PERCENTAGE TAX

➢ Percentage tax is a business tax imposed on persons, entities, or transactions specified under Sections 116 to 127 of
the National Internal Revenue Code of 1997 (aka Tax Code), as amended & as required under special laws.

Tax Form: BIR Form 2551Q Quarterly Percentage Tax Return

Who are required to file?

➢ Persons refer to individuals and non-individuals, which include, but are not limited to, estates, trusts, partnerships,
and corporations.

1. Persons, who are not VAT-registered, who sell goods, properties or services, whose annual gross sales and/or receipts
do not exceed Php3,000,000.00 and are exempt from value-added tax (VAT) under Section 109 (BB) of the National
Internal Revenue Code, as amended by Republic Act (RA) No. 10963.
2. Persons who lease residential units where the monthly rental per unit exceeds fifteen thousand pesos (Php15,000.00)
but the aggregate of such rentals of the lessor during the year does not exceed Php3,000,000.00
3. Persons engaged in the following industries/transactions:
a. Cars for rent or hire driven by the lessee, transportation contractors, including persons who transport
passengers for hire, and other domestic carriers by land for the transport of passengers (except owners of
bancas and owners of animaldrawn two-wheeled vehicle) and keepers of garages
b. International air/shipping carriers doing business in the Philippines on their gross receipts derived from
transport of cargo from the Philippines to another country.
c. Franchise grantees of –
i. radio and/or television broadcasting companies whose annual gross receipts for the preceding year do
not exceed Php 10,000,000.00 and did not opt to register as VAT taxpayers, and
ii. gas and water utilities.
d. Overseas dispatch, message or conversation transmitted from the Philippines by telephone, telegraph, tele-
writer exchange, wireless and other communication equipment services, except those transmitted by:
i. The Philippine Government or any of its political subdivisions or instrumentalities;
ii. Diplomatic services;
iii. Public international organizations or any of their agencies based in the Philippines enjoying privileges,
exemptions and immunities which the Philippine Government is committed to recognize pursuant to
international agreement; and
iv. News services for messages which deal exclusively with the collection of news items for, or the
dissemination of news item through, public press, radio or television broadcasting or a new sticker
service furnishing a general news service similar to that of the public press.
e. Banks, non-bank financial intermediaries performing quasibanking functions
f. Other non-bank financial intermediaries (including pawnshops as clarified under Revenue Regulations [RR] No.
10 – 2004)
g. Person, company/corp (except purely cooperative companies/associations)doing life insurance bus. in the Phil.
h. Fire, marine or miscellaneous agents of foreign insurance companies
i. Proprietor, lessee or operator of cockpits, cabarets, night or day clubs, boxing exhibitions, professional
basketball games, JaiAlai and racetracks, including karaoke bars, karaoke televisions, karaoke boxes & music
lounges as clarified under Revenue Memorandum Circular (RMC) No. 18 – 2010
j. Winnings or 'dividends' in horse races

Documentary Requirements
1. BIR Form 2551Q - Quarterly Percentage Tax Return Form
2. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
3. Duly approved Tax Debit Memo, if applicable
4. For amended return, proof of payment and the return previously filed
5. Authorization letter, if filed by an authorized representative
6. Copy of Certificate of Registration issued by Cooperative Development Authority for cooperatives, and from the
National Electrification Administration for electric cooperatives
Procedures: (For Manual filing/payment)
a. Download the newly-revised BIR Form 2551Q pdf file format under the BIR Forms-VAT/Percentage Tax Returns section
of the BIR website.
b. Properly fill-out BIR Form 2551Q in triplicate copies.
c. Proceed to any Authorized Agent Bank (AAB)located within the territorial jurisdiction of the Revenue District Office
(RDO) where the taxpayer is registered and present the duly accomplished BIR Form 2551Q and other requirements.
If paying manually, present the aforementioned documents together with BIR-prescribed deposit slip, and payment
to the respective AAB. The Quarterly Percentage Tax shall be paid at the time the return is filed by the taxpayer.
d. In places where there are no AABs, the duly accomplished BIR Form 2551Q, together with the required attachments
and payment, shall be filed/paid with the Revenue Collection Officer (RCO), thru the Mobile Revenue Collection
Officers System (MRCOS) facility, or duly Authorized Treasurer of the city or municipality where said business or
principal place of business / where the taxpayer is registered, who will issue an Electronic Revenue Official Receipt.
e. Receive copy of BIR Form 2551Q duly validated/stamp-received by the AAB/RCO/authorized City or Municipal
Treasurer
f. Manual Filers who want to pay online can pay through GCash Mobile Payment, LandBank of the Philippines (LBP)
Linkbiz Portal (for taxpayers who have ATM account with LBP/Bancnet ATM or Debit Card), or DBP Tax Online (for
holders of VISA/Master Credit Card/Bancnet ATM or Debit Card).
g. If there is no payment:
i. File the BIR Form 2551Q, together with the required attachments, with the RDO/LTDO/Large Taxpayers
Assistance Division, Collection Agent having jurisdiction over the registered address of the taxpayer (head
office of the business establishment); or
ii. Use the latest eBIRForms Package V7.9.2 to file the return online (preferred)

