Other Percentage Tax

CHAPTER 12 ”
Other
er Parcenta e laaves £ OPT ?
’
KINDS OF PERCENTAGE TAXEs:

1) Tax on person exempt from value-added tax (Sec. 116)
2) Percentage tax on domestic carriers and keepers. of garages (Sec. 117)
3) Percentage tax On International carriers (Sec. 118)
4) Tax on franchises (Sec. 119)
5) Tax on overseas dispatch, message or conversation originating from Philippines
(Sec. 120) z
Tax on banks and non-bank financial intermediaries (Sec. 121)
Tax on other non-bank financial intermediaries (Sec. 122)
Tax on life insurance premiums (Sec. 123)
Tax on agents of foreign insurance companies (Sec. 124)
Amusement taxes (Sec, 125) :
Percentage Tax on POGOs under Sec. 125-A (mew provision)
11) Tax on winnings (Sec. 126) _
12) Tax on sale, barter or exchange of shares of stock listed and traded through the
local stock exchange (Sec. 127) '
egg(*}\ bk - TAX ON PERSONS EXEMPT FROM VALUE-ADDED TAX
Section 116 of the Tax Code, as amended by CREATE Law provides:

Any person whose sales or receipts are exempt under Section 109 (CC) of the Tax Code from the
payment of value added tax AND who is not a VAT-registered person shall pay a tax equivalent to
three percent (3%) of his gross quarterly sales or receipts: Provided, that cooperatives, shall be
exempt from the three percent (3%) gross receipts tax herein imposed: Provided, further, that
effective July 1, 2020 until June 30, 2023, the rate shall be one percent (1%). et Sd
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
(Php3,000,000.00) and are exempt from value-added tax (VAT) under Section
109 (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)
Exempt Person (CREATE Law; RR 4-2021):
1) Cooperatives
2) Self-employed individuals and professionals availing of the 8% tax
on gross sales and/or receipts and other non-operating income.
669
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CamScanner
5
Chapter 72 - Parcentage Ta a
“ Requisites:
1) Not a VAT registered person
2) The annual gross sales or receipts do not exceed P3,000,000; and
3) Not exempt from vat under Section 109(1)(A) to 109(BB)**, as amended.
NOTE: **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(A) to 109(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.
* Tax Base:
Sale of goods : Gross sales
Sale of services : Gross receipts
< Formula:
Tax base (gross sales or receipts) Pxxx
_ Multiply: Tax Rate: :
= Prior to July 1, 2020 : 3%
* From July 1, 2020 to June 30, 2023 (CREATE law) 1%
* Beginning July 1, 2023 (CREATE law) 3%
Percentage tax due Pxxx
SUMMARY: PERCENTAGE TAX OR VAT
t
“| Sale is NOT exempt from vat under Sale is EXEMPT from vat under Sec.
Sec. 109(1}(A) to 109(1)(8B) 109(1)(A) to 109(1)(BB)
AGSR® < P3M AGSR* > P3M
4 y
OPT under NOT also Subject to Percentage

| Subject to VAT |
Sec.116 Tax/Business Tax
jrrcteseenenensnrdenseseinicinicin
cere yeyer?
* which is
1 AGSR® - Annual Gross Sales/Receipts
a A mmm
emi mmr e
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Chapt lek ‘ey Y Tapees
PERCENTAGE TAX ON DOMESTIC CARRIERS AND KEEPERS OF GARAGES

«Also known as Common Carriers, Tax (CCT) on domestic common carriers
Section 117 of the Tax Code, as amended, provides:

Percentage Tax on Domestic Carriers and Keepers of Garages. - 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
animal-drawn two wheeled vehicle), and keepers of garages shall pay a tax Sanne to three
percent (3%) of their cusrierly gross receipts.
The gross receipts of common carriers derived from their incoming and outgoing freight shall not be
subjected to the local taxes imposed under Republic Act No. 7160, otherwise known as the Local
| Government Code of 1991.
* Common Carriers - refers to the persons, corporations, firms or associations

’ engaged in the business of carrying or transporting passengers or goods, or both
by land, water, and air, for compensation, offering their services to the public, and
shall include transportation contractors.
{4 Domestic carriers shall refer only to local carriers
* Persons Liable:
2,
‘e
1) Cars for rent or hire driven by the lessee (rent-a-car);

2) Transportation contractors; including persons who transport passengers for
hire;
3) Other domestic carriers by land for transport of passengers;
4) Keepers of garages.
* Exempt Persons:
1) Owners of bancas
2) Owners of animal-drawn two-wheeled vehicles
* Formula:
Tax base Pxxx
Multiply: Tax Rate 3%
Common carrier’s tax Pxxx
“~ Tax Base
1) Actual Gross Receipts Whichever is higher
2) Minimum Gross Receipts
671
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The
Chapt Z: C/ nate ye ates
SUMMARY: ‘Common Carrier's Tax (CCT) on Do Pei yi mer Led eed
DOMESTIC Common Carriers

(Local of Philippine Companies)
Local Transport From Philippines To a foreign

(within the Philippines) count
| By Air of Sea
Transport o'
Transport of Passengers and/or
Passengers and Cargo
Goods/Cargoes * Goods. *
an : Vat or OPT : Zero-rated (0%) vat ; y

Secll7 -under Sec. 116
T ,
Except owners of
banca and anima!
drawn 2-wheeled
vehicde
7 - PERCENTAGE TAX ON INTERNATIONAL CARRIERS

«Also known as Common Carriers Tax on /ntemational/ carriers
ae |
d, provides: : Eg
Tax Code , as ame nde
| ‘Section 118 of the
(A) international air carriers doing; business in the Philippines on their gross receipts derived from. |
transport of cargo from the Philippines to another country shall pay a tax of three percent (3%) of
their quarterly gross receipts.
(B) international shipping carriers doing business in the Philippines on their gross receipts
derived from transport of cargo from the Philippines to another country shall pay a tax equivalent to
three percent (3%) of their quarterly gross receipts. .
“Persons Liable:
1) International Air Carriers
2) International Shipping Carriers
{2 “International carriers shail refer to foreign carriers doing business in the Philippines (RFCs)
« Formula:
Gross receipts (tax base) _. — PXxx
Multiply: Tax Rate 3%
Common carrier's tax PXXx
** 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. (RA No. 10378, RR No. 15-2013)
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RR" 15-2022, which prescribes that "gross receipts" for the purpose of determining Conimon
Carrier's Tax shall be the same as the tax base for calculating Gross Philippine Billings.
SUMMARY: CCT on INTERNATIONAL CARRIERS (Résident Foreign Corporations)
International Carriers
(Resident Foreign Corporations)
|
sig aay | 3
From Philippines to a Foreign From a Foreign Country to the
Country (by Air or Sea) Philippines (by Air or Sea)
Transport of Transport of
Passengers Goods
|
rm ‘ s ¥
t CCT under Sec,
| Exempt - } | 118 | [ Not subject to Tax
oy p fe) bE) - TAX ON FRANCHISES

2,
“° Also known as. Franchise Tax
as amended, provides: i 7
' Sec. 119 of the Tax Code,
Any provision of general or special law to the contrary notwithstanding, there shall be levied, |
assessed and collected in respect.to all franchises on radio and/or television broadcasting |
companies whose annual gross receipts of the preceding year does not exceed Ten million pesos |
(PhP10,000,000), subject to Section 236 of the Tax Code, a tax of three percent (3%) and on gas
and water utilities, a tax of two percent (2%) on the gross receipts derived from the business |
covered by the law granting the franchise: Provided, however, That radio and television broadcasting |
companies referred to in this Section shall have an option to be registered as a value-added taxpayer
and pay the tax due thereon: Provided, further, That once the option is exercised, said option |
shall be irrevocable. The grantee shall file the return with, and pay the tax due thereon to the |
Commissioner or his duly authorized representative, in accordance with the provisions of Section
128 of this Code, and the return shall be subject to audit by the Bureau of Intemal Revenue, any |
provision of any existing law to the contrary notwithstanding.
Tax Rate:
1) Franchises on Gas and Water utilities - 2% ; mf
2) Franchises on Radio and/or Television Broadcasting Companies — 3%
*,°
Persons Liable:
1) Franchises on Gas and Water Utilities
2) Franchises on Radio and/ or Television Broadcasting Companies
Requisites for franchises on Radio and/ or Television Broadcasting

Companies:
1) Nota VAT registered person; and -
.2). Annual gross receipts of the preceding year do not exceed P10,000,000.
t
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17
Radio 8/or Television
Summary Rules Applicable toRadio 1 Broadcasting | Companies fl deal
OT AMIR SPORE NOME is Sc caer inionnasons nin
More than P10,000 ,000 Prior Year lee VAT Neaketiemess
P10,000,000 and below Prior Year VAT or OPT. If the taxpayer opted fo register under the
vat system, said option shall be irrevocable.
“ Formula: ;
Tax base Pxxx
Rate _2% oF 3% _
Franchise tax BOR
\
Manila Water and Maynilad were granted legislative franchises under RA 11601 and RA 11600,
respectively. Consequently, they are now subject to 2% franchise tax, instead of vat.
RA 11601: An Act granting Manila Water Company, Inc. a Franchise to establish, operate and
maintain a waterworks system and sewerage and sanitation services in the east zone service area
or Metro Manila and province of Rizal.
RA 11600: An Act granting Maynilad. Water Services, Inc. a Franchise to establish, operate and
maintain a waterworks system and sewerage and sanitation services in the west zone area or Metro
Manila and province of Cavite.
- TAX ON OVERSEAS DISPATCH, MESSAGE OR CONVERSATION

ORIGINATING FROM THE PHILIPPINES
* Also known as Overseas Communication Tax (OCT)
| Sec. 120 of the Tax Code, as amended, provides:

| There shall be collected upon every overseas dispatch, message or conversation transmitted from
the Philippines by telephone, telegraph, telewriter exchange, wireless and other communication
equipment service, a tax of ten percent (10%) on the amount paid for such services. The tax
imposed in this Section 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 each quarter.
“ Requisites:
There is an overseas dispatch, message or conversation transmitted from the
Philippines by telephone, telegraph, tele-writer exchange, wireless and other
communication equipment services.
* Person Liable — The user of the facility

2,
‘?
Exempt Persons:
1) The Philippine government or any of its political subdivisions or
instrumentalities.
2) Diplomatic Services.
Amounts paid for messages transmitted by any embassy and consular offices of a foreign
government. —
3) ‘International Organizations.
' Amounts paid for messages transmitted by a public intemational organization or any of its
agencies based in the Philippines enjoying privileges, exemptions and immunities which the
Goverment of the Philippines .is ines to recognize pursuant to an intemational
_ agreement,
674
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| : Chapter (2 - (areata Tapes
Be: , 4) News Agencies.

t Amounts paid for messages from any newspaper, press association, radio or television
newspaper, broadcasting agency, or newstickers services, to an y other newspaper, press
| association, radio or television newspaper broadcasting agency, or newsticker service or to a
i bona fide correspondent, which messages deal exclusively with the collection of news items
for, or the dissemination of news item through, public press, radio or television broadcasting or
a newsticker service fumishing a general news service similar to that of the public press.
* Formula:
Payments for services Pxxx
Rate 10%
Overseas communication tax (OCT) PXXxx
TAX ON BANKS AND NON-BANK FINANCIAL INTERMEDIARIES PERFORMING

