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TAX-401 (Other Percentage Taxes - Part 1)
TAX-401 (Other Percentage Taxes - Part 1)
Net trading gains within the taxable year on foreign currency, debt
securities, derivatives and other similar financial instruments 7%
Sec. 122 – Tax on other non-bank financial Gross receipts derived from interest, commissions, discounts and all
intermediaries other items treated as gross income under the Tax Code 5%
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(B) Tax on shares of stock sold or Gross selling price or gross value in money in accordance with the
exchanged through public offerings proportion of shares of stock sold, bartered, exchanged or otherwise
disposed to the total outstanding shares of stock after listing in the
local stock exchange
Up to 25% 4%
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Over 25% but not over 33 1/3% 2%
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Over 33 1/3% 1%
The excess of the threshold shall be subject toVAT prospectively, and the 8% income tax previously paid shall be
credited to the Income Tax Due under the graduated rates provided in Section 24(A)(2)(a) of the Tax Code, as
amended.
6) Exempt under Sec. 116 a. Cooperatives shall be exempt from the 3% gross receipts tax.
b. Self-employed individuals and professionals availing of 8% tax on gross sales and/or receipts and other
non-operating income.
7) Exercises: Determine which of the following is subject to VAT, 3% (1%) 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 exceed P3,00,000
b) Service contractor, VAT-registered, gross annual receipts do not exceed P3,000,000
c) Milling for others, not VAT-registered, gross annual receipts exceed P3,000,000
d) Seller of fresh fish, gross annual sales exceed P3,000,000
e) VAT-registered seller of both VAT-subject goods and VAT-exempt goods (optionally registered VAT-exempt sales)
f) Mr. Jaime Rodriguez 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, 2021 P 150,000
Gross sales 250,000
Purchases from VAT-registered suppliers 150,000
How much is the percentage tax due and payable?
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.
Question 1 – How much is the percentage tax, if any?
2 – How much is the VAT, if any?
b. 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 passengers
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 1) Cars for rent or hire driven by the lessee
carrier’s tax 2) Transportation contractors, including persons who transport passengers
3) Other domestic carriers by land for the transport of passengers
4) Keepers of garage
3) Persons not subject to 1) Owners of banca
common carrier’s tax 2) Owners of animal-drawn two wheeled vehicle
4) Tax base Actual quarterly gross receipts or minimum quarterly gross receipts whichever is higher.
5) Tax rate 3%
6) Minimum quarterly 1) Jeepney for hire Manila and other cities P65,700 (P2,400)
receipts Provincial P32,900 (P1,200)
2) Public utility bus Not exceeding 30 passengers P98,600 (P3,600)
Exceeding 30 but not exceeding
50 passengers P164,200 (P6,000)
Exceeding 50 passengers P197,100 (P7,200)
3) Taxis Manila and other cities P98,600 (P3,600)
Provincial P65,700 (P2,400)
4) Car for hire with
chauffeur P82,100 (P3,000)
5) Car for hire
without chauffeur P49,300 (P1,800)
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 the Local Government Code of 1991.
8) Transportation contractors 1) Transportation contractors on their transport of goods or cargoes;
and common carriers subject 2) Persons who transport goods or cargoes for hire;
to VAT 3) Other domestic carriers by land relative to their transport of goods or cargoes;
4) 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. Exercises: 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
b) Transport of goods and cargoes by domestic common carrier by land, VAT-registered, gross receipts do not exceed P3,000,000
c) Transport of passengers, goods and cargoes by domestic common carrier by sea, not VAT-registered, gross receipts exceeded
P3,000,000
d) Transport of passengers, goods and cargoes by domestic common carrier by air, not VAT-registered, gross receipts do not
exceed P3,000,000
4) Gross receipts defined 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, deposits applied as payments, advance payments and other service
charges and fees actually or constructively received during the taxable quarter from cargo and/or mail,
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. (Sec. 5, RR 15-2013, implementing R.A. No. 10378)
5) Exempt from VAT 1) Transport of passengers by international carriers doing business in the Philippines
(not allowed to register for 2) Transport of cargo by international carriers doing business in the Philippines
VAT purposes)
6) Off-line international Not subject to the 3% common carrier’s tax on international carriers
carrier having
branch/office as a sales
agent in t he Philippines
4) Exercises: 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 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, 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 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 cargo from Singapore to
Tokyo (passage documents sold in the Philippines by its sales agent)
Question 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?
m) As a franchisee, Ms. Kathleen En, had the following data on revenues and receivables, taxes not included:
Receivables
Revenues Beginning End
From operations:
Covered by the franchise P2,000,000 P300,000 P400,000
Not covered by the franchise 600,000 50,000
e. Sec. 120 - Tax on Overseas Dispatch, Message or Conversation Originating from the Philippines
1) Persons subject to tax 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 the quarter.
2) Persons not subject to tax 1) Philippine Government;
2) Diplomatic services;
3) International organizations;
4) News services.
3) Tax base Amount paid for the services rendered
4) Tax rate 10%
5) Examples of communication 1) Telephone;
facilities 2) Telegraph;
3) Telewriter exchange;
4) Wireless and other communication equipment services.
6) Exercise: Mr. Elirie Espenilla 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. Espenilla 15,000
Paid by callers 23,000
Local calls, paid by Mr. Espenilla:
Other than long distance (personal calls) 7,000
Long distance (business calls) 20,000
f. Sec. 121 - Tax on Banks and Non-Bank Financial Intermediaries Performing Quasi-Banking Functions (Gross Receipts Tax)
1) Bank defined 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.
2) Non-bank financial The term “non-bank financial intermediary” means a financial intermediary, as defined in Sec. 2 (D) (c) of
intermediary defined 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
3) 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 for the borrower’s own account, or through the issuance of certificates of
assignment or similar instruments, with recourse, or repurchase agreements 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.
4) Persons subject to the tax Banks and non-bank financial intermediaries performing quasi-banking functions
g. Sec. 122 – Tax on Other Non-Bank Financial Intermediaries (Gross Receipts Tax)
1) Persons subject to tax Non-bank financial intermediaries, such as money changers and pawnshops
2) Tax base and tax rates Tax base Tax rates
Gross receipts derived from interest, commissions, discounts and all other items treated as
gross income under the Tax Code 5%
Interests, commissions and discounts from lending activities, as well as income from
financial leasing:
Remaining maturity of instrument is 5 years or less 5%
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Remaining maturity of instrument is more than 5 years 1%
3) In case maturity is In case the maturity period is shortened thru pre-termination, the maturity period shall be reckoned to end
shortened through as of the date of pre-termination for purposes of classifying the transaction and applying the correct rate
pre-termination of tax accordingly.
4) Exercise 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 instruments is more than 5 years) 120,000
Income from financial leasing (remaining maturity of instruments is 5 years) 140,000
“Do not be impressed by things that can be seen by the naked eye, they are temporary. Focus instead on things that the naked eye jb
cannot see; they have eternal value.” - Tamthewise