Procedures: (For eFPS filing and/or payment)

a. Use the existing BIR Form 2551Q in the eFPS system which contains all the alphanumeric tax codes (ATCs) enumerated
in the said form in filing the return.
b. Taxable amount to be indicated in the quarterly percentage return shall be the total gross sales/receipts for the
quarter.
c. In case percentage taxes for the first, second and/or third month of the quarter had been paid, payment/s made are to
be reflected in BIR Form 2551Q in Item No. 20A-Creditable Percentage Tax Withheld per BIR Form 2307.
d. After e-filing, proceed to online payment by clicking the proceed to payment button and pay the quarterly percentage
tax due.
e. If no payment, simply file the return using eFPS System but no need to proceed to payment.
Note: "No payment" returns filed late will result on imposition of penalties, which will automatically be computed in the
EFPS upon filing of the return.

Procedures: (For eBIRForms filing and/or payment)

a. Use the existing enhanced old BIR Form 2551Q in Offline eBIRForms
Package V7.9.2, which contained all the alphanumeric tax codes (ATCs)
enumerated in filing the return.
b. Taxable amount to be indicated in the quarterly percentage return shall be
the total gross sales/receipts for the quarter.
c. In case percentage taxes for the first, second and/or third month of the
quarter had been paid, payment/s made are to be reflected in BIR Form
2551Q in Item No. 20A-Creditable Percentage Tax Withheld per BIR Form
2307.
d. Proceed to any AAB located within the territorial jurisdiction of the RDO
where the taxpayer is registered and present the duly accomplished BIR
Form 2551Q and other requirements. If there is payment that will be done
manually, present the aforementioned documents together with BIRprescribed deposit slip, and payment to the
respective AAB. The Percentage
Tax shall be paid at the time the return is filed by the taxpayer.
e. In places where there are no AABs, the duly accomplished BIR Form 2551Q,
together with the required attachments and payment, shall be filed/paid with
the RCO, thru the MRCOS facility, or duly Authorized Treasurer of the city or
municipality where said business or principal place of business / where the
taxpayer is registered, who will issue an Electronic Revenue Official Receipt
(eROR)
f. eBIRForms Filers who want to pay online can pay through GCash Mobile
Payment, LandBank of the Philippines (LBP) Linkbiz Portal (for taxpayers
who have ATM account with LBP/Bancnet ATM or Debit Card), or DBP Tax
Online (for holders of VISA/Master Credit Card/Bancnet ATM or Debit
Card). (see the updated list of epayment gateways from previous slides)
Note: "No payment" returns filed late will result on imposition by the RDO of
penalties, which shall be paid at the concerned AAB

