Bernard Bakilan, a certified public accountant, practices his profession in the

industry as the Chief Financial Officer of UHAW. During the month, he received
P50,000 compensation plus P10,000 fringe benefits.
Employment is not a commercial activity as it does not involve sales of services to
clients or customers. Hence, the compensation income and the fringe benefits are
not subject to business tax.
Illustration 2
Jones is a job order employee contracted by the government to provide
support services for office job for 6 months. Jones is paid P18,000 a month.
Directorship in a corporation
Although a director may not be an employee, director's fees, per diems, and
allowances are not derived in an economic or commercial activity or rendering of
services to clients for a fee. Hence, these are not subject to business tax (RMC77-
2008).
Illustration 1
Mr. Agua is an independent director of Aga Corporation receiving director's fees,
per diems, and allowances totaling P15,000 per board meeting appearances.
Mr. Agua is not subject to business tax.
Query: What if Mr. Agua is an employee of Aga Corporation?
Mr. Agua's director's fees shall be part of his compensation income and is
not likewise subject to business tax.
Illustration 2
John, a certified public accountant, renders his services to the public for a fee. Is he
subject to business tax?
The exercise of profession by regularly rendering services to clients for a fee
is considered a business subject to business tax and bottom
Business principally for subsistence
Business principally for subsistence or livelihood refers to businesses with gross
sales or receipts not exceeding P100,000 per year.
Marginal income earners - refer to individuals not deriving compensation income
under an employer-employee relationship but who are self- employed deriving gross
sales or receipts not exceeding P100,000 in any 12-month period
Examples of marginal income earners: