COMPETENCY

APPRAISAL
Percentage Tax
PERCENTAGE TAX
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
of services. (CIR vs. Solidbank Corporation, G.R. No. 148191, November 25, 2003)
Percentage Tax
SERVICES SPECIFICALLY SUBJECT TO PERCENTAGE TAX
1. Banks and non-bank financial intermediaries
2. International carriers on their transport of cargoes, excess baggage and mails only (RA 10378)
3. Common carriers on their transport of passengers by land and keepers of garage
4. Certain amusement places
5. Brokers in effecting sales of stocks through the Philippine Stock Exchange and corporations or shareholders
on initial public offerings
6. Certain franchise grantees
7. Life insurance companies and agents of foreign insurance
8. Telephone companies on overseas communication
9. Jai-alai and cockpit operators on winnings
Percentage Tax
Percentage Tax
Percentage Tax
Net trading gains within the taxable year on foreign currencies, debts, securities, derivatives and other
financial instruments
The tax clearly applies to the annual net gains from this category. According to RR4-2009, the figure to be
reported in the monthly percentage tax return shall be the cumulative total of the net trading gain/loss since the
start of the taxable year less the figures already reflected in the previous months of the taxable year.

Net trading loss sustained from this category shall be deductible only to the gains from trading on the same
category. The net trading loss shall not be deductible to other categories of receipts. If the bank has a cumulative
net loss at the end of the year, the same cannot be carried over as deduction against trading gains in the
following year.
Percentage Tax
Percentage Tax
Percentage Tax
PERCENTAGE TAX ON INTERNATIONAL CARRIERS
International caffiers doing business in the Philippines shall pay a tax equivalent to 3% of their quarterly gross
receipts derived from the transport of cargoes, baggage, or mails from the Philippines to another country.
Percentage Tax
Percentage Tax
AMUSEMENT TAXES
Proprietor, lessee or operator of the following amusement places shall pay the following respective tax rates on
their quarterly gross receipts:
Places of boxing exhibitions 10%
Places of professional basketball games 15%
Cockpits, cabarets, night or day clubs 10%
Jai-alai and race tracks 30%
Percentage Tax
TAX ON SALE, BARTER OR SALE OF SHARES OF STOCK LISTED AND TRADED THROUGH THE LOCAL
STOCK EXCHANGE OR THROUGH INITIAL PUBLIC OFFERING

Tax on sale, barter or exchange of stocks listed and traded through the Philippine Stock Exchange (PSE)
The sale, barter or exchange, including block sale, of listed stocks through the PSE, other than by dealers in
securities, is subject to a tax of 60% of 1% based on gross selling price or gross value in money of the shares of
stocks sold. This percentage tax is commonly known as "stock transaction tax".

The same shall be paid by the seller or transferor and is to be collected by the stock broker who effected the sale.
The stock broker shall remit the tax to the BIR within 5 banking days from the date of collection.
Percentage Tax
Percentage Tax
THEORY PART 1
1. The percentage tax rates on services specifically subject to percentage tax ranges from
a. 2 of 1% to 3% b. ½ of 1% to 30% c. 1% to 3% d. 1% to 30%

2. To be subject to the general percentage tax, a taxable person must not be

a. VAT-registered. b. Non-VAT-registered. c. Operating below the VAT threshold. d. All of these

3. Which domestic common carrier is specifically subject to percentage tax?

a. Common carrier by land c. Common carrier by sea
b. Common carrier by air d. All of these

4. From which of the following sources does the 3% common carriers tax specifically apply?
a. Transport of passengers b. Transport of goods c. Both A and B d. Neither A nor B

5. The percentage tax specifically imposed on certain domestic transporters is called

a. Common carrier's tax b. Skipper's tax c. Transporter's tax d. Gross receipt tax

6. Which is not specifically subject to a percentage tax?

a. International sea or air carrier c. Domestic common carrier by sea
b. Domestic common carrier by land d. A and B
Percentage Tax
7. From which of the following sources is the gross receipt of an international carrier subject to percentage tax?
a. Outgoing transport of passengers c. Incoming transport of passengers or cargoes
b. Outgoing transport of cargoes d. None of these

8. A domestic carrier which is also engaged in international transport operation is subject to

a. VAT b. Percentage tax c. Excise Tax d. VAT and Percentage tax

9. On transport of excess baggage, cargoes or mails, an international carrier shall pay

a. Percentage tax if it is below the VAT threshold.
b. Percentage tax even if it is above the VAT threshold.
c. VAT regardless of whether it is below or above the VAT threshold.
d. no business tax.