Deadline: Within twenty-five (25) days after the end of each taxable quarter

Coverage Taxable Base Tax Rate

1. Non-VAT registered persons under Gross sales or receipts 3%
Section 109 (BB) * (Sec. 116)
2. Domestic carriers and keepers of Gross receipts 3%
garages (Sec. 117)
3. International air/shipping carriers doing business in Gross receipts on transport of cargo 3%
the Philippines Sec. 118) from the Phil. to a foreign country
4. Franchise grantees (Sec. 119):
▪ Gas and water utilities Gross Receipts 2%
▪ Radio and television broadcasting companies Gross Receipts 3%
whose annual gross receipts of the preceding year do
not exceed Php10,000,000 and did not opt to register as
VAT taxpayer
5. Overseas dispatch, message or conversation Amount paid for the service 10%
originating from the Philippines (Sec. 120)
6. Banks and non-bank financial intermediaries > Interest, commissions and discounts
performing quasi-banking functions (sec. 121) from lending activities as well as
income from financial leasing, on the
basis of remaining maturities of
instruments from which receipts are
derived:
▪ If maturity period is five years or less 5%
▪ If maturity period is more than five 1%
Years

> Dividends and equity shares and net 0%

income of subsidiaries

> Royalties, rentals of property, real or 7%

personal, profits from exchange and all
other items treated as gross income
under Sec. 32 of the Tax Code, as
amended

> Net trading gains within the taxable 7%

year of foreign currency, debt
securities, derivatives and other
similar financial instruments
 7. Other non-bank financial intermediaries > Interest, commissions, discounts and 5%
not performing quasi-banking functions all other items treated as gross income
(Sec. 122) under the Tax Code, as amended

> Interest, commissions, 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:
▪ If maturity period is five years or less 5%
▪ If maturity period is more than five 1%
years
8. Life Insurance Company/ Agent/ Corporation (except Total premiums collected 2%
purely coop. companies or associations) (Sec. 123)
9. Agents of foreign insurance companies (except
reinsurance premium)(Sec. 124):
▪ Insurance agents authorized under the Insurance > Total premiums collected 4%
Code to procure policies of insurance for companies
not authorized to transact business in the Philippines
▪ Owners of property obtaining insurance directly > Total premiums collected 5%
with foreign insurance companies
10. Proprietor, lessee or operator of the ff.(Sec. 125):
▪ Cockpits > Gross receipts 18%
▪ Cabarets, Night or Day Clubs, videoke bars, karaoke > Gross receipts 18%
bars, karaoke televisions, karaoke boxes and music
lounges
▪ Boxing exhibitions (except when the World or > Gross receipts 10%
Oriental Championship is at stake in any division,
provided further that at least one of the contenders for
World Championship is a citizen of the Philippines and
said exhibitions are promoted by a citizen/s of the
Philippines or by a corporation/ association at least 60%
of the capital of which is owned by said citizen/s)
▪ Professional basketball games (in lieu of all other > Gross receipts 15%
percentage taxes of whatever nature & description)
▪ Jai-alai and race tracks Gross receipts 30% > Gross receipts 15% 30%
▪ Winnings on horse races (Sec. 126) > Winnings or 'dividends’ 10%
> Winnings from double 4%
forecast/quinella and trifecta bets 10%
> Prizes of owners of winning
race horses