:
OA ES ich FUNCTIONS
“Also known as Gross Receipts Tax (GRT)
GROSS RECEIPTS TAX

Gross receipts or income derived from: Tax Rate
a) Interest, commissions and discounts from Lending activities and Financial leasing:
* Remaining maturity period in 5 yeats or less
» _ Remaining maturity period is more than.5 years 5%
- 1%
b) . Dividends and equity shares in net income of subsidiaries 0%
c) Royalties, rentals of property, real or personal, profits from exchange and all other 1% :
items treated as gross income under the Tax Code
d) —_ Net trading gains within the taxable year on foreign currency, debts securities, :
derivative and other similar financial instruments _ 1%
Provided, however, That in case the maturity period referred to in paragraph (a)
is shortened thru pre-termination, then the maturity period shall be reckoned to
end as of the date of pre-termination for purposes of classifying the transaction
and the correct rate of tax shall be applied accordingly.
Provided, finally, That the generally accepted accounting principles as may be

prescribed by the Bangko Sentral ng Pilipinas for the bank or non-bank financial
intermediary performing quasi-banking functions shall likewise be the basis for the
calculation of gross receipts.
Nothing in the Tax Code, as amended, shall preclude the Commissioner from
imposing the same tax herein prewed on persons performing similar banking
activities.
DEFINITION OF TERMS:
“* Banks or Banking institutions — refer to those entities as defined under Section 3 of Republic Act No.
8791, otherwise known as the General Banking Law of 2000, or more specifically, to entities engaged
in the lending of funds obtained in the form of deposits. The term "banks" or “banking institutions”
are synonymous and interchangeable and specifically include universal banks, commercial banks,
thrift banks (savings and mortgage banks, stock savings and loan associations, and private
development banks), cooperative banks, rural banks, Islamic banks and other classifications of
banks as may be determined by the Monetary Board of the BSP (RR No. 8-08).
: 675
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| Chapter V2 - een Lagees
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Non-bank Financial Intermediaries- refer to persons or entities whose principal function include the
*,
lending, investing or placement of funds or evidences of indebtedness of equity deposited with them,
acquired by them or otherwise coursed through them, either for their own account or for the account
of others. This includes all entities regularly engaged in the lending of funds or purchasing of
receivables or other obligations with funds obtained from the public through the issuance,
endorsement or acceptance of debt instruments of any kind for their own account, or through the
issuance of certificates, or of repurchase agreements, whether any of these means of obtaining funds
from the public is done on a regular basis or only occasionally. (RR No. 8-08)
*“* — Quasi-banking Functions— shall refer to the borrowing of funds from twenty (20) or more personal
_ of corporate lenders at any one 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 of repurchase agreements for
purposes of relending or purchasing receivables or other similar obligations. Provided, however, that
commercial, industrial and other non-financial companies, which borrows funds through any of these
means for the limited purpose of financing their own needs or the needs if their agents or dealers,
shall not be considered as performing quasi-banking functions.
Cegp te) ieee) - TAX ON OTHER NON-BANK FINANCIAL INTERMEDIARIES NOT

PERFORMING QUASI-BANKING FUNCTIONS
*» Also known as Gross Receipts Tax (GRT)
Gross receipts or income derived from: Tax Rate |

a) Interest, commissions, discounts, and all other items treated as
gross income under the tax code 5%
b) Interest, commissions and discounts from Lending activities and

financial leasing:
(a) Remaining maturity period in 5 years or Jess 5%
(b) Remaining maturity period is more than 5 years 1%
Provided, however, That in case the maturity period is shortened thru pretermination, then the
maturity period shall be reckoned to end as of the date of pretermination for purposes ofCoan
the transaction and the correct rate shall be applied accordingly.
Provided, finally, That the generally accepted accounting principles as may be prescribed by the
Securities end Exchange Commission for other nonbank financial intermediaries shall likewise be
the basis for the calculation of gross receipts.
Nothing in the Tax Code, as amended, shall preclude the Commissioner from imposing the same
tax herein provided on persons performing similar financing activities.
676
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SUMMARY: Gross Receipts Tax (GRT) on Financial Intermediaries

t ; Financial Institutions or
Intermediaries
$e. 121 ‘Banks and Non-bank See. 122+ OTHER Non-bank )

Financia! Intermediaries Performing Financial intermediaries Not
Quasi-banking operations Performing quasi-banking
Operations
On Gros: Receipts (GR) derived On GR derived from interest,

from interest, discount, discount and commission FROM
commission FROM lending lending activities and financial
activities and financial teasing leas!
On GR derived from dividends ae)

and equity shares in net income }————». 0%
of subsidiaries ) Le
Cn GR derived from royalties, On GR derived from Interest,

rentals of property, and ALL z ™ Giscount, commission and ALL
Other items weated es GROSS Other items treated as GROSS
\_ INCOME under the Tax Code _/ INCOME
On GR derived from Net Trading x

Gains on foreign currency, debts,
securities, derivatives and other = %
\ similar instruments J
Greist) pb rs- TAX ON LIFE INSURANCE PREMIUMS

“+ Also known as Premiums Tax:
There shall be collected from every person, company, or corporation (except purely cooperative
companies or associations) doing life insurance business of any sort in the Philippines a tax of
two percent (2%) of the total premium collected, whether such premiums are paid in money,
notes, credits or any substitute for money; but premiums refunded within six (6) months after payment
on account cf rejection of risk or returned for other reason to a person insured shali not be included
in the taxable receipts; nor shall any tax be paid upon reinsurance by a company that has already
paid the tax; nor upon premiums collected or received by any branch of a domestic corporation,firm
or association doing business outside the Philippines on account of any life insurance of the insured
who is a non-resident, if any tax on such premium is imposed by the foreign country where the branch
is established nor upon premiums collected or received on account of any reinsurance, if the insured, .
in case of personal insurance, resides outside the Philippines, if any tax on such premiums is
imposed by the foreign country where the original insurance has been issued or perfected; nor upon
that portion of the premiums collected or received by the insurance companies on variable contracts,
in excess of the amounts necessary. to insure the lives of the variable contract owners. Cooperative
companies or associations are such as are conducted by the members thereof with the money
collected from among themselves and solely for their own protection and not for profit.
“- Formula:
Premiums collected PXXxx

Rate 2%
Premiums tax PXxx
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3 Chapter 72 - penny Lagees
The following premiums are exempt from tax:
1) Premiums refund within six (6) months after payment on account of rejection
of risk or returned for other reason to a person paid the tax.
2) Premiums paid upon re-issuance by a company that has already paid the tax
3) Premiums collected or received by any branch of a domestic corporation,
firm, or association doing business outside the Philippines on account of any
life insurance of the insured who is a non-resident, if any tax on such
premium is imposed, by the foreign country where the branch is established. _
4) Premiums collected are received on account of any reinsurance, if the
insured, in case of personal insurance, resides outside the Philippines, if any
tax on such premiums is imposed by the foreign country where the original
insurance has been issued or perfected;
5) Portion of the premiums collected or received by the insurance companies or
variable contracts in excess of the amounts necessary to insure the lives of
the variable contract workers (as defined in Sec. 232(2) of Presidential
Decree No. 612). ‘
6) Premium collected by a purely cooperative company or association.
Sxept)\
el a— TAX ON AGENTS OF FOREIGN INSURANCE COMPANIES
Also known as Premiums Tax on- agents of nonresident foreign, insurance
3
companies
| Sec. 124 of the Tax Code, as amended, provides:
Every fire, marine or miscellaneous insurance agent authorized under the Insurance Code to
procure policies of insurance as he may have previously been legally authorized to transact on risks
located in the Philippines for companies not authorized to transact business in the Philippines shall
pay a tax equal to twice the tax imposed in Section 123: Provided, That the provision of this
Section shall not apply to reinsurance:
Provided, however, That the provisions of this Section shall not affect the right of an owner of
property to apply for and obtain for himself policies in foreign companies in cases where said owner
does not make use of the services of any agent, company or corporation residing or doing business
in the Philippines. ’
In all cases where owners of property obtain insurance directly with foreign companies, it shall be
the duty of said owners to report to the Insurance Commissioner and to the Commissioner each case
where insurance has been so effected, and shall pay the tax of five percent (5%) on premiums
| paid, in the manner required by Section 123.
Persons Liable:
1) Fire, Marine or Miscellaneous Agents of non-resident Foreign Corporations

engaged in insurance business but not authorized.to transact business in the
Philippines
Premiums collected . PXxX

RATE (twice the rate imposed on Sec. 123; rate = 2% x 2= 4%) 4% _
Premiums Tax XXX
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2) Owners of property directly obtaining insurance from Non-resident Foreign
Corporations engaged in insurance business but not authorized to transact
business in the Philippines
Premium payments Pxxx

RATE ! 5%
Premiums Tax Pxxx
SyagON BES - AMUSEMENT TAXES

Section 125 of the Tax Code (Amusement Taxes), provides:
There shall be collected from the proprietor, lessee or operator of cockpits, cabarets, night or day
clubs, boxing. exhibitions, poor basketball games, Jai-Alai and racetracks, a tax
equivalent to:
a) _ Eighteen percent (18%) in the case of cockpits;
b) Eighteen percent (18%) in the case of cabarets, night or day clubs;
c) | Terrpercent (10%) in the case of boxing exhibitions:

Provided, however, that boxing exhibitions wherein World or Oriental Championships
in any division is at stake shall be exempt from amusement tax: Provided, further,
That at least one of the contenders for World or Oriental Championship is a citizen of
the Philippines and said exhibitions are promoted bya citizen/s of the Philippines or
by a corporation or association at least sixty percent (60%) of the capital of which is
owned by such citizens;
d) Fifteen percent (15%) in the case of professional basketball games as envisioned in

Presidential Decree No. 871: Provided, however, That the tax herein shall be in lieu of all
other percentage taxes of whatever nature and description; and
e) Thirty percent (30%) in the case of Jai-Alai and racetracks of their gross receipts,
irrespective, of whether or not any amount is charged for admission.
For the purpose of the amusement tax, the term ‘gross receipts’ embraces all the receipts of
the proprietor, lessee or operator of the amusement place. Said gross receipts also include
income from television, radio and motion picture rights, if any.°
A person or entity or association conducting any activity subject to the tax herein imposed shall
be similarly liable for said tax with respect to such portion of the receipts denved by him or it.
The taxes imposed herein shall be payable at the end of each quarter and it shall be the duty of
the proprietor, lessee or operator concemed, as well as any party liable, within twenty (20) days
after the end of each quarter, to make a true and complete retum of the amount of the gross
receipts derived during the preceding quarter and pay the.tax due thereon.
* Persons Liable — Proprietor, lessee or operator of cockpits, cabarets, night or

day clubs, boxing exhibitions, professional basketball games, Jai-Alai and
racetracks.
“ Formula:
Gross receipts PXxx
Rate X0K%
Amusement tax __PXXx_
679.
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“Gross receipts- embraces all the receipts including income from television, radio
and motion picture rights (if any) of the proprietor, lessee or operator of the
amusement places.
5
“ Rates: . re ae eg 9 ST ee a
Amusement Places = ..—-—s-_—s' TaxRate
* . Boxing Exhibition 10% or exempt**.
» — Professional Basketball games 15%
= Cockpits, Cabarets, Night or Day Clubs 18%
* __Jai-alai and Racetracks 5 Fie 30%
**Requisites for Exemption of Boxing Exhibitions:

a) World or Oriental Championships is at stake;
b) One of the contenders is a citizen of the Philippines; and
c) Promoted by citizens of the Philippines or by a corporation or association at least sixty
percent ves of the capital of which is owned by such citizen.
erp te) me eeyy\ - GAMING TAX on Services Rendered ro Offshore Gaming

Licensees (OGLs).
This is a new provision in the Tax Code as amended by RA 11590, also known as “An Act
Taxing Philippine Offshore Gaming Operations (POGOs)” amending for the purpose,
Sections 22, 25, 27, 28, 106, 108, and Adding New Sections 125-A and 288 (G) S the
Tax Code of 1997.
Section 125-A of the Tax Code (GAMING TAX), provides:

Any provision of existing laws, rules or regulations to the contrary notwithstanding, the entire gross
gaming revenue (GGR) or receipts or the agreed predetermined minimum monthly revenue
or receipts from gaming, whichever is higher, shall be levied, assessed, and collected a
GAMING TAX equivalent to five percent (5%), IN LIEU of all other direct and indirect internal
revenue taxes and local taxes, with respect to gaming income.
Provided, That the gaming tax shall be directly remitted to the Bureau of Internal Revenue not later
than the 20th day following the end of each month: Provided, further, That the Philippine Amusement \
and Gaming Corporation or any special economic zone authority or tourism zone authority or freeport
authority may impose regulatory fees on offshore gaming licensees (OGLs) which shall not
cumulatively exceed two percent (2%) of the gross gaming revenue or receipts derived from gaming
operations and similar related activities of all offshore gaming licensees or a predetermined minimum
guaranteed fee, whichever is higher.
¢ INCOME FROM GAMING OPERATIONS ,
In LIEU of ALL other direct and indirect internal revenue taxes and local
taxes, there shall be levied, assessed and collected from OGLs (whether Philippine-
based or Foreign-based) a GAMING TAX equivalent to’ CHnierever is higher)
between:
o 5% of Gross Gaming Revenue (GGR); or
o 5% of the Agreed Pre-determined minimum monthly revenue
(APMMR) from gaming operations
“Income from Gaming Operations refers to income or earnings realized or

/ derived from operating online games of chance or sporting events via the internet
using a network and software or program.
680 ated at .
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Chapter 12 L breentage Y oe.
ANOS Cc" «<
FORMULA based on RR 20. 2021 dated December 1, 2021;

Gross wagers Pxx
Less: Payouts (xx)
Gross Gaming Revenue (GGR) : Pox |
Vs, APMMR i Pxx
HIGHER amount bet, GGRand APMMR sé