10. Which is a VAT-exempt receipt to a bus operator?

a. Receipts from passengers c. Receipt from baggage
b. Receipt from cargoes d. None of these

11. To an operator of a domestic sea transport vessel, which of the following is vatable?
a. Fares from passengers b. Fares from baggage c. Fares from cargoes and mails d. All of these
Percentage Tax
12. To an international carrier, which is subject to percentage tax?
a. Transport of passengers c. A and B
b. Transport of cargoes, mails or baggage d. Neither A nor B

13. Which is not specifically subject to common carrier's tax?

a. Bus b. Taxi c. Jeepney d. truck

14. Which is more likely exempt from business tax?

a. Tricycle b. Jeepney c. Car for hire without chauffeur d. Pedicab

15. To an operator of a domestic aircraft, which is vatable?

a. Fares from passengers c. Fares from cargoes and mails
b. Fares from baggage d. All of these
Percentage Tax
THEORY PAR T 2
1. Which of these is vatable?
a. City taxis b. Sea vessels c. Provincial buses d. City buses

2. Which is subject to 3% percentage tax?

a. Kalesa b. Bangka c. Bulldozer d. Car for hire

3. A jeepney operator with gross receipts from passenger fares exceeding P3,000,000 in any 12-month period is
subject to
a. 3% percentage tax. b. 8% percentage tax. c. 12% VAT. d. 0% VAT.E

4. Franchise grantees of telephone, telegraph, and other communication equipment are subject to percentage
tax on
a. Overseas dispatch of message c. Both A and B
b. Domestic dispatch of message d. Neither A nor B

5. Which is not exempt from the overseas communication tax?

a. PEZA locators b. Government c. Diplomatic services d. News services
Percentage Tax
6. The overseas communication tax is
a. 10% of revenue. b. 10% of gross receipts. c. 3% of revenue. d. 3% of gross receipts

7. Which is a vatable receipt to a franchise telephone franchise grantee?

a. Receipt from domestic dispatch of message C. Receipt from outgoing calls
b. Receipt from incoming calls d. Both A and B

8. Which of the following franchisees is subject to the franchise tax?

a. Electricity b. Transportation c. Water utility d. Telephone

9. The franchise tax on radio or television franchisees is

a. 2% of gross receipt. b. 3% of revenue. c. 2% of revenue. d. 3% of gross receipt.

10. A radio or television broadcasting company with annual gross receipt not exceeding P9,000,000 shall pay
a. VAT b. 3% percentage tax c. 2% percentage tax d. no business tax.

11. What is the business tax liability of gas and water utilities with gross receipts not exceeding P10,000,000?
a. VAT b. 3% percentage tax c. 2% percentage tax d. Exempt

12. What is the business tax liability of gas and water utilities with gross receipts exceeding P10,000,000?
a. VAT b. 3% percentage tax c.2 % percentage tax d. Exempt
Percentage Tax
13. A radio or television broadcasting company with annual gross receipts of P12,000,000 shall pay
a. VAT b. 3% percentage tax c. 2% percentage tax d. no business tax.

14. The gross receipt tax on long-term interest income is

a. 7% b. 5% c. 3% d. 1%

15. Which is subject to the gross receipt tax?

a. Banks b. Quasi-banks c. Pawnshops d. All of these
Percentage Tax
THEORY PART 3
1. The gross receipts of banks pertain to
a. Principal collection c. Principal and interest collection
b. Interest collection d. None of these

2. Which is subject to percentage tax?

a. Life insurance b. Hull insurance c. Fire insurance d. All of these

3. The premiums tax on life insurance applies to

a. Direct premium b. Re-insurance premium c. Refunded premium d. All of these

4. Which is part of gross receipts for purposes of the premiums tax on life insurance?
a. Check b. Bills and coins c. Promissory notes d. All of these

5. The gross receipt tax on banks from other items of gross income aside from interest income is
a. 7% b. 5% c. 39% d. 1%

