LESSON 1 d. Franchise tax.

e. Overseas communications tax

THEORIES ON BUSINESS TAX, f. Tax on banks and non-bank financial
PERCENTAGE TAX, and EXCISE intermediaries performing quasi-banking
TAX functions
g. Tax on other non-bank financial
intermediaries
What is business?
h. Tax on insurance companies
- regular conduct or pursuit of a commercial or
i. Tax on agents of foreign insurance companies
economic activity. The requisites are:
j. Amusement tax
a. The activity must be commercial or economic.
k. Tax on winnings
b. There must be regularity in the activity.
l. Stock transaction tax.
COMMERCIAL OR ECONOMIC ACTIVITY
- activity where the purpose is profit or income. LESSON 2
“REGULAR” THEORIES ON VALUE-ADDED
- involves more than one isolated transaction.
- Requires repetition and continuity of action.
TAX
The Business Taxes The value-added is on:
a. Excise tax. a. Sale of goods or properties
b. Percentage tax; and b. Sale of services
c. Value-added tax c. Importation of goods.

A. EXCISE TAX Can there be, on one business:

On whom is it imposed? Excise tax with VAT? Yes
A. On manufacturers and importers of: Excise tax with 3% percentage tax? Yes
1. Distilled spirits (e.g., liquors) Excise tax with some OPT. No
2. Wines (e.g., grape wine) VAT with percentage tax? No
3. Fermented liquors (e.g., beer)
4. Tobacco products (e.g., chewing tobacco)
Registration of business
5. Cigars
6. Cigarettes  register with the BIR as a VAT taxpayer and
7. Automobiles pay an annual registration fee for every
8. Yachts and other vessels for pleasure. separate and distinct establishment, including
9. Manufactured fuel oils (e.g., gasoline, diesel facility types (sales outlets, places of
fuel oil, bunker fuel oil, etc.) production, warehouses and storage places)
10. Mineral products (e.g., gold, silver)  Every taxpayer not subject to VAT but subject
11. Non-essential goods (e.g., jewelry, perfumes) to the excise tax or percentage tax must
12. Sweetened beverages. register with BIR and pay annual registration
B. On sellers of services of: fee for every separate and distinct
1. Domestic procedures, establishment.
2. surgeries, and body enhancements for
aesthetic (but not reconstructive surgery due
Registration for VAT -Mandatory registration.
to;)
- liable to register for VAT if:
a. congenital disorders,
b. trauma, a. Gross sales or receipts within the year
c. burns, exceeded 3M.
d. infectious disease b. There are reasonable grounds to believe that
e. those intended to correct dysfunctional gross sales or receipts for the next 12months
areas of the body. will exceed 3M.
B. PERCENTAGE TAXES
- taxes on sales of services (enumerated in
NIRC).
a. 3% percentage tax on sale of goods,
properties, or services.
b. Common carrier's tax on domestic carriers.
c. Common carrier's tax on international
carriers.
 Example.
 With gross sales in any year not exceeding
3M, Mr. N was paying the percentage tax of
3% on his sales.
 On August 25, 2019 his sales were already
3.2M.
 What were the business taxes in 2019?
January 1 to August 31 — Percentage tax
September 1, 2019 and thereafter — Value-added tax.
b. Taxpayers under the Large Taxpayers Service
to issue electronic receipts or sales or
commercial invoices.
 Taxpayers not covered by this mandate may
issue electronic receipts or sales or
commercial invoices in lieu of manual.

Optional registration
Any person not required to register as a VAT taxpayer
because the sales do not, or will not, exceed 3M, may
opt to register under the VAT system.

The threshold of ₱3,000,000

 husband and wife will be considered as
separate taxpayers.
 If a taxpayer has 2 or more lines of businesses
that would otherwise be subject to the VAT,
the gross sales/receipts will be combined in
determining if the threshold was exceeded.
 Any VAT exempt sales will not be included in
determining the threshold.
Cancellation of VAT registration
 may be cancelled if:
1. The person makes written application and can
demonstrate to the Commissioner's
satisfaction that his gross sales or receipts for
the following 12months will not exceed 3M.
2. ceased to carry on his business and does not
expect to recommence any business within
the next 12 months.

When will the cancellation take effect?

Answer: The first day of the following month.

Registration of invoices and receipts

 taxpayer who is in business will have his
invoices and receipts registered with the BIR.
 If a VAT taxpayer, invoices and receipts will
clearly indicate that he is a VAT taxpayer.

Electronic receipts or sales or commercial invoices

 Under the TRAIN LAW, within 5years from the
effectivity of law, and upon the establishment
of a system capable of storing and processing
the required data, the BIR will require:
a. Taxpayers engaged in e-commerce, and