Gaming Tax rate 5%
GAMING TAX 1a Gye Pxx
o — Gross Wagers refer to the total amount of money that offshore gaming customers.
o Payouts refer to the total amount paid out to offshore gaming customers for winning.
© Agreed Pre-determined Minimum Monthly'Revenue from gaming operations refers to
the amount that is derived after dividing the minimum monthly fee or its equivalent, as
imposed by a Philippine Offshore Gaming Operation (POGO) Licensing Authority, by
the rate of prescribed regulatory fee.
¢ PAYMENT OF GAMING TAX
The Gaming Tax shall be directly remitted to the BIR not later than the 20th
day following the end of each month.,
¢ INCOME FROM NON-GAMING OPERATIONS
The non-gaming revenues of operations of all OGLs shall be subject value

added tax (vat) or percentage tax, whichever is applicable. Income from Non-
Gaming Operations refers to any other income or earnings realized or derived by
OGLs that are not classified as income from gaming operations.
¢ DEFINITION OF TERMS (Based on RR 20-2021 dated November 26, 2021)
: © — Philippine Offshore Gaming Operation (POGO)

> — Refers to the operation by an Offshore Gaming Licensee (OGL) on online games of
chance or sporting events via the intemet using a network or software or program
exclusively for offshore customers/players who are non-Filipinos.
> The term POGO shall also refer OGLs and Accredited Service Providers
® Offshore Gaming Licensee (OGL)

» Refers to an offshore gaming operator, whether organized in the Philippines
(Philippine-based) or abroad (Offshore of Foreign-based), duly licensed or
authorized through a gaming license issued by.a POGO Licensing Authority to
conduct offshore gaming operations including the acceptance of bets from offshore
customers,
OGLs, also known as Interactive earntig Licensees, shall be considered engaged
Vv
in doing business in the Philippines.
_. 9 POGO Licensing Authority

> — Refers to Philippine Amusement and Gaming Corporation (PAGCOR) or any other
special economic zone authority, tourism zone authority or freeport authority
authorized by their respective charters to issue gaming licenses and accreditation
to POGO entities.
681
bai ry ¥
The
Chapter {2 - erent Cages
Seg
g Co) ets - TAX ON WINNINGS
Section 126-A of the Tax Code (TAX ON WINNINGS), provides:

Every person who wins in horse races shall pay a tax equivalent to ten percent (10%) of his winnings
or ‘dividends’, the tax to be based on the actual amount paid to him for every winning ticket afte
deducting the cost of the ticket: Provided, That in the case of winnings from double, forecast/quinella
and trifecta bets, the tax shall be four percent (4%). In the case of owners of winning race horses,
the tax shall be ten percent (10%) of the prizes. The tax herein prescribed shall be deducted from
the ‘dividends’ corresponding to each winning ticket or the ‘prize’ of each winning race horse owner
and withheld by the operator, manager or person in charge of the horse races before paying the
dividends or prizes to the persons entitled thereto. The operator, manager or person in charge of
horse races shall, within twenty (20) days from the date the tax was deducted and withheld in
accordance with the second paragraph hereof, file a true and correct return with the Commissioner
in the manner or form to be prescribed by the Secretary of Finance, and pay within the same period
the total amount of tax so deducted and withheld.
~+, Persons Liable:
1) Owners of the winning horse; and

2) _ Bettor in a horse race or jai-alai
Owner of the winning horse
Formula:
Prize/Winnings PXxx
Rate _ 10%
Tax on winnings PXxx
NOTE:
Cost of winning tickets is not applicable to owners of winning horses. Accordingly, the
percentage tax shall be based on gross winnings or prizes. '
Bettor in a horse race
| Ordinary Special
winnings _ Winnings**
Gross winnings or dividends PXXxX °
Less:
Cost of winning ticket (xxx)
| Net winnings PXxx PXXx PXXX
| OPT RATE 10% — 4% _
TAX ON WINNINGS — Prox PXxx
NOTE: The 4% rate is applicable only to bettors and in cases only of winnings from
double, forecast/quinella and trifecta bets (also known as special winnings").
Payment
The operator, manager or person in charge of horse races shall, within

twenty (20) days from the date the tax was deducted and withheld, file a true and
correct return with the BIR in the manner or form prescribed by the Secretary of
ecg and pay within the same period the total amount of tax so deducted and
wi Q
682
The
er
Chapter (2 - Pyeae Taee
« Summary
Taxpayer Winnings from Rate Basis

Bettors Regular bet or 10% Winning or dividends less
ordinary winnings - cost of winning ticket
Bettors : Double, 4% Winning or dividends less

forecast/quinella cost of winning ticket
and trifecta bets
Horse owners sae 10% Gross Winnings_
- TAX ON SALE,
BARTER OR EXCHANGE OF SHARES OF STOCK
LISTED AND TRADED IN THE LOCAL STOCK EXCHANGE (LSE)
¢ Also known as Stock Transaction Tax (STT)
Sec. 127 of the Tax Code (Stock Transaction Tax), as amended by Bayanihan Act, provides:
There shall be levied, assessed and collected on every sale, barter, exchange or other disposition
of shares of stock listed and traded through the local stock exchange other than the sale by a dealer
in securities, a tax at the rate of six-tenths of one percent (6/10 of 1%) of the gross selling price or
gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed which
shall be paid by the seller or transferor.
Requisites:
*Se
1) Seller is NOT a dealer in securities; and

2) _ Shares sold are /isted and traded through the LSE.
* Formula:
Gross Selling Price (GSP) Pxxx

x Rate (1/6 of 1% of GSP) -006
Stock Transaction Tax PXxx
“ Tax on Initial Public Offering (IPO)
The provision of the Tax Code pertaining to tax imposed on Initial Public
Offering (IPO) was repealed by RA 11494, also known as the Bayanihan to Recover
as One Act or Bayanihan Act 2, effective September 15, 2020,, Consequently,
every sale, barter, exchange or other disposition through IPO of shares of stock in
closely held corporations shall no longer be subject to tax upon effectivity of RA
11494.
Initial Public Offering (IPO) refers to a public offering of shares of stock

made for the first time in the Local Stock Exchange.
683
The
Che ter C2. - Percentage la
~~ Return on Capital Gains Realized from Sale of Shares of Stock Listed and
* Traded in the Local Stock Exchange
It shall be the duty of every stock broker who effected the sale subject
to the tax Imposed herein £0 co ta, and te itthe same to the Bur au
ereof and to submit on Mondays of each week to the saretany of the stock
ae of which he is a member, a true and complete return which shall contain
a declaration of all the transactions effected through him during the preceding
week and of taxes collected by him and turned over to the Bureau of Internal
Revenue.
Capital Gains Realized from Sale of Shares of Stock Listed and Traded in
the Local Stock Exchange is not subject to Income Tax
Any gain derived from the sale, barter, exchange or other disposition of
shares of stock under this Section shall'be exempt from the tax imposed in
Sections 24(C), 27(D)(2), 28(A)(8)(c), and 28(B)(5)(c) of the Tax Code and from
the regular individual or corporate income tax. Moreover, tax paid under this
Section shall not be deductible for income tax purposes.
ADMINISTRATIVE PROVISIONS — _-
1. FILING OF RETURN AND PAYMENT OF PERCENTAGE TAX
Quarterly Return (Last month of the Quarter)
The filing of Percentage Tax Return and payment of the corresponding percentage
tax is due is done on a QUARTERLY BASIS which should be filed and paid on or
before the 25" day following the end of the quarter using BIR Form No. 2551Q.
TAXPAYER WHOSE VAT REGISTRATION IS CANCELLED

» Inthe case of a person whose VAT registration is cancelled and who becomes
liable to the tax imposed in Section 116 of the Tax Code, as amended, the
percentage tax shall accrue from the date of cancellation and shail be paid on
a quarterly basis which should be filed and paid on or before the 25" day
following the end of the quarter using BIR Form No. 2551Q.
WHERE TO FILE
Except as the Commissioner otherwise permits, every person liable to the

- Percentage Tax may, at his option, file a separate return for each branch or place
of business, or a consolidated return for all branches or places of business with
the authorized agent bank, Revenue District Officer, Collection Agent or duly
authorized Treasurer of the city or municipality where said business or principal
place of business is located, as the case may be.
684 |
The
Nevule cs CamScanner
Ohi fey 702: i Lagees
‘
2. “OTHER ADMINISTRATIVE PROVISIONS

» PERSON RETIRING FROM BUSINESS
> Any person retiring from a business subject to percentage tax shall notify the
nearest internal revenue officer, file his return and pay the tax due thereon
within twenty (20) days after closing his business
‘ DETERMINATION OF CORRECT SALES OR RECEIPTS
> When itis found that a person has failed to issue receipts or invoices, or when
no return is filed, or when there is reason to believe that the books of accounts
or other records do not correctly reflect the declarations made or to be made
in a retum required to be filed under the provisions of the Tax Code, the
Commissioner, after taking into account the sales, receipts or other taxable
base of other persons engaged in similar businesses under similar situations
or circumstances, or after considering other relevant information may
prescribe a minimum amount of such gross receipts, sales and taxable base
and such amount so prescribed shall be prima facie correct for purposes of
determining the internal revenue tax liabilities of such person.
685
The
Oke Ler Todt ie peers ‘Liwes
QUIZZER
Principles.
1. Statement 1: Other percentage taxes are indirect taxes that ccan be passed on by person
required to pay to another person who shall bear the burden of paying the tax.
Statement 2: Transactions that are subject to the other percentage taxes are no longer
subject to the value-added tax but may be subject to excise tax.
a. Only statement 1 is correct
b. Only statement 2 is correct
C. Both statements are correct
d Both statements are incorrect
«+ Answer: C
0 Statement 1: Business taxes are indirectfaxes
© — Statement 2:
Sale or Transaction (transaction level only)= ‘may be subject to either vat OR percentage tax
only + excise tax, if applicable.
Taxpayer (entity level: individuals, corporations, etc.) = may be subject both to vat and
percentage tax + excise tax, if applicable, provided the taxpayer is engaged in mixed
transactions (vatable business and non-vatable business).
Statement 1: All VAT-exempt taxpayers shall be subject to other percentage taxes.

Statement 2: A taxpayer who is subject percentage tax on his gross receipt will also be
subjecttto income tax on his net income.
: @ Only statement 1 is correct
C. Both statements are correct
d. Both statements are incorrect
Bg Answer: B
© ° Statement’: =.
Sale or Transaction = if in the list of vat exempt (therefore, non-vatable) and at the same time
not in the list of transactions subject to percentage tax (Sections 116 to 127 of the Tax Code),
_ the transaction is exempt from business tax (both vat and percentage tax; i.e., sale of
agricultural food products on their original state are not subject to vat and percentage tax).
Taxpayer = A vat-exempt taxpayer (i.e., individual and corporation) MAY BE subject to OPT if
itis involved in a transaction subject to OPT under Sections 116 to 127 of the Tax Code, as
amended. However, if such vat-exempt supplier is engaged in a transaction which is not also
included in the list of transactions subject to OPT, such taxpayer is exempt both from VAT and
OPT.
© — Statement 2: Income tax is in addition to business tax.
Which of the following is not correct? The percentage tax:

Is a tax on sale of services.
b. May be imposed on sale of goods.
C. May be imposed together with the value-added tax,
d May be imposed together with the excise tax.
686
The
aphes
Chapter Lo3 treentige e Tapes
“> Answer: C
® The a business tax to a particular" transaction" may be:
VAT (in general); or .
= Percentage tax (if in the list of OPT); or
*- Exempt from business tax = if in the list of vat exempt and not included in the list
of transactions subject to OPT
* — However, VAT and OPT is not allowed to be imposed at the same time toa
particular “transaction”.
4, Which of the following statements is notaati about percentage tax?

a. tis a business tax.
b. _ Itis a transfer tax.
c. tis anad valorem tax.
d. _Itis not a progressive tax.
¢ Answer: B
© Transfer tax is applicable to gratuitous transfers (donation or inheritance) while percentage
tax and vat are applicable to onerous taxes.
5. Which statement is wrong?

a. Percentage taxes are basically on sales of services.
b. Percentage taxés are not allowed by law to be shifted to the customers or clients.
c. Anisolated transaction not in the course of business will not result in a Pabany for a
percentage tax
d. None of the above
“* Answer: B
® “C"ls correct because it is not pertaining to a “business” transaction. It may only be
subjected to income tax.
Section 116- OPT on vat exempt sales and transactions

6. Aseller of agricultural food products is vat-exempt. His annual gross sales during 2022
amounted to P3,000,000. To what business tax is he liable?
a. 1% Percentage tax under Section 116 of the Tax Code
b. 12% Value added tax of 12%
c. 3% Common carrier's tax under Section 117 of the Tax Code
“- Answer: D
> Refer to the explanation in Quizzer #2, Statement 1.
> Percentage tax rate under Section 116 of the Tax Code, as amended, are as follows:
* — Prior to July1, 2020: 3%
* — From July 4, 2020 to June 30,2023: 1% °
* Beginning July 1, 2023: 3%
7. Which of the following is subject to Percentage Tax under Section 116 of the Tax Code?
a. Fruit dealer whose gross receipts for the year amounted to P2,800,000 only.
b. Anindividual taxpayer whose gross sales for the year amounted to P100,000.
C. School bus operator whose gross receipts for the vee amounted to P2,500,000.
687
The
Chapter 72 ; caeaiege Tapees
“ Answer:D .
© — Section 116 shall apply if:
1. The transaction is vat exempt and the reason for vat-exemption i is simply because the
taxpayer's gross sales or receipts did not ee the vat threshold of P3M; and
2. ~ The taxpayer is not vat registered.
® Ifthe reason for vat exemption is not because of #s 1 wd 2 above, the transaction is not -
subject to Section 116.
© The taxpayer in item “B" is known as Marginal Income Eamer (MIE), an individual whose
gross sales or receipts during the year is not more than P100,000. MIE is not subject to
business tax (Vat and OPT),
8. The taxpayer is a trader of poultry feeds. Determine hisapplicable business tax.

a. Subject to 12% vat
b. Vat exempt but subject to Percentage Tax under Section 116
c. 12% vat or OPT under Section 116, at his option
d. Exempt from 12% vat and OPT
~* Answer: D
*
0 Refer to Quizzer #2, Statement1.