Sec.4.116. Tax on Persons Exempt from VAT

Any person whose sales/receipts are exempt under Sec109 of the Tax Code from the payment of VAT and who is
not a VAT-registered person shall pay a tax equivalent to 3% of his gross quarterly sales/receipts: Provided, however, that
the following shall be exempt from the payment of 3% tax:
- Cooperatives & Self-employed individuals and professionals availing of the 8% tax on gross sales and/or
receipts and other non-operating income under Sec 24 of the Tax Code.
o Provided, further, that effective July 1, 2020 until June 30, 2023, the rate shall be 1%
o Persons Liable
1. Persons, who are not VAT-registered, who sell goods, properties or services, whose annual gross
sales and/or receipts do not exceed three million pesos and are exempt from value added tax (VAT)
under Section 109(1)(CC) of the National Internal Revenue Code, as amended by Republic Act (RA) No.
11534 (CREATE Law).
2. Persons who lease residential units where the monthly rental per unit exceeds fifteen thousand
pesos (Php15,000.00) but the aggregate of such rentals of the lessor during the year does not exceed
three million pesos (Php3,000,000.00)
o REQUISITES:
The following are the requirements to be subjected to Percentage Tax under this Section of the Tax
Code as amended under RA 11534 (CREATE Act):
1. Not VAT registered person
2. The annual gross sales or receipts do not exceed Php3,000,000.00 and
3. Not exempt from vat under Section 109(1)(A) to 109(1)(BB) Of the Tax Code, as amended.
o A taxpayer with annual gross sales and/or receipts not exceeding the vat threshold is NOT
automatically subject to Percentage Tax under this Section of the Tax Code. If the taxpayer is
engaged in any of the activities or transactions exempt from vat under Sections 109(1)(A) to
109(1)(BB) as amended by the CREATE Law, s/he is not subject to percentage tax under this Section,
regardless of the amount of gross sales and/or receipts, such as those engaged in the sale of
agricultural or marine food products in their original state. To be subjected to percentage tax under
this section (Sec. 116), the taxpayer must not also be subject to other percentage tax under Sections
117 to 127, such as a domestic common carrier engaged in the transport of passengers by land.
o TAX BASE: ❑ Sale of goods - Gross sales
❑ Sale of services - Gross receipts
.
.
.
.
.
.
o OPTION TO REGISTER UNDER THE VAT SYSTEM
Persons subject to the above tax shall have the option to apply for vat registration not later than ten
(10) days before the beginning of the taxable quarter. Any person under this section who elects to
register under the vat system shall not be allowed to cancel his registration for a period of three (3)
years
- Annual Gross Sales/Receipts Business Tax of More than Php3,000,000.00: VAT (generally, unless
exempt)
- Annual Gross Sales/Receipts Business Tax of Php3,000,000.00 and below: Generally subject to OPT
under Sec. 116. However, if the taxpayer opted to register under the vat system, it shall be
irrevocable for 3 consecutive years.
o VAT Threshold for Married Individuals
For purposes of the threshold of P3M, the husband and wife shall be considered separate taxpayers.
However, the aggregation rule for each taxpayer shall apply. For instance, if a professional, aside
from the practice of his profession(s), also derives revenue from other lines of business which are
otherwise subject to VAT, the same shall be combined for purposes of determining whether the
threshold has been exceeded. Thus, the VAT-exempt sales shall not be included in determining the
threshold. (Sec. 3, RR 16-2011).
Tax Form
BIR Form 2552: Percentage Tax Return for Transactions Involving Shares of Stocks Listed and Traded Through The Local
Stock Exchange or Through Initial and/or Secondary Public Offering

Required to File:
1. Every stock broker who effected a sale, barter or exchange of shares of stock listed and traded through the local stock
exchange other than the sale by a dealer in securities, which tax shall be paid by the seller/transferor
2. A corporate issuer, engaged in the sale, exchange or other disposition through Initial Public Offering (IPO) of shares of
stock in closely-held corporations
3. A stockbroker who effected a sale, exchange or other disposition through secondary public offering of shares of stock
in closely-held corporations

Documentary Requirements:
1. BIR Form 2552 - Percentage Tax Return for Transactions Involving Shares of Stocks
2. Duly issued Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable
3. Proof of Exemption for transactions not subject to tax, if applicable
4. Duly approved Tax Debit Memo, if applicable
5. For amended return, proof of payment and the return previously filed
6. Authorization letter, if filed by an authorized representative

Procedures: (For Manual filing and/or payment)

a. Download the existing old BIR Form 2552 pdf file format under the BIR Forms-VAT/Percentage Tax Returns section of
the BIR website.
b. Properly fill-out the existing old BIR Form 2552 in triplicate copies using the new tax rate then compute the tax due
thereon.
c. Proceed to any AAB located within the territorial jurisdiction of the RDO where the where the broker or corporate
issuer is registered, and present the duly accomplished old BIR Form 2552, together with the required attachments.
d. If paying manually, present the aforementioned documents together with BIR-prescribed deposit slip, and payment to
the respective AAB. The Percentage Tax Involving Shares of Stocks shall be paid at the time the return is filed by the
taxpayer.
e. Receive the BIR Form 2552 taxpayer's copy duly validated and stampreceived by the teller of the AAB.
f. Manual Filers who want to pay online can pay through GCash Mobile Payment, LandBank of the Philippines (LBP)
Linkbiz Portal (for taxpayers who have ATM account with LBP/Bancnet ATM or Debit Card), or DBP Tax Online (for holders
of VISA/Master Credit Card/Bancnet ATM or Debit Card)

