do not exceed
P 10,000,000
- 2% based on Gross Receipts of franchises on gas and
water utilities derived from the business covered by the
law granting the franchise
Radio and television broadcasting companies referred to shall
have the option to be registered as a VAT- taxpayer and pay the
tax due thereon. Once this option is exercised, said option shall
be irrevocable.

Percentage Taxes
13. Overseas Communications Tax
14. Tax Rate is:
- 10% based on amount collected upon every dispatch,
message or conversation transmitted from the Philippines
by telephone, telegraph , telewriter exchange, wireless
and other communications equipment services

The tax imposed shall be payable by the person paying for

the services rendered and shall be paid to the person
rendering the services who is required to collect and pay the
tax within twenty (20) days after the end of each quarter

The tax shall not apply to the Government, Diplomatic

Services, International Organizations, News Services

Percentage Taxes
15. Tax on Banks and non-bank financial interme-diaries
performing Quasi-banking functions
16.

There shall be collected on gross receipts from sources within the

Philippines by all banks and non-bank financial intermediaries
performing quasi-banking functions

Percentage Taxes
17.

Basis and Rates

On interest, commissions and discounts from lending activities as

well as income from financial leasing, on the basis of remaining
maturities of instruments from which such receipts are derived
Maturity Period is five (5) years or less . . . . . . . . . . . . . . . . . . 5%
Maturity Period is more than five (5) years. . . . . . . . . . . . . . . . 1%
On dividends and equity share in net income of
subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
On royalties, rentals of property, real or personal, profits
from exchange and all other items treated as gross
income under Section 32 of the Tax Code. . . . . . . . . . . . . . . . . . . 7%

On net trading gains within the taxable year on foreign

currency, debt securities, derivatives and other
similar instruments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%

Percentage Taxes
18. Tax on Other Non-Bank financial intermediaries not
performing Quasi-banking functions
19.

There shall be collected on gross receipts from sources within the

Philippines by all banks and non-bank financial intermediaries
performing quasi-banking functions

Percentage Taxes
20.

Basis and Rates

From interest, commissions, discounts and all other

items treated as gross income under the Tax Code. . . . . . . . . . . 5%
On interest, commissions and discounts from lending activities as
well as income from financial leasing, on the basis of remaining
maturities of instruments from which such receipts are derived
Maturity Period is five (5) years or less . . . . . . . . . . . . . . . . . . 5%
Maturity Period is more than five (5) years. . . . . . . . . . . . . . . . 1%

Percentage Taxes
21. Tax on Life Insurance Companies
22. Basis and Rates
- 5% on the total premiums received by persons (except
purely cooperative companies or associations) doing life
insurance business of any sort in the Philippines

Percentage Taxes
23.

The following shall not be included in the taxable receipts:

a. Premiums refunded within 6 months after payment on
account of rejection of risk or returned to the insured for
other reasons;
b. Reinsurance premiums where the tax has previously
been paid;
c. Premiums collected or received by any branch of a
domestic firm or association doing business outside the
Philippines on account of any life insurance of a nonresident insured, if any tax on such premium is imposed
by a foreign country where the branch is located;
d. Portion of the premium collected or received by the insurance
companies on variable contracts in excess of the amounts
necessary to insure the lives of the variable contract workers.

Percentage Taxes
24. Tax on Agents of Foreign Insurance Companies
25. Rates and Basis
- 10% on premium received by every fire, marine, or
miscellaneous insurance agent legally authorized under
the Insurance Code to procure policies of insurance on
risk located in the Philippines for companies not authorized to transact business in the Philippines except on
reinsurance premium
- 5% on premium payments obtained directly with foreign
firms where the owner of the property does not make use
of the services of any agent, company or corporation
residing or doing business in the Philippines, in which
case, it shall be the duty of the said owners to report to the
Insurance Commission and to the BIR each case where
the insurance has been so effected

Percentage Taxes
26. Amusement Tax
27. Subjected are proprietor, lessee, or operator of
cockpits, cabarets, night or day clubs, boxing
exhibitions, professional basketball games, Jaialai and racetracks

Percentage Taxes
28. Rates and Basis
- Cockpits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18%
- Cabarets, night and Day Clubs . . . . . . . . . . . . . . . . 18%
- Professional Basketball Games. . . . . . . . . . . . . . . . 15%
- Jai-alai and racetracks irrespective of
whether or not any amount is charged
for admission. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30%
- Boxing exhibitions except those wherein
World or Oriental Championship in any
division is at stake and at least one of the
contenders is a citizen of the Philippines and
promoted by a citizen/s of the Philippines or by
a corporation or association at least 60% of the
capital of which is owned by such citizens. . . . . . .10%

Percentage Taxes
29. Winnings
30. Basis and Rates
- Horse Races. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10%
(The basis is the actual amount paid to the bettor for
every winning ticket after deducting the cost of
the ticket)
- Double, Forecast/Quinella and trifecta bets. . . . . . 4%
- Owner of Winning Race Horses . . . . . . . . . . . . . . . 10%

Percentage Taxes
31. Sale, Barter, or Exchange of Shares of Stock listed
and Trade in the Local Stock Exchange
32. Basis and Rates
- of 1% of the gross selling price or gross value in
money derived on every sale, barter or other disposition
of shares of stock listed and traded through the local
stock exchange other than the sale by a dealer in
securities

Percentage Taxes
33. Sale, Barter, or Exchange through initial Public
Offering
34. Basis and Rates
On the gross selling price or gross value in money derived
on every sale, barter, exchange or other disposition through
initial public offering of shares of stock in closely held
corporation in accordance with the proportion of such
shares to the total outstanding shares of stock after the
listing on the local stock exchange at the rates herein
prescribed:
Not Over 25%. . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Over 25% but not exceeding 33 1/3% . . . . . . 2%
Over 33 1/3%. . . . . . . . . . . . . . . . . . . . . . . . . . 1%