© Sale of Poultry Feeds is vat exempt, but the reason for vat exemption is not simply because
the seller's gross sales did not exceed the vat threshold of P3,000,000 but because poultry -
feeds are intended for poultry animals.
9. — One of the following is subject to Percentage Tax under Section 116 of the Tax Code: -
a. Establishments whose annual gross sales or receipts exceed P3,000,000 and who
are VAT registered.
b. Businesses whose annual gross sales or receipts exceed P3,000,000 and who are
not VAT registered.
c. VAT registered establishments whose annual gross sales or receipts do not exceed
- P3,000,000
d. Establishments whose annual gross sales or receipts do not exceed 23,000,000 and
who are not VAT registered.
“+ Answer: D
Use the following data for the next four (4) questions:
Ana has the following data for 2022 the taxable year:
Gross sales P2,850,000
Collections 1,420,000
10. If Ana is a seller of goods, her business tax for the year should be
a. P28,500 OPT c. P170,400 vat
b. P85,500 OPT d. P342,000 vat
“* Answer: A.
OPT =P2,850,000 x A%= P28,500
© — The basis of business
tax for sale of goods is gross sales.
688
The
7 Cle ter 2% Ve erlage Lawes
44. If Anais a seller of service, her business tax for the year should be
a. P42,600 OPT c. P170,400 vat
b. P14,200 OPT d. P342,000 vat
“> Answer: B
0 OPT=P1,420,000 x 1%= P14,200
0 The basis of business tax for sale of service is gross receipts or collection.
42. |f Ana is vat registered \

She is subject to 12% vat
She is subject to OPT under Section 116
oO
She is subject to 12% vat or 1% OPT, at her option

oO
She is exempt from OPT under Section 116 if she opted to be taxed at 8%
oo
Answer: A
*
The 8% optional tax is NOT applicable to vat registered taxpayers.
43. If Anais a taxi operator,

a. Sheis subject to 12% vat.
b: She is subject to common carrier's tax under Section 417
c. Sheis subject to 12% vat or 3% common carrier's tax, at her option
d She is exempt from OPT if is she opted to be taxed at 8%
” heheh B
© The 8% optional tax is not applicable to crue who are subject to OPT other than Section.
116 of the Tax Code, as amended.
COMPUTATION OF PERCENTAGE TAX DUE DURING THE TRANSITION PERIOD

(USING 1% AND 3% RATE)
14. Ken (self-employed) i is a non-vat registered taxpayer who operates a convenience store.
The following data were provided during 2023 taxable year:
Sale of processed food items — 1st and 24 Quarter P1,000,000
Sale of processed food items — 3 and 4" Quarter 800,000
Sale of non-food items — 1st and 24 Quarter ° 400,000
Sale of non-food items — 34 and 4 Quarter 350,000
Purchases - processed food items 925,000
Purchases - nonfood items 360,000
Salaries of helpers 380,000
Compute the correct percentage tax due and prepare the percentage tax return.
a. P25,500 si c. P216,000
b. P76,500 . d, P306,000
“+ Answer: A
0 The taxpayer is non-vat registered + his gross sales did not exceed the vat threshold + the
transactions are not exempt from vat. Consequently; ‘he is subject to 1% OPT under Section
689
The
Chapter (2 - pee Larces
Solution:
Sale of processed food items

1s and 2 Quarter (P-1M x 1%) P10,000
3° and 4% Quarter (P800,000 x 3%) 24,000
Sale of non-food items
1s and 2 Quarter (P400,000 x 1%) 4,000
34 and 4" Quarter (P350,000 x 3%) 10,500
Total Percentage Tax 2023 P48,500
PREPARATION OF PERCENTAGE TAX RETURN
15. Floyd (self-employed) is a non-vat registered taxpayer who operates a convenience store.
The following data were provided for 2022 taxable year:
Sale of processed food items P1,800,000
Sale of non-food items 750,000
Purchases - processed food items 925,000
Purchases - nonfood items 360,000
Salaries ofhelpers 380,000 ©
Compute the correct percentage tax due and prepare the percentage tax retum.
a. P25,500 c.. P216,000
b. P76,500 d. P306,000
“+ Answer: A ‘
© The taxpayer is non-vat registered + his gross sales did not exceed the vat threshold + the
transactions are not exempt from vat. Consequently, he is subject to 1% OPT under Section
© OPT=(P1,800,000 + 750,000) x 1% = P25,500
690
The
The Book
Book R̶Readexs-Raiders
e̶a̶d̶e̶r̶s̶ Raiders || Nevule
C, pit 72 - Percentage Laes
Republic of the Philippines

Department of Finance
Bureau of internal Revenue
Quarterly Percentage Tax Return

Enter aff requted inlormabon in CAPITAL LETTERS using BLACK ink. Mark appicable
| Pl AO Te |
daxes with an “X” Tivo. copies MUST be filed with the BIR and one held by the Taxpayer. we ti tie
2551Q OIIBENCS Pt
Forthe =X] Calendar Fiscal | 3 Quarter _ | 4 Amended Return? |6 Numer

of Steet/s |
2year Ended ery | 4,2! 2, 0, 2,2 tt [) 24 C) st (0 4) yes x] no | Atetet [0,0
Number (TIN)
§ Texpayet Identification | 42,3 fe] 9,4;2)2]3,6,5]e]o,0,0, , |7RDOCcde | 04,9
8 t's Name flesi Name, FirstName, Middle Name for lndivaival OR isteved Name for Non-Individual,
MAG BAIN UAL. Fy LOY Dy, MAIN ID RAT GMyAy

9 Registered Address (hatcar complete assess. Farah hakate Me branch saress. he recored aches 9 dftrent har ti caret ackrecs gp fo Pie FOO ie upaute reget ackteca by wg BR Fern No 1909
2,3, ;MAPS AYIA, ST) BR GY). ~MA PAG IPAINJGG APs | yyy
MAN HLA, SOUTHYy | pp tp ppp t tt | 9A ZIP Code | 1,7
2 14
fio. Contact Number (LancineCeiphone
No)} 11 Email Address t j
0, 95457, 7,8,7,5,3,4,)8) | Cov

Gg @a malty. eyoum sy pp pp
‘Are you availing of tax relef under
Nz Spaniel Car orlimeratonsl Tex Treaty? CI Yes 4 No |12A If yes, specify het fer TA af oo eek
K3 Only for individual taxpayers whose sales’receipts are subject to Percentage Tax under Section 116 of the Tax Code, as amended:
What income tax rates are you availing? (choose one)
{Tode Sie out only on the initial [x] Graduated income tax rate on net
Quarter of the taxable yoar) taxable income
eT} 8% income tax rate on gross sales/receipts/othei
fothers
_ Part il - Total Tax Payable :
44 Total Tax Due (From Schedule 7 item 7) : LoL Lb 2151 510 10 EAlo.0
Less: Tax Crecit/Payment (attach proof)
15 Creditable Percentage Tax Withheld per BIR Form No. 2307 eh Bes <b ap ol 0 ee 0 \0
16 Tax Paid in Return Previously Filed, if this is an Amended Return fat ttt 1 1 10 feyo,0
17 Other Tax Credit/Payment (spacity) 5 = (Se ee er eee: Bs 0;0
of liens 15 to 17)
48 Total Tax Credits/Payments (Sum : elt a pe 8 *10)0
19 Tax Still Payable/(Overpayment) (item 14 Less Item 18) rides ene EET 2;54 5) 0,0 RS 0,0
Add: Penatties i 3
Rolo wie SS dd de tt) ORO10

_ 21 Interest p yy 1 pp 1 fey 10
a » bt ty 1 p18 FO 0
23 Total Penatties (Sum of items 20 to 22) ee eee)
(Sum of tems 19 and 23) pp by 4 2545) 9) OF. 40,0
24 TOTAL AMOUNT PAYABLEHOverpayment)
ovespeyment, mark one box only: To be refunded To be issued a Tax Credt Certiinate
oom
and to the bew fimnylats hevledgs and bela,
have beer made m good tach, varied by mesus, ws true snd cont
Wve decare under Ihe permibes of penury thal bys rectum, and Bt ts allachmernte,
to he processing of my mfornaton es
pursutedip he provizons of he Natoral Internal Revenve Code, as arendod, and he meguatons ismed under autorty theteal Futher, | ve my consent
contarnpiated undar the “Data Preacy Act of 2012 (RA No 10173) for ieptimale and teas perposes Wf Avhortzed Representa, ettech sutionzeton b
For Inaeaduat For Non-indiwadual.
FLOYD M. MAGBANUA
Signature over Printad Name of President/Vice President!
Sgnature over Pated rae ot Terence corset ener ax Agert |, Authorized Officer of Representative!Tax Agent
T f ion Not Oate
of issue
feoney Rt no farzlebl | mccoy | ____
Part lil Details of Payment
Particulars ee Number Date (MM/DD/VYYY)
26 CesvBark Debt Memo! » yi | yp preted arty |p pt typepp
a6 Check bi ae eo es 1 PSE ee
27 Tax Debit Memo 4 PhO fee oe gr OG le Sop Cat file food he
128 Others (Specity below)
aaciaacy Maier leon pata ltiea dts Pea tape yo ed
Machine Vaicnon Reeriue Ofca Races (OR) Detais (fnothied wih an Autnarzed Agaet Bare) Stamp of receiving Ofigs/AAB and Date of Receipt
(RO’s SignatureGank Tellers Imbal)
"NOTE: Picase read te BIR Data Privacy Policy found in the BIR vabsite (vaww bir. gov ph)
691
The
Chapter tok S eabeeitaye Taeve ‘
2561 Q Quarterly Percentage a Rétuirn | (FIR
2 9,4 ,2)3,6 0,0;0 M G, BA\N,U,A
Alphanumenc Tar “Taxable Amount
1 T,0,1 ,0
2 P,T)0 41 3,7,5,0,0,0,0,0}{0
3
“
6
6
7 Total Tax Due (Suma tems 1D AiTo Fart i Rentd. - : ‘ 2 45,5,0,0,0,0},] 0,0
TE :
places, such as catar ang day , ¥ideoke bars,

4
, Commissions a@scounts from tending a3 well as Income Tnancial
58
commssons
692
The
the
oni
\
oe
Che G2 = PPren
2, ta e Tapes
Section 117 - Common Carriers Tax on Domestic Common Carriers
16. This refers to persons, corporations, firms or associations engaged in the business of
camying of transporting passengers or goods or both, by land, water, and air, for
compensation, offering their services to the public and shall include nee
contractors.
a. Common carriers;
b. Dealers in securities;
c. Lending investors;
d. Franchise grantees.
«> Answer: A
17. Aperson whose business is to keep automobiles for hire or keep them stored for usé of
order.
a. Keepers of garage
b. Common carrier
c. Taxicab operator
d. Tourist bus operator
«+ Answer: A
18. Akeeper of garage whose gross receipts in 2022 taxable year exceeded the P3,000,000
vat threshold is subject to:
-a. Value-added tax
b. Garage sales tax
c. Common carner's tax
d. Franchise tax.
«* Answer: C
0 — A keeper of garage is subject to common carrier's tax regardless of the amount of its gross
receipts. -
19. Which of the following is subject to the 3% common carrier's tax under Sec. 117 of the Tax .
Code?
a. Transportation contractors on their transport of goods or cargoes.
b. Common carriers by air and sea relative to their transport of passengers
c. Owners of animal-drawn two-wheeled vehicle.
d. Domestic carriers by land for the transport of passengers.
Answer; D
Xd
¢.
0 — “AY: transport of goods— subject to vat.