Procedures: (For eFPS filing and/or payment)

a. File online using the existing BIR Form 2552 in the eFPS and pay online the corresponding taxes due thereon by
proceeding to payment. The result of this transaction is deficiency tax.
b. To cover the deficiency tax, eFPS filers shall likewise file and pay online the deficiency tax using BIR Form No. 0605 and
fill in the corresponding information in the Tax Type (ST Percentage Tax – Stocks) and ATC field (ATC MC 031 – Deficiency
Tax) in lieu of the correct BIR form that should have been used
c. eFPS filers who want to pay online can pay through GCash Mobile Payment, LandBank of the Philippines (LBP) Linkbiz
Portal (for taxpayers who have ATM account with LBP/Bancnet ATM or Debit Card), or DBP Tax Online (for holders of
VISA/Master Credit Card/Bancnet ATM or Debit Card).
Note: Once the enhanced version of the BIR Form 2552 is available in eFPS, there will be a notification/announcement
through a Revenue Memorandum Circular (RMC). Guidelines shall be issued accordingly if there is a necessity whether or
not to amend the previously filed returns in eFPS.

Procedures: (For eBIRForms filing and payment)

a. File online using the existing BIR Form 2552 in the eBIRForms Package and pay the corresponding tax dues via over-
the-counter (OTC) of AAB under the jurisdiction of the RDO where the taxpayer is registered.
b. For eBIRForms filers who want to pay online, you can pay thru GCash Mobile Payment, LandBank of the Philippines
(LBP) Linkbiz Portal (for taxpayers who have ATM account with LBP/Bancnet ATM or Debit Card), or DBP Tax Online (for
holders of VISA/Master Credit Card/Bancnet ATM or Debit Card)
c. The result of this transaction thru eBIRForms is deficiency tax.
d. To cover the resulting deficiency tax, eBIRForms filers shall likewise file and pay online the deficiency tax using BIR
Form No. 0605 and fill in the corresponding information in the Tax Type (ST Percentage Tax – Stocks) and ATC field (ATC
MC 031 – Deficiency Tax) in lieu of the BIR Form 2552 that should have been used.
Note: "No payment" returns filed late will result on penalties that will be imposed by the RDO, which shall be paid at the
concerned AAB.

Deadline:
➢ For tax on sale of shares of stocks listed and traded through the local stock exchange (LSE):
– within five (5) banking days from the date of collection
➢ For tax on shares of stocks sold or exchanged through primary offering:
– within 30 days from the date of listing in the LSE
➢ For tax on shares of stocks sold or exchanged through secondary public offering:
– within five (5) banking days from the date of collection
Note: Aside from BIR Form No. 2552, a stockbroker or corporate issuer is also required to submit a true and complete
return to the Secretary of the Stock Exchange of which he is a member. The said return shall contain a declaration of all
transactions effected through him during the preceding week and of taxes collected by him and turned over to the BIR.

Coverage Taxable Base Tax Rate

1. Sale, barter, exchange or other Gross selling price or gross value 6/10 of 1%
disposition of shares of stock listed in money
and traded through the Local Stock
Exchange other than the sale by a
dealer of securities (Sec. 127)
2. Sale, barter or exchange or other Gross selling price or gross value in
disposition through (Sec. 127): money
▪ Initial Public Offering (IPO) – the
issuing corporation shall pay the Proportion of disposed shares to total
imposed tax outstanding shares after the listing in
▪ Secondary Public Offering – the the local stock exchange:
seller shall pay the imposed tax
▪ Up to 25% 4%
▪ Over 25% but not over 33 1/3% 2%
▪ Over 33 1/3% 1%

Tax on Shares of Stock Sold or Exchanged through Initial Public Offering. —

Repealed by RA No. 11494, otherwise known as Bayanihan Act to Recover as One (BARO). This removed the percentage
tax to encourage more closely-held corporations to go public and attract investors to participate in public offerings.
[See RR No. 23-2020, issued on 14 September 2020 for the implementing guidelines.