6. Statement 1: Reinsurance premium is exempt from the percentage tax.

Statement 2: Reinsurance premium is exempt from VAT.
Which statement is correct?
a. Statement 1 b. Statement 2 c. Both statements d. Neither statement
Percentage Tax
7. Agents of foreign insurance are subject to
a. 2% premiums tax b. 5% premiums tax c. 4% premiums tax d. 10% premiums tax

8. Which is not subject to amusement tax?

a. Places of boxing exhibitions c. Cockpits
b. Places of professional basketball games d. Golf course

9. The premiums tax on insurance premium is

a. 2% b. 3% c. 5% d. 7%

10. The percentage tax for operators of race tracks is

a. 10% b. 15% c. 18% d. 30%

11. Operators of discos or cabarets are subject to an amuse

a. 10% b. 15% c.18% d. 30%

12. The general percentage tax on winnings from a horse race is

a. 3% b. 4% c.5% d. 10%
Percentage Tax
13. Which winning is subject to percentage tax?
a. Winnings from lotto c. Winnings from horse race
b. Winnings from derby d. Winnings from gambling

14. Which of the following events is not exempt from amusement tax?
a. World championship b. Oriental championship c. National championship d. None of these

15. Which is incorrect with respect to the requisites of exemption of receipts from professional boxing?
a. Both contenders must be Filipinos
b. The promoter must be a Filipino or corporation with at least 60% Filipino ownership
c. The competition must be a world or oriental championship
d. All of these
Percentage Tax
PROBLEMS PART 1
1. Grace is a proprietor of a mini-store with sales in any 12-month period not exceeding P1,900,000. She shall
pay a. Percentage tax b. VAT c. Excise tax d. Percentage tax and Excise tax

2. Tony, a VAT-registered taxpayer, reported P200,000 sales in the month of May. Tony's annual sales never
exceeded P1,800,000. Compute Tony's percentage tax.
a. P0 b. P6,000 c. P24,000 d. P54,000

3. Donnel, a non-VAT-registered operator of jeepney, reported a total receipt of P200,000 during a month,
including P20,000 rentals for cargo transport. Compute the percentage tax.
a. P0 b. P5,400 c. 6,000 d. P6,600
Percentage Tax
4. Mr. Ngina owns and operates a taxi unit. He also teaches as an accounting professor the University of Baguio
and renders taxation advisory services to various clients. Mr. Ngina is registered as a VAT-taxpayer. In March
2020, He had the following receipts:
Compensation income - teaching P200,000
Receipts from taxi 50,000
Receipts from professional practice 350,000
Total P600,000
=========
Compute the percentage tax payable of Mr. Ngina for March 2020.
a. P0 b. P1,500 c. P12,000 d. P18,000

5. In the immediately preceding problem, compute the total receipts of Mr. Ngina subject to the VAT.
a. P0 b.P350,000 c. P400,000 d. P550,000

6. Michael Jackson is an operator of a fleet of 10 taxis operated under the "boundary system." A total of P150,000
"boundary" payments from chauffeurs was received in July 2015. A total of P20,000 is still receivable from
chauffeurs for family advances. The percentage tax for the month is
a. P360 b. P600 c. P4,500 d. P5,100
Percentage Tax
7. Mr. Pogi-it practices his profession as a medical practitioner. He registered as a VAT taxpayer. Mrs. Pogi-it is a
nurse employed by a public hospital. Which statement is correct?
a. Mr. Pogi-it shall pay percentage tax. c. Mrs. Pogi-it is exempt from business tax.
b. Mrs. Pogi-it shall pay percentage tax d. Mr. Pogi-it is exempt from business tax.