® — “BY transport of passengers or goods “via air or sea"— subject to vat.
0 ‘"C*-exempt
20. Statement 1: The gross receipts of common carriers derived from their incoming and
Outgoing freight shall not be subject to the local taxes imposed under RA 7160, otherwise
known as the Local Government Code of 1991.
693
The
Oheple f= Pacentage Taees
Statement 2: The 3% common carrier's tax is based on the actual quarterly gross receipts
or minimum quarterly receipt whichever is lower.
Cc. Both statements are correct
d Both statements are incorrect
* Answer: A; Statement 2- shall be whichever is higher
* 21. Pedro is a non-vat registered transportation contractor engaged in the transport of

passengers, goods and cargoes. What business tax(es) is he liable?
a. 12% value-added tax; ‘
b. 3% common carrier's tax;
C. Percentage tax under Section 116 on gross receipts from transport of goods and
cargoes and 3% common carrier's tax on gross receipts from transport of passengers;
d. 12% VAT on gross receipts from transport of goods and cargoes and 3% common
carrier's tax on gross receipts from transport of passengers.
“+ Answer: C; (subjectto Section 116 and Section 117)
22. Using the same information in the preceding number, except that Pedro is a vat-registered.
What business tax(es) is he liable to?
a. 12% value-added tax;
b. 3% common carmer’s tax;
C. Percentage tax under Sec. 116 of the Tax Code on gross receipts from transport of
goods and cargoes and 3% common carrier's tax on gross receipts from transport of
passengers.
12% VAT on gross receipts from transport of goods and cargoes and 3% common
carrier's tax on gross receipt from transport of passengers.
“> Answer: D
23. One of the following statements is incorrect: Operators of transport facilities are
a. Subject to the value-added tax on gross receipts from transporting passengers.
b. Subject to the value-added tax on gross receipts from transporting goods and
cargoes.
Cc, Subject to percentage tax under Section 117 of the Tax Code on their gross receipts
from transporting passengers, by land.
d. Subject to the value-added tax on gross receipts from renting out its transportation
facilities.
“ Answer: A
24. Anon-vat registered domestic carrier by land isi engaged in the transport of goods. The
company’s annual gross receipts did not exceed P3,000,000 during 2024, To what
business tax(es) is it liable?
a. 12% value-added tax
b. 3% Percentage Tax under Section 116
694
The
Chapter (32) Percentage Cages
_ 3% Common carrier's tax under Section 117
d. Not subject to business tax.
“ Answer: B
25. Assume the annual gross receipts in the preceding number exceeded the vat threshold of
P3,000,000 during’ 2024. To what business tax(es) is it liable?
b. 3% OPT under Section 116 of the Tax Code, as amended
c. 3% common carrier's tax under Section 117 of the Tax Code, as amended
d. Notsubject to business tax.
“> Answer: A
‘ ?
A domestic cartier by sea is engaged in the transport of passengers, goods and cargoes.
itis not VAT-registered and its annual gross receipts did not exceed the P3,000,000 vat
threshold during 2024. To what business tax(es )is it liable?
b. 3% Percentage tax under Section 116, as amended
c. 3% common carrier's tax under Section 117
“- Answer: B
27. Assume the annual gross receipts in the preceding number exceeded the vat threshold of
P3,000,000 during 2024, to what business tax(es) is it liable?
a. 12% value-added tax .
b. 3% OPT under Section 116, as amended
d. - Not subject to business tax.
“+ Answer: A
28. A domestic carrier by land is engaged in the transport of passengers. It is not VAT-
registered and its annual gross receipts did not exceed P3,000,000 during 2023. To what
business tax(es) is it liable? -
a. 12% valué-added tax
b. 1% Percentage tax under Section 116, as amended
“* Answer: C
% _ Ifitinvolves transport of passengers by land by domestic carriers, it is subject to CCT under
Section 117 of the Tax Code, regardless of the amount of annual gross receipts.
Assume the annual gross receipts in the preceding number exceeded the vat threshold of
P3,000,000 during 2023. To what business taxes is it liable?
b. Percentage tax under Section 116
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c. 3% common canier’s tax under Section 117
* Answer: C
30. Maharlika Airlines, a domestic corporation plying domestic routes, had the following gross
receipts for the month ended April 2023: transport of passengers, P4,500,000; transport of
cargoes, P7,000,000, The correct amount of business tax for the month should be:
a. PO c. P345,000
b. P135,000° d. P1,380,000
“+ Answer: D
© — Business Tax (val) = (P4.5M + P7M) x 12%= P14,380, 000 ‘
©- Domestic airline companies are not subject to Section 117.
Use the following data for the next (2) two questions:
Arianne is a bus and truck operator with routes from Manila to Subic and vice-versa. For the
taxable year 2024, she reported gross receipts from her bus operations of P36,000,000. On
the hand, her aos receipts from her neo of noe or cargoes amounted only to P800,000
only.
31. Assuming Arianne is non-vat registered, how much is her total business tax due?
a. P1,088,000 c. P1,176,000
b. P1,104,000 d. P4,416,000
“> Answer: B
Common carrier's tax = P36M x 3% P1,080,000
Section 116 = P800,000 x 3% 24,000
Total business taxes 1,104,600 -
32. Assuming Arianne is vat registered, how much is her total business tax due?
a. P1,080,000 c. P1,176,000
b. P1,104,000 d. P4,416,000
“> Answer: C ;
Common carrier's tax = P36M x 3% P1,080,000
VAT = P800,000 x 12% 96,000
Total business taxes 1,176,000
33. Pedro is a jeepney operator. He is also engaged in the business of leasing residential
units. His gross receipts from his jeepney operation amounted to P5,000,000 for the year.
The monthly rental of the residential units is P14,000 with annual gross receipts of
P3,500,000 during 2022. Which of the following is correct?
op |
Pedro is required to register under the vat system

Pedro may apply for optional vat registration
Pedro is exempt from business and income tax
a9
None of the above

Answer: D
%ie
> — He is not required to register under the vat system nor apply for optional vat registration
because his business activities are not subject to vat:
. 696
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Chapter 72: Dirediigsye e Tages
© He is subject to common carrier's tax under Section 117 of the Tax Code, for hisjeepney .
operation.
© Lease of residential units with monthly rental per unit of not more than P15,000 is exempt from
val (refer fo discussion about vat exempt sales and transactlons In Chapter 11 of this
book) and percentage tax under Sec. 116 of the Tax Code, as amended.
34, Allof the following, except one, are not subject to common carrier's tax
\ a, owner of a parking lot/building
b. rent-a-car companies
c. common carers engaged in carriage of goods or cargo
d. domestic airline companies
« Answer: B
35. Isarog is a\vat registered common carrier with passenger buses and cargo trucks. For the
month of June 2023, it had the following data on revenues and receipts (taxes not included,
if applicable):
o For transporting passengers, gross revenues and receipts of P330,000.
o For transporting cargoes, gross eee P220,000, of which P200,000 was
received.
o For renting out to the MMDA ts towing trucks, gross receipts of P50,000,
representing P10,000 from gross revenue of the quarter ending March 31 and
P40,000 for the month of June. -
The percentage tax is: ;
a. P3,300 c. P15,900
b. P9,900 d. P17,400
“+ Answer: A
& Common Carrier's Tax under Section 117 = P330,000 x 1% = P3,300.
© ~ The basis of business tax if from sale of service is collections or receipts.
36. The value added tax is:

a. P24,000 c. P28,800
b. P30,000 d. P25,000
“ Answer: B
0 12% Vat = (P200,000 + 50,000) x 12% = P30,000 :
37. Milagros Lines, a vat- registered person, has the following gross receipts:
Bus 1 (carriage of goods, 218,000) 100,000
Taxi 90,000
Jeepney 35,500
Cargo truck 45,000
Sea vessel ( | 250,000
Additional Information:
Y Salaries of drivers and conductor 425,000
Y Cost of oil and gasoline 175,000
697
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Chapter 12; _ ne Tapes

o He awe to common carrier's lax under Section 117 of the Tax Code, for his jeepney
operation. bet a8
© Lease of residential units with monthly rental per unit of not more than P15,000 is exempt from
vat (refer to discussion about vat exempt sales and transactions In Chapter 11 of this
book) and percentage tax under Sec. 116 of the Tax Code, as amended.
34. Allofthe following, except one, are not subject to common carrier's tax
j
\
owner of a parking lot/building
rent-a-car companies
aoop
common carriers engaged in carriage of goods or cargo

domestic airline companies
¢ Answer: B
35. Isarog is aivat registered common carrier with passenger buses and cargo trucks. For the
month of June 2023, it had the following data on revenues and receipts (taxes not included,
if applicable):
o For transporting passengers, gross revenues and receipts of P330,000.
o For transporting cargoes, gross revenues
of P220,000, of which P200,000 was
received.
o For renting out to the MMDA its towing trucks, gross receipts of P50,000,
representing P10,000 from gross revenue of the quarter ending March 31 and
P40,000 for the month of June. ‘
The percentage tax is: .
a. P3,300 " c. P15900 12 - OPT)
° MCQNos. 35 (Chapter
b. P9,900 d. P17,400 ~ Answer should be “B”; use 3% rate.
«+ Answer: A
& Common Carrier's Tax under Section 117 = P330,000 x 1% = P3,300.
© ° The basis of business tax if from sale of service is collections or receipts.
36. The value added tax is:

a. P24,000 c. P28,800
b. P30,000 d. P25,000
“* Answer: B
0 12% Vat = (P200,000 + 50,000) x. 12% = P30,000 ‘
37. Milagros Lines, a vat- registered person, has the following gross receipts:
Taxi . 90,000
Jeepney 35,500
Cargo truck 45,000
Sea vessel ( 250,000
Additional Information:
v Salaries of drivers and conductor 125,000
Y Cost of oil and gasoline 175,000
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| Chapter 72 - Percemye Lapees
During the month, Bus 1 was bumped by another bus owned by Mandaon Lines and
paid Milagros Lines P120,000 for the damage.
The percentage tax due on Milagros Line in February is:

a, P10,770 6. P11,715
b. P14,370 d, nil
“ Answer:A
Bus 1 = P100,000- 18,000 P82,000
Bus 2 = P165,000- 13,500 151,500
Taxi 90,000
Jeepney 35,500
Total P359,000
x CCT rate under Sec. 117 3%
OPT, CCT P10,770
38. The total business taxes in the preceding number should be:
a. P10,770 c. P49,950
b. P39,180 d. nil
«+ Answer: C
OPT (refer fo the preceding number) P10,770
VAT:
Carriage of goods (P18,000 + 13,500) 31,500
Cargo truck 45,000
. Sea vessel 250,000
Total : P326,500
x vat rate 12% 39, 180
Total Business Taxes P49,950
39. is a pool of land transportation vehicles whose accessibility to the riding

‘public is facilitated. through the use of common point of contact which may be in the form
of text, telephone and/or cellular calls, email, mobile applications or by other means.
a. Domestic common carriers
b. Intemational carriers
c. Transportation network vehicle services (TNVS)
d. Partners
“- . Answer: C
40. The owner(s) of the vehicles, other than the TNVS, used in transporting passengers and/or
goods in TNVS, shall be referred herein as
a. Domestic common carriers
b. Intemational carriers
c. Transportation network vehicle services (TNVS)
d. Partners
“ Answer: D
698
The
TIKI
‘
Cb ter C2 - eae Tages
41. Statement 1: Under RMC 70-2015, transport network vehicle services, such as but not
limited to the. likes of UBER, GRAB TAXI, their Partners/suppliers and similar
arrangements, which are holders of a valid and current Certificate of Public Convenience
a the oe of passengers by land, shall be subject to 3% common carriers tax under
. 117,
Statement 2; Transport network vehicle services, such as but not limited to the likes of
UBER, GRAB TAXI, their Partners/suppliers and similar arrangements, which are nof
holders of a valid and current Certificate of Public Convenience for the transport of
passengers by land, shall also be subject to 3% common carrier's tax under Sec. 117.
c. Both statements are correct
d. Both statements are incorrect
“Answer: A. ; Statement
2— shall be subject to 12% vat.
Section 118 - Common Carrier's Tax on International Carriers
42. The 3% percentage tax on international carriers is impoSed upon:

Intemational air carrier International shipping
doing business in the Philippines doing business in the Philippines
a. Yes Yes
b. No No
C. Yes No
d. "No . Yes
“» Answer: A
43. Statement 1: Domestic common carriers are subject to 0% on its flight originating from
abroad to the Philippines.
Statement 2: Resident international carriers are subject to the 0% VAT on its gross
Philippine billings on flight originating from the Philippines to a foreign destination.
Statement 1 Statement 2
a True True
b True ” False
C. False False
d False True
“> Answer: C
GUIDE:
Domestic Common Carriers (local carriers)
© — On their transport of passengers by land= Sec. 117
— Ontheir transport of goods or cargoes including mails, by land= 12% vat
© ~ On their domestic transport from and to the Philippines of passengers, goods/cargoes, and
mails by air or by sea = 12% vat.
© — Ontheirinternational flights and shipments originating from the Philippines to a foreign country
= 0% vat
© Ontheir international flights and shipments originating from abroad to the Philippines = exempt
from business tax.
699
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Chapter 72 - Lents Cagces
"Intemational Carriers (Resident Foreign Carers) Sa
© On their transport of passengers on their intemational flights and shipments originating from
the Philippines to a foreign country = exempt from business tax i |
- Q On their transport of goods/cargoes and mails on their intemational flights and shipments
originating from the Philippines to a foteign country = Section 118; Common Carriers tax on
Intemational Carriers.
© — Ontheirintemational flights and shipments originating from abroad to the Philippines = exempt
from business tax.
_ 44. Dete rmine the carrier that is subject to the Percentage Tax:
Resident foreign corporation operating as an international shipping carrier
b. Non-resident foreign corporation operating as an intemational air carrier
C. Domestic corporation with intemational flights
d. Domestic corporation with intemational voyages
“> Answer: A
© . Nonresident foreign corporations operating as intemational carriers are not subject to CCT
under Section 118 of the Tax Code because they are not operating in the Philippines.
© Domestic carriers on their intemational flights and shipments originating in in the Philippines
are subject to 0% vat, not CCT.
45. Statement 1: International air carriers and international shipping carriers shall not be
subject to 12% value added tax but to 3% common carrier's tax based on gross receipts
derived from their transport of passengers and goods from Philippines to other countries.
Statement 2: In cases when the Gross Philippines Billings Tax of 2.5% for international
carriers is not applicable (i.¢., tax exempt based on reciprocity or treaty), the common
carrier’s tax under Section 118 of the NIRC, as amended, shall still apply.
A. B. C. D.
Statement 4 True True False False
Statement 2 True False. True False
¢ Answer: C; (S1: Gross receipts from transport operations shall be excluded)
46. Statement 1: Banks are subject to the VAT on its interest income.
Statement 2: Resident intemational carriers are subject to the 0% VAT on its gross
Philippine billings on flight originating from the Philippines to a foreign destination.
Statement 1 Statement 2
a. True True
b. True False
c. False False
d. False True
“+ Answer: C
700
The
ee ter:Zd - renee Tayees |
~ 47. The Republic of Korea, as an act of goodwill, does not impose business taxes to Philippine
carriers. Korean Air is operating in the Philippines having two flights a week. If you were
engaged by Korean air as its tax consultant and askéd you whether it is liable to percentage
tax, Which of the following will be your advice?
a. Korean Airis liable to percentage tax based on gross receipts from
passengers, goods, cargoes and mails.
b. Korean Air is liable to percentage tax based on gross receipts from passengers
only.
c. Korean Airis liable to percentage tax based on gross receipts from goods,
cargoes and mails only.
d. Korean air is not liable to percentage based on the principle of reciprocity.
“> , Answer: C
© Unlike in income taxation for Intemational carriers, reciprocity is not applicable to Section 118
(common carrier's tax on intemational carriers) of the Tax Code.
Section 119 — Franchise Tax
48. Aright or privilege granted by the State to a person, individual or corporation, to operate a
public utility such as radio broadcasting, television station, electric light system, telephone
“company, gas, and water utilities.
a. Franchise c. Dealers in securities
b. Common carriers d.. Lending investors
“+ Answer:A
49, Statement 1: A franchise is a privilege to serve the public acquired by special grants from
private organizations.
Statement 2: There are franchise holders whose gross receipts are subject to 12% vat
even if not vat registered.
Both statements are correct.
os»
Both statements are incorrect.

Only the first statement is correct.
a9
Only the second statement is correct.

* Answer: D
‘7
%
50. Which of the following franchise grantees is subject to the franchise tax?
a. Franchise on radio and/or television broadcasting companies the annual gross
receipts in the preceding year exceed P10,000,000. |
b. Franchise on gas and water utilities.
Franchise on toll road operations.
2S
d. PAGCOR andits licensees and franchisees.
“* Answer: B i
> — Radio and/or television broadcasting whose gross receipts in the preceding year exceed
P10,000,000 shall be subject to value added tax.
701
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Chapter 12 , . is es Lagves
“© Although there are other franchises granted by the government such as but not limited to
electric companies, cable companies and telecom companies, the term “Franchise Tax” shall
pertain only to franchise tax levied under Section 119 of the Tax Code, as amended.
51. Statement 1: Radio and/or television broadcasting whose gross receipts in the preceding
year did not exceed P10,000,000 shall have an option to be registered as value-added
taxpayer.
Statement 2: Once a radio and/or television broadcasting franchise grantees registered as
value-added taxpayer, the registration shall not be revoked.
. a. Both statements are correct.
b. Both statements are incorrect.
c. Only the first statement is correct.
d. Only the second statement is correct.
“> Answer: A ~
52. A franchisee, had the following data on revenues and receivables in 2023:
Quarter ended, March 31, 2023 Revenues AR, beg... AR, end
Covered by the franchise. , P4,000,000 P600,000 P800,000
Not covered by the franchise 1,200,000 160,000
_ If the franchisee is generating and selling electricity, the correct amount of business
tax is: :
a. P200,800 c. P580,800
b. P456,000 d. P238,800
‘+ Answer: C
Solution:
Covered by the franchise:

Revenues P4,000,000
Add: AR, beg. 600,000
Less: AR, end (800,000)
= Collections P3,800,000
Not Covered by the franchise:
Revenues P1,200,000
Add: AR, beg.
Less:AR,end (160,000)
= Collections . P1,040,000
Total collections P4,840,000
x Vat Rate 12%
Value Added Tax is ~__ P580,800_
© Sale of electricity is subject to vat instead of franchise tax.
53. if the franchisee. is a gas and water utility, the correct amount of business tax is:
a. P200,800 _ ©. P580,800
b. P456,000 d. P238,800
“- Answer: A
702
The
Chapter 7.13 5 kereentay Tapees
‘The business tax liability should be:

2021 2022 2023
a. P270,000 P360,000 P1,200,000
Sb: 1,080,000 1,440,000 1,440,000
CG. 270,000 360,000 300,000
d. 1,080,000 360,000 360,000
“Answer: A
© 2021 =P9,000,000 x 3% =P270,000
© 2022=P12Mx 3% = P360,000;
= Gross receipts preceding year$ P10M; apply 3% Franchise Tax
© 2023 = P10,000,000 x 12% = P1,200,000
= Gross receipts preceding year > P10M; subject to vat
56.. Gallaxy Transport Corporation is a holder of franchise from the government to offer
passenger and cargo transport operations by land. Its gross receipts from passenger
operations amounted to 210,000,000 while its gross receipts from cargo operations
amounted to P2,000,000: How much is the franchise tax due for the month?
a. P300,000 c. P1,440,000
b. -P540,000 d. PO
“> Answer: D
The gross receipts from passenger operations by land is subject to CCT under Section
117, not Franchise Tax under Section 119 of the Tax Code.
0 The gross receipts from cargo transit operations is subject to vat, instead of Franchise
Tax under Section 119 of the Tax Code.
57. Using the same data in the preceding paragraph, how much is the total business taxes
due for the month?
a. P300,000_ - c. P1,440,000
b. P540,000 d. PO
“* Answer: B
Passenger operations (CCT) = P10M x 3% P300,000
Cargo operations (Vat) = P2M:x 12% 240,000
58. Which of the following is subject to percentage tax under Section 119 of the Tax Code:
PAGCOR ;
Tollway operators
aoop
Telecomumication companies
None of the above
Answer: D
2 od
0 PAGCORis subject to franchise tax of five percent (5%) of its gross revenues or earnings from
its casino operations, dollar pit operations, regular bingo operations, and income from mobile
bingo operations operated by it, with agents on commission basis (RMC 33-2013, April 17,
2013). This franchise tax, however, is different from the franchise tax imposed under Sec. 119
of the Tax Code. ,
© Tollway operators and Telecommunication companies are subject to vat.
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Chapter Ces isonet Lapees
Solution:

Revenues P4,000,000
Add: AR, beg. 600,000
Less: AR, end ; (800,000)
x Franchise Tax Rate % P76,000

Revenues P1,200,000
Add: AR, beg. . '
Less: AR, end (160,000)
x Vat Rate 12%. 124,800
Total Business Tax P200,800
% The gross receipts from those covered by the franchise is subject to the applicable franchise
tax rate, regardless of the amount of the gross receipts.
© The gross receipts not covered by the franchise is subject to vat because the gross receipts
for the taxable year will obviously exceed the vat threshold.
54. if the franchisee is a radio television broadcasting company, the correct amount of
business tax is:
‘a. P200,800 c. P580,800
b. P456,000 d. P238,800
“- Answer: D
Solution:
Revenues P4,000,000
Add: AR, beg. 600,000
Less: AR, end (800,000)
x Franchise Tax Rate 3% P114,000

. Revenues P1,200,000
F Add: AR, beg.
Less: AR, end — (160,000)
= Collections - P1,040,000
x Vat Rate 12% ~ 424,800
Total Business Tax P238,800
55. Bulwagan ng Katotohan Broadcasting Company, a non-vat holder of a franchise to operate

a radio and/or television network provided the following data (net of any tax):
Year Gross Receipts
2021 P9,000,000
— 2022 12,000,000
2023 10,000,000
703
The
(ees
ater (2- [2sees aT,
Chip
section 120 - Overseas Communications Tax
59. Atelephone company, VAT-registered, provides services for domestic and overseas calls.
What business taxes are due from the services offered?
|. Value-added tax for domestic calls.
||. Overseas communications tax for overseas calls.
a.lonly | c. Both | and Il
b. Ilonly d. Neither | nor Il
“> Answer: C
GUIDE:
© Local communications = 12% vat
© Overseas originating in the Philippines = 10% OCT under Section 120
© Overseas onginating abroad = not subject to business tax
60. One of the following is subject to overseas communications tax:

a, Long distance call by a son from Manila to his father in Iloilo City.
b. Monthly telephone bill from PLDT.
c. Telephone bill on a call by a mother in the Philippines to her son in London.
d. Telephone call by Magda in Hongkong to her friend in Manila.
“* Answer: C
0 *a” and “b’, subject to vat
® “d" not subject to business tax
61. Smart-Globe Telecommunications has the following data for a particular month:
Gross receipts, domestic calls P5,000,000
Gross receipts, overseas calls (originating in the Philippines) 3,000,000
Purchase of supplies used in connection with domestic calisnet . 300,000
of VAT
Purchase of equip. used in connection with both domestic calls 800,000
and overseas calls, net of VAT '
Business expense ' 1,000,000
How much is the overseas communications tax collected from persons who used the
communications facilities?
a. P300,000 c. P800,000
b. P500,000 d. nil
“+ Answer: A
® OCT=P3,000,000 x 10% = P300,000
62. Using the same data in the preceding number, how much is the vat payable? .
a. P420,000 c. P504,000
b. P470,000 ‘d. nil
“ Answer: A
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Chapter 12 “ deraanige Lagves
Solution:
Output vat (P5M x 12%) ‘ P600,000
Input vat:
Directly attributable = P300,000 x 12% (36,000)
Allocated = P800,000 x 12% x 5/8 (60,000)
Vat Payable P504,000
63, Which of the following statements is false?

a. BBC, an intemational news agency, is required to pay 10% percentage tax from
messages originating from the Philippines by telephone or telegraph.
b. Amounts paid for messages transmitted by an embassy and consular offices of a
foreign goverment is not subject to 10% overseas communications tax.
c. Overseas communications initiated by a resident citizen not engaged in trade or
business is subject to overseas communication tax.
“<- Answer: A
EXEMPT from OCT:

= Diplomatic Services
* —— Intemational Organizations/ as provided under intemational agreements/treaties
« News Agencies or Services
= Government
64. One of the following statements is incorrect.