8. There are two competing keepers of garage with the following receipts:
Parcorito P 1,200,000
Parkodun 2,500,000
Which will pay 3% percentage tax?
a. Parcorito b. Parkodun c. Both d. None of them

9. Mr. Conner has two taxis which were both grounded during the month of February 2020 because of technical
problems. The applicable presumptive quarterly gross receipt for each taxi was P3,600. Compute the percentage
tax due for February 2020.
a. P0 b. P72 c. P108 d. 8216

10. Mr. Frank Sinatra owns a cargo truck for rent. During the month, it generated total receipts of P40,000 from
various clients. The percentage tax
a. P0 b. P1,200 c. P2,000 d. P4,800
Percentage Tax
11. Mr. Jackson Michael, a non-VAT taxpayer, is an operator of four buses plying the route Baguio-Manila. In
November 2020, the buses remitted a total of P320,000 including P30,000 freight and charges for passenger
baggage and mails. Compute Michael's common carrier's tax.
a. P0 b. P8,700 c. P9,600 d. P10,500

12. In the immediately preceding problem, compute the percentage tax if Mr. Michael is a VAT-registered
taxpayer.
a. P0 b. P8,700 c. P9,600 d. P10,500

13. Cagayan Ferry Boats transport passengers and cargoes between the islands of Palaui and Sta. Ana. It earned a
total of P120,000 in March 2020 excluding P10,000 freight for cargoes.
What is the percentage tax if Cagayan Ferry Boats registered respectively as a non-VAT taxpayer and as a VAT-
taxpayer?
a. P0; P0 b. P3,600; P0 c. P3,900; P3,600 d. P3,900; P0

14. Lavezares Ferries transports passengers and land vehicles between Samar and Sorsogon. Lavezares usually
had an average annual receipts of P5,000,000. During the month, it earned a total of P400,000 from customers.
The percentage tax is
a. P0 b. P12,000 c. P138,000 d. P150,000
Percentage Tax
15. An operator of car with chauffeurs for hire had the following financial results of operations during a month:
Total collections P 240,000
Less:
Fuel P 100,000
Other car supplies 24,000
Driver's salaries 20,000 144,000
Net income P96,000
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What is the percentage tax?
a. P2,880 b. P4,200 c. P4,320 d. R7,200

16. DANUMI is a local water district with annual sales exceeding P10M a year. During the month, it collected
P4,000,000 from sales of water. Compute the percentage tax.
a P0 b. P80,000 c. P 120,000 d. P 200,000

17. Radyo Bolero had annual sales not exceeding P10M a year. During the month, it posted a revenue of
P2,000,000 out of which P1,800,000 was collected. Compute the percentage tax.
a P0 b. P36,000 c. P 54,000 d. P 60,000
Percentage Tax
PROBLEMS PART 2
1. Regga Transporters, a transportation contractor, transports employees of Euro Textiles Industries to and from
Cagayan de Oro City to a distant factory plant in Impasug-ong, Bukidnon. In March, Regga Transporters was
paid P300,000 by Euro Textile Industries. The percentage tax is
a. P0 b. P9,000 c. 15,000 d. 36,000

2. Napartas Company is a transportation contractor of Haring Padala, a mail courier company. Napartas
Company delivers the mails to addressee location specified in the mail. During the month, Napartas Company
was paid P400,000 by Haring Padala. The percentage tax is
a. P0 b. P12,000 c. P24,000 d. P48,000

3. Malaysian Birdie, an international air carrier, collected a total of P30,000,000 from transport of passengers
during the month. It also collected a total of P5,000,000 from transport of mails and baggage. Compute for the
percentage tax.
a. P0 b. P150,000 c. P900,000 d. P1,050,000
Percentage Tax
4. Puro-Air is a domestic airliner with annual receipts exceeding P50,000,000. During a month, it generated the
following receipts:
Passengers P5,000,000
Cargoes and baggage 1,500,000
Total P6,500,000
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The percentage tax is
a. P0 b. P45,000 c. P150,000 d. P195,000

5. European Seagull, an international shipping carrier, had the following receipts on its Philippine operations:
Gross receipts from: Passengers Baggage Total
Incoming voyages P2,000,000 P1,500,000 P3,500,000
Outgoing voyages 3,000,000 1,800,000 4,800,000
Total P 5,000,000 P 3,300,000 P 8,300,000
========== ========== ==========
How much is the percentage tax?
a. P0 b. P54,000 c. P99,000 d. P144,000
Percentage Tax
6. American Hawk, an international air carrier, recorded the following taxable receipts during a month for
outgoing flights:
From booking agencies in
Philippines Abroad Total
Passengers P2,000,000 P3,000,000 P5,000,000
Mails and baggage 500,000 1,200,000 1,700,000
Total P 2,500,000 P 4,700,000 P 6,700,000
========== ========== ==========
Compute for the percentage tax.
a. P15,000 b. P51,000 c. P60,000 d. P75,000

7. DEF Insurance Corporation has the following receipts and receivables from its insurance products:
Life Property Total
Cash and check collections P1,000,000 P500,000 P1,500,000
Promissory notes 200,000 100,000 300,000
Total P1,200,000 P 600,000 P1,800,000
========= ======== ===========
Compute for the premiums tax.
a. P20,000 b. P 24,000 c. P30,000 d. P 36,000
Percentage Tax
8. Bullion Bank reported the following receipts during the month:
Interest income:
1 to 3 year loan P1,200,000
3 to 5 year loan 800,000
6 to 8 year loan 600,000
8 to 10 year loans 400,000
Total P3,000,000
==========
Compute for the gross receipts tax.
a. P100,000 b. P110,000 c. P 80,000 d. P 70,000 Enter

9. Venture Bank had the following summary of receipts:

Interest income on short term loans P2,000,000
Interest income on long-term loans 1,000,000
Rent income on ROPOA 800,000
Services fees and gains 200,000
Total P4,000,000
=========
How much is the gross receipts tax?
a. P220,000 b. P200,000 c. P180,000 d. P 160,000
Percentage Tax
10. A quasi-bank receives the following from its short-term placement of excess funds:
Dividend income P500,000
Bank interest income, net of final tax 800,000
Total P1,300,000
=========
Compute for the gross receipts tax.
a. P0 b. P40,000 c. P50,000 d. P 91,000

11. A cellular company had the following receipts:

P2,000,000 - From domestic calls
P3,000,000- Incoming calls to the Philippines
P2,500,000-Outgoing calls abroad
What is the percentage tax?
a. P0 b. P75,000 c. P 165,000 d. P 250,000

12. Boy Manok is an operator of a cockpit. During the quarter, it collected P200,000 from gate receipts, P240,000
from "tongs" and P300,000 from business concessionaires inside the cockpits. Total winnings on derby sets
totaled P2,400,000. What is the amusement tax?
a. P0 b. P74,000 c. P 111,000 d. P 133,200
Percentage Tax
13. Borneo Corporation, a publicly listed company, is planning to increase its public ownership by issuing
additional 1,000,000 shares for P10 per share. The new shares will increase the outstanding shares of Borneo to
2,500,000. Compute for the IPO tax.
a. P0 b. P 100,000 c. P 200,000 d. P 400,000

14. In a recently completed race, Sta. Ana Hippodrome noted the following winning tickets:
Straight bets - P 40,000, 20 tickets at P100 per ticket
Combination bets-P 20,000, 2 tickets at P200 per ticket
Compute the percentage tax to be withheld on the winnings.
a. P0 b. P3,800 c. P4,584 d. P5,760

15. Mr. Magno owns 1,000,000 shares representing 40% of the outstanding stocks of Calatna Corporation, a
closely-held corporation, which is conducting an initial public offering. Mr. Magno sold 700,000 shares during the
initial public offering for P100 per share.
Compute the IPO tax due from Mr. Magno.
a. P350,000 b. P 700,000 c. P1,400,000 d. P 2,800,000

16. Assuming further that Mr. Magno sold his remaining 300,000 shareholdings after the IPO for P90 per share,
compute the IPO tax.
a. P 161,000 b. P 270,000 c. P 540,000 d. P 1,080,000
Percentage Tax
17. Helix Company is conducting an initial public offering of 2,000,000 shares. Helix Company already had
4,000,000 issued and outstanding shares. The new IPO shares shall be sold at P3 per share. What is the tax on the
initial public offering?
a. P0 b. P 60,000 c. P 120,000 d. P 240,000

18. Geneva Corporation, a non-VAT taxpayer, leases commercial spaces to various businesses. During a month, it
received P142,500 rentals, net of 5% creditable withholding tax. Compute the percentage tax.
a. P0 b. P4,061 c. P 4,275 d. P 4,500

19. Almendras Corporation sells bread to various stores and makes P150,000 monthly sales on the average.
During the month, it made total sales of P200,000 out of which only P160,000 was collected. Compute the
percentage tax.
a. P0 b. P4,500 c. P 4,800 d. P 6,000