a. Overseas communications tax is imposed on overseas communications originating
from the Philippines.
b. The person liable to overseas communications tax may or may not be engaged in any
trade or business.
c. The overseas communications tax is imposed whether the overseas communications
are made in the course of trade or business or not.
d. The overseas communications tax is imposed on the owner of the communication
facilities used to make overseas communications.
“* Answer: D
© "D"is wrong. Itis imposed on the user of the facility
65. Moon Telecom Inc. has the following collections for the month of April 2023:
Overseas call originating abroad P1,120,000
Overseas call originating in the Philippines 880,000
Local calls : 2,240,000
How much is the overseas communications tax to be remitted by Moon for the month?
a. P220,000 c. P200,000
b. P88,000 d. P80,000
4
“> Answer: D
706
The
Chapter (64 = j aeaniage Tayees
Solution: :
Collections P880,000
x 100/110
Revenues exclusive of OCT - P800,000
xOCT % 10%
OcT P80,000
Joumal Ent :
~ De Cr.
Cash P880,000
OCT Expense 80,000
Revenues ; A P880,000
OCT Payable oni 80,000
© — NOTE: Percentage Taxes, except Stock: Transaction Taxes under Sections +27 of the Tax
Code are classified as operating expenses for income taxation purposes.
© The overseas calls originating abroad is not subject to business tax in the Philippines.
66. Based on the preceding number, how much is the output tax?
a. P240,000 c. P360,000
b. P454,286 d. P268,800
“ Answer: A
Collections P2,240,000
x 400/112
Revenues exclusive of vat, P2,000,000
x OCT % 12%
OCT P240,000
Joumal Entry.
Or. Cr.
Cash P2.240,000
Revenues P2,000,000
Output vat ; 240,000
© Unlike percentage taxes, vat on sale (output vat) is not classified as operating expenses. Itis
a tax credit against output vat
Section 121 and 122 - Gross Receipts Tax
67. Which of the following is subject to Other Percentage Taxes?

|. Banks
|. Financing/ credit Companies
lll. | Pawnshops
lV. Duly registered Credit Cooperatives
a. landilonly c, |, Il, Illand IV

b. |, lland Ill only d. None of the above
“* Answer: B
707
The
Chapter 72 - renee oe
Banko Natin sold a repossessed car to JJ at P1,000,000. Banko Natin is

|. Subject to value added tax
It. Subject to gross receipts tax of 7%
lll. - Subject to regular corporate income tax
a. Ill only c. Iland Ill only |
b. | and III only d. None of the above
¢- Answer: C
169, Maharlika Bank purchased machineries from a VAT supplier. What is the treatment for
VAT purposes of the sale transaction considering that banks are subject to percentage
taxes under Sec. 121 of the Tax Code?
a. 0% vat c. exempt from vat
b. 12% vat > d. percentage tax
< Answer: B
© Although banks and other financial institutions are not subject to value added tax but to gross
receipts tax under Section 121 of the Tax Code, it does not follow that sale of vatable goods
to them is no longer subject to vat. Sale of machineries are subject to vat. Consequently, sale
of such items to a banking institution is subject to vat.
70. Which of the following is subject to Gross Receipts Tax?

l. Pawnshops/money changers
Il. Credit cooperatives
Ill. Lending activities of multi-purpose cooperatives.
A. B. C. D.
l Yes Yes Yes No
ll Yes No No No
Ill Yes No Yes No
«+ Answer: B
© Othernon-bank financial intermediaries, such as money changers and pawnshops, are subject
to percentage tax under Sections 121 and 122, respectively, of the Tax Code. [Sec. 4109-1
(B)(w), RR 4-2007]
71. A pawnshop, for business tax purposes

a. Is treated as a lending investor liable to 12% vat on its gross receipts from interest
income and from gross selling price from sale of unclaimed properties.
b. Is not treated as a lending investor but liable to 5% gross receipts tax under Section
122 of the Tax Code on its gross receipts from interest income and from gross selling
price from sale of unclaimed properties. i
Is exempt from 12% vat and OPT
a9
Is subject to 12% vat and OPT
“Answer: B; [Sec. 4,109-1 (B)(w), RR 4-2007]
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| Chapter Gi = Percent e Tapes
72. Piggy Bank has the following data for the month of January 20213
Interest income, the remaining maturity of the instrument is 5 years P100,000
Rentals (gross of 5% expanded withholding tax) : 50,000
Net trading loss (10,000)
How much is the gross receipts tax on thecéllections of Piggy for January 2023?
a. P5,000 c. P7,800
_ b. P3,500 d. P8,500
«> Answer: D
Interest income — from short term loan = P100,000 x 5% P5,000
Rental income ~ P50,000 x 7% 3,500
. Gross receipts tax grein P8,500
73. In addition to the information in the preceding number, Piggy Bank has the following
information for the month of February 2023:
Interest income, the remaining maturity of the instrument is 6 years 100,000
Rentals (gross of 5% expanded withholding tax). 50,000
Net trading gain co 20,000
How much is the gross receipts tax on the collections of Piggy for February 2023?
a. P5,200 c. P9,200
b. P5,900 d. P9,900
« Answer: A
Interest income— from long term loan = ; P00, 000x 1% P1,000,
Rental income- P50,000 x 7% 3,500
Net trading gain= (P20,000-10,000) x 7% 700:
Gross receipts tax > P5,200
® — Apply cumulative rule as to net trading gain
74. Pedro executed on January 1, 2019, a long term loan from Pilipinas Bank in the amount of
P6,000,000 payable within ten (10) years, with an annual interest of 2%. However, on
January 31, 2023, the loan was pre-terminated. Assuming Pilipinas Bank declared
correctly the interest from 2019 to 2022 and the applicable gross receipts taxes were paid,
how much gross receipts tax should be paid for the year 2023?
a. P100 c. P19,700
b. P24,500 d. P500
“+ Answer: C
Solution: ‘
GRT payment Si Jan. 1, 201 9 to Dec. 31, 2022 (P4,800)
(P6,000,000 x 2% x 4 years) x 1% :
Adjusted GRT (P6M x 2% x 4 x 5%) 24,000
Adjustment (deficiency) P19,200
Add: GRT for January 2023 ;
(P6M x 2% /12months) x 5% 500
Total Gross Receipts Tax, Jan. 31, 2023 P19,700
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Chapter 72 = falaatage Cages
75. On December 1, 2018, Floyd borrowed P1,000,000 from BDO payable within 10 years,
The loan pays an annual interest of P100,000 payable every December 1 beginning
December 1, 2019. On December 1, 2023, Floyd pre-terminated the loan by repaying the
principal in full. The gross receipts tax still due from BDO due to the pre-termination in
2023 is: 3
a. P5,000 c. P21,000
b. P16,000 d. P25,000
“Answer: C
GRT payment from Dec. 1, 2019
to Dec. 1, 2022 (P4,000)
(P100,000 x 4 years) x 1%
-Adjusted GRT (P400,000 x 5%) 20,000
Adjustment (deficiency) P16,000
Add: GRT for 2023= P100,000x 5% * i 5,000
Gross Receipts Tax Due, Dec. 1, 2023 P21,000
76. China Bank extended loans to its debtors during the year, with real properties of the
debtors being used as collateral to secure the loans. When the debtors failed to to pay the
unpaid principal and interest after several demand letters, the bank foreclosed the same
and entered into contracts of lease with tenants. The bank is subject to business tax as
follows:
1. 12% vat
ll. 7% gross receipts tax
a. | only c. Both] and Il
b. Il only d. Neither| nor II
> Answer:B
Section 123 - Premiums Tax on Life Insurance

Section 124 - Premiums Tax on Agents of Foreign Insurance companies
77. Statement 1: The tax on insurance premiums applies to every person, company or
corporation doing life insurance business of any sort in the Philippines, except purely
cooperative companies and associations.
Statement 2: A person engaged in non-life insurance business is subject to value-added
tax.
a. Both statements are correct.
_b. Both statements are incorrect.
“+ Answer: A
78. Statement 1: The tax on life insurance premiums is 2% based upon the total premiums
collected whether such premiums are paid in money, notes, credits, or any substitute for
money.
Sfatement 2: The tax on agents of foreign insurance companies is 4% based upon the total
premiums collected.
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ah ter 72 Parentage e Cages
Pr Only the second statement is correct.
Answer: A
79, Statement 1: All insurance premium collected by life insurance company is subject to 2%
gross receipt tax.
Statement 2: A life insurance premium refunded within six (6) months is not subject to a
2% percentage tax.
“+ Answer: A
80. Section 124 of the Tax Code, as amended, provides that every fire, marine or
miscellaneous insurance agent authorized under the Insurance Code to procure policies
of insurance as he may have previously been legally authorized to transact on risks located
in the Philippines for companies not authorized to transact business in the Philippines shall
pay a tax equal to:
a. 2% 6. 5%
b. 4% ° d. 10%
“ Answer: B
0 The tax rate, as provided in the Tax Code, is twice of Section 123
81. Adomestic insurance company gave the following information for the month:
Gross receipts from its insurance policies
Premium on life insurance P2,100,000
Premium on non-life insurance 1,500,000
Gross receipts as agent of a non-resident foreign insurance co. :
Premium on non-life insurance P4,000,000
Premium on property insurance. 1,000,000
The percentage tax due for.the month is:

a. P355,000 - ¢, P242,000
b. P430,000 d, P605,000
“+ . Answer: C
Solution:
Premium on life insurance (P2,100,000 x 2%) P42,000
Gross receipts as agent of a non-resident foreign insurance company
Premium on non-life insurance (P4,000,000 x 4%) 160,000
Premium on property insurance (P1,000,000 x = 40,000
Percentage Tax for the ean ___P242,000_
7i1
The
Che ter 72:- Percentage Taaes
ape Only the second statement is correct.
> Answer: A
79, Statement 1: All insurance premium collected by life insurance company is subject to 2%
gross receipt tax.
Statement 2: A life insurance premium refunded within six (6) months is not subject to a
2% percentage tax.
a. Both statements are correct. e MCQ Nos. 79 (Chapter 12 - OPT)
b. Both statements are incorrect. — Answer should be “D”
“ Answer: A
80. Section 124 of the Tax Code, as amended, provides that every fire, marine or
miscellaneous insurance agent authorized under the Insurance Code to procure policies
of insurance as he may have previously t been legally authorized to transact on risks located
in the Philippines for companies not authorized to transact business i inthe Eiippines shall
pay a tax equal to:
a. 2% 6. 5%
5 4% d. 10%
“ Answer: B
® The fax rate, as provided in the Tax Code, is twice of Section 123
81. Adomestic insurance company gave the following information for the month:
Premium on life insurance P2,100,000
Premium on non-life insurance 1,500,000
Gross receipts as agent of a non-resident foreign insurance co.
Premium on non-life insurance P4,000,000
Premium on property insurance. 1,000,000
The percentage tax due for.the month is:

a. P355,000 - ¢, P242,000
b. P430,000 d. P605,000
“> Answer: C
Solution:
Premium on life insurance (P2, 100,000 x 2%) P42,000
Gross receipts as agent of a non-resident foreign insurance company
Premium on non-life insurance (P4,000,000 x 4%) ‘160,000
Premium on property insurance (P1,000,000 x " 40,000
Percentage Tax for the oan ___ 242,000 _
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Ay Chapter ‘“ : Percentige Tanves
82. Pro-Life Insurance is engaged in business. It also Serves as an agent of a marine
nonresident foreign insurance company. It has the following data for the current month:
Total premium collected as an agent of a foreign insurance P2,000,000
company
Total premiums collected from non-life insurance in the Philippines 500,000
Purchase of supplies for use in non-life business in the 300,000
Philippines
How much is the tax for total premiums collected as an agent of a foreign insurance
company? :
a. P80,000 c. P40,000
b. P100,000 d. P20,000
“* Answer: A
© Tax on Agents of Foreign Insurance Co. = P2,000,000 x 4% = P80,000
83. Using the same data in the preceding problem, how much is vat payable?
a. P24,000 c. P40,000
b. P52,800 d. P20,000
“ Answer:A he ei
Output vat (P500,000x 12%) ., P60,000
Less: Input vat (P300,000x 12%). _ - (36,000)
Vat payable 24,000 °
84. Mabuhay Insurance Corporation furnished us its data shown below:

= — Insurance Premiums collectible is 23,750,000
= The breakdown of the above premiums is as follows: -
Life Insurance Premiums 75%
Non-life insurance premiums 25% ‘
» During the month, 70% of collectible life insurance premiums and 50% of collectible
non-life insurance premiums were collected.
The Premiums Tax payable is:

a. P39,375 c. P94,437.50
b. P78,750 . d. P196,875
“* Answer: A
Insurance premiums collectible P3,750,000
x 75%
x , 70%
Total premiums collected on life insurance P1,968,750
x 2%
Premiums Tax Payable P39,375
85. Using the same data in the preceding number, the total business taxes should be:
a. P39,375 c. P95,625
b. P56,250 d. P120,000
“+ Answer: C
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Che fer 7.2. pene Tapes
Solution: :
Premiums Tax Payable (preceding number) -P39,375
Output Vat (P3,750,000
x 25% x 50% x 12% 56,250
Total business taxes for the month —_—
P95,625
86, Pedro wants to procure fire insurance for his Mansion in Forbes Park, Makati from Gallaxy
insurance Company, a non-resident foreign corporation,. through its agent in the
Philippines, G.I. Joe. He paid premiums in 2018 amountingto P500,000. How much is the
premiums tax payable on the transaction?
a. P10,000 c. P25,000
b. P20,000 d. P50,000
“+ Answer: B rest :
® Premjums Tax on Agents of Foreign Insurance Co.
= P500,000 x 4% = P20,000
87. Using the same information above, but assuming Pedro directly obtained the insurance
policy from Gallaxy Insurance Company, how much is the premiums tax payable on the
transaction? ;
a. P10,000 c. P25,000
b. P20,000 d. P50,000
“- Answer: C
0 Premiums Tax = P500,000 x 5% = P25,000
Section 125 - Amusement Taxes
88. A tax on the right or privilege to enter places of amusement

a. value added tax c. amusement tax
b. franchise tax d. income tax
“- Answer: C
89. The operator of one of the following places is not subject to amusement tax.
a. Cockpits
b. Racetracks .
c. Bowing alleys
d. KTV Karaoke joints
¢ Answer: C
0 Bowling alleys are subject to vat, not amusement tax.
90. One of the following is a correct amusement tax rate:

30% on jai-alai and racetracks
apo @
15% on cockpits, cabarets, night and day clubs

18% on boxing exhibitions
10% on professional basketball games
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Chapter 72. - ic’ de Lawes
ate Answer: A
© cockpits, cabarets, night and day clubs shall be 18%
© boxing exhibitions shall be 10%
professional basketball games shall be 15%
91. One of the following is an incorrect amusement tax rate:

a. Jai-alai and racetracks - 30%
b. Cockpits, cabarets, night and day clubs - 18%
c. Professional basketball games - 15%
d. Boxing exhibitions - 12% é ; ;
< Answer: D
92. One of the following is subject to amusement tax on gross receipts

a. Owners of winning racehorses,
b. Proprietors of karaoke KTV houses.
c. Owners of winning cocks in the cockpits
d. _Lessees of bowling alleys
sd Answer: B
>
© Owners of winning racehorses are subject to percentage tax on winnings under Section 126
of the Tax Code, not amusement fax. .
o Owners of winning cocks in the cockpits are subject to income tax only
0 ‘D"is subject to vat
93. Gross receipts for amusement tax shall include all the following except one. Which one is
it?
a. Income from television, radio and motion picture rights.
b. Income from sale of tickets.
c. Income from sale of food and refreshments within the amusement place.
d. Income from sale of food and refreshments outside the amusement place.
“¢ Answer: D
94. Statement 1: All boxing exhibitions held in the Philippines shall be subject to amusement
tax.
Statement 2: Admission charges to amusement places are ee for the imposition of
amusement tax.
“- Answer: B
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95, Apol B., a Filipino citizen, promoted a world boxing championship bout in the Philippine
Arena in Bocaue, Bulacan featuring Manny Pacquiao, a Filipino champion, and Lucas
Matthysse, dubbed as “Fight of Champions”. Gate receipts amounted to P30,000,000 and
additional receipts from television coverage was P20,000,000. The amusement tax due is:
a. P2,000,000 c. P5,000,000
b, P3,000,000 d. nil
* Answer: D
96. Assuming the bout above will be held in Malaysia, how much is the amusement tax?
a. P2,000,000 c. P5,000,000
b. P3,000,000 d. nil
“ Answer: D
91. Assuming the bout is in the Philippines but the promoter, Apol B., is a foreign national, how
much is the amusement tax?
a. P2,000,000 : c. P5,000,000
b.. P3,000,000 d. nil
“> Answer: C; (Amusement Tax = (P30M + P20M) x 10% = P5M)
98. Zirkoh, a comedy bar, had the following data during the month of March 2023:
Net income during the month P160,000
Collections during the month:
From services rendered in January 200,000
From services rendered in February 1,200,000
From services to be performed in March 40,000
How much is the amusement tax for the month?

a. P216,000 c. P259,200
b. P252,000 d. P288,000
“* Answer: C
Total collections. 1,440,000
x ‘ 18%
Amusement Tax P259,200
For business tax purposes, ignore income and expenses.
© If it pertains to sale of services, the basis of business tax is gross receipts or collections,
regardless of when the service was rendered,
© Acomedy bar, for business taxation purposes, is subject to amusement tax:
*Night and Day Clubs” as provided in RMC 18-2010 are drinking, dancing and entertainment venues
which oftentimes’serve food and provide entertainment. “Cabarets’, on the other hand, are
restaurants or clubs where liquor and food are served, with a stage provided for performances by
musicians, dancers or comedians, including a venue for dancing by patrons/customers, similar to
that of nightclubs. With the advent of modern interactive entertainment, along with recorded music
escrneyc ay now,
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Chapter 12 ~ Percentage Toes
(and/or music video) using a, microphone and public address system, the proprietorsfessees or
operators of these amusement places have pursued a new form of lounge and club entertainment,
“Most of these establishments provide facilities to allow patrons to sing with the expectation that
Sufficient revenue will be made selling food and drinks to customers. The “terms” night and day clubs
and cabarets have become passe’. Amusement places which offer the samo pleasurable diversion
entertainment and function now indude videoke bars, karaoke bars, karaoke televisions, karaoke
boxes and music lounges. As such, the. proprietors, lessees, or operators of the aforementioned
establishments are deemed also subject to 18% amusement tax under Section 125 of the Tax Code,
and not to the 12% value added tax.
99. Based on the preceding number, if it is a racetrack, how much is the amusement tax
payable for the month?

a. P60,000 c. P432,000
b. P360,000 d. P480,000
. Answer: C

Total collections : 1,440,000
x ; wt 30%
Amusement Tax P432,000
Use the following data for the next three (3) questions:
Casa Palawan, vat registered, offers different services to its guests. The following data taken
from the books of the taxpayer are for the first quarter of 2023:
Revenues Collections Input vat
Hotel rooms P2,000,000 P1,500,000
Dining Hall: ; |
Sale of food and refreshments 1,000,000 850,000
Sale of wine, beer and liquor 700,000 650,000
Disco:
Sale of food and refreshments 600,000 550,000
Sale of wine, beer and liquor 500,000 450,000
400. How much is the amusement tax for the quarter?

a. P180,000 c. P540,000
b. P360,000 d. P438,000
“+ Answer: A
Gross receipts from disco operations P1,000,000

x amusement tax rate "1 49%
Output vat ~__ P180,000_
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101. How much is output vat for the quarter?

a, P180,000 c. P540,000
b. P360,000 / d. P438,000
* Answer: B
Gross receipts from:
Hotel rooms P1,500,000
Dining hall (P850k + 650k) i 1,500,000
Total gross receipts subject to vat P3,000,000
x Vat rate 12%
Output vat P360,000
402. How much is the total business taxes for the quarter?
a. P180,000 c. P540,000
b. P360,000 d. P400,000
“+ Answer: C
Amusement tax P180,000
Output vat “360,000
Total business taxes “P540, 000
103. Philippine Basketball Association (PBA), a professional basketball league in: the
Philippines, opened its own coliseum during April of 2023 and held all its games for the
month in the newly built, state of the art facility in Bulacan. PBA provided the following
data during the month:
Receipts from Entrance Fee P9,800,000
Gross Receipts from Restaurant operations:
Sale of food and beverages : 2,200,000
Sale of wines & liquor 750,000 °
Expenses 3,800,000

a. P1,210,000 c. P1,762,000
b. P1,320,000 d. P1,912,500
“ Answer: D
Gross receipts from entrance fee P9,800,000
Sale of food and beverages 2,200,000
Sale of wines and liquors ___ 750,000 _
Total gross receipts 12,750,000
x : meteeS
Amusement Tax P1,912,500
104, Based on the preceding number but suppose the restaurant is owned and operated by
Bryan, a vat-registered person, the amusement taxes of Bryan and the PBA is
Bryan PBA°
a. P354,000 P1,320,000
b, P1,320,000 ~ P364,000
C. P354,000 ~ P354,000
d. PO . P1,470,000
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Answer: D
PBA: Gross receipts, PBA = P9.8M x 15% OPT -P1,470,000

Bryan: Gross receipts, restaurant = P2,950,000 x 12% vat 954,000
© Bryanis subject to vat, not to amusement tax.
105. Boxing exhibitions shall be exempt from amusement tax when the following conditions are
present:
a. _ Involves World or Oriental championships in any division.
b. One of the contenders isa citizen of the Philippines.
c. Promoted by citizens of the Philippines or by a, corporation orassociation at least ~
60% of the capital is owned by Filipino citizens.
d. Allof the conditions above must be satisfied
“- Answer: D
106. Premier Entertainment is the operator of Tanghalan Coliseum. During the month it had the
following gross receipts from various activities:
Concerts P2,500,000
Professional basketball game 1,240,000
Boxing Exhibition 1,780,000
The boxing exhibition is a world championship fight between G.I. Joe and Lucas
Matthysse, both foreign nationals and the bout was promoted by a domestic corporation.
How much is the amusement tax payable of Premier?

a. P1,78,000 c. P364,000
b. P186,000 d. P664,000
“¢ Answer: C
Solution:
Professional basketball (P1,240,000x 15%) . P186,000
Boxing Exhibition (P1,780,000 x 10%) 178,000
Total Amusement Taxes P364,000
NOTE: Section 125 of the Tax Code provides that a person or entity or association conducting
any activity subject to the tax herein imposed shall be similarly liable for said tax with respect
to such portion of the receipts derived by him or it.
107. How much is total business taxes of Premier?

a. P1,78,000 c. P364,000
b. P186,000 d. P664,000
“+ . Answer: C
Solution: ,
’. VAT? Concert (P2,500,000 x 12%) P300,000
Amusement Tax (refer to the preceding number) 364,000
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Section 125-A : GAMING TAX ON OFFSHORE GAMING LICENSEES
108. It refers to the operation by an Offshore Gaming Licensee on online games of chance or
sporting events via the intemet using a network or software or program exclusively for
offshore customers/players who are non-Filipinos,
a. Philippine Offshore Gaming Operation
b. Offshore Gaming Licensee
c. Accredited Service Provider
d. POGO Licensing Authority
“+ Answer: A
409. Which of the following may grant a license to a POGO entity?

a. Philippine Amusement and Gaming Corporation (PAGCOR)
b. Special Economic Zone Authority
c. Tourism or Freeport Zone Authority
d. Allofthe above
* Answer: D
410. Income from gaming operations ofa POGO entity is:

Exempt from income tax
Subject to 25% RCIT
aoop
Subject to 5% Franchise tax

None of the above
“Answer:C
?
*,
111. The 5% Franchise Tax of a POGO entity is:

a. Anincome tax
b. In addition to income tax
c. Inaddition to all other direct and indirect internal revenue taxes and local taxes
such as value added tax
d. Inlieu of Il other direct and indirect internal revenue taxes and local taxes
%¢ Answer: D
112. The 5% Franchise Tax of a POGO entity is based on:

a. Gross wagers
b. Gross gaming revenue
c. Agreed Pre-determined minimum monthly revenue (APMMR) from gaming
operations
d. Whichever is higher of gross gaming revenue and agreed pre-determined
minimum monthly revenue from gaming operations
“+ Answer: D:
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113. Which of the following statements is correct?

Gross Wagers refer to the total amount of money that offshore gaming
customers. ;
b. Payouts refer to the total amount paid out to offshore gaming customers for
winning.
Cc. Agreed Pre-determined Minimum Monthly Revenue from gaming operations
refers to the amount that is derived after dividing the minimum monthly fee or
its equivalent, as imposed
by a Philippine Offshore Gaming Operation (POGO)
Licensing Authority, by the rate of prescribed regulatory fee.
d. All of the above.
Answer: D
2.
Xd
114. Statement 1: Income from Gaming Operation refers to income or earnings realized or
derived from operating online games of chance or sporting events via the internet using a
network and software or program.
Statement 2: Income from non-gaming operation refers to any other income or eamings
realized or derived by OGLs that are not classified as income from gaming operations.
Only statement 1 is correct

aAoop
Only statement 2 is correct

Both statements are correct
Both statements are incorrect
2,
~%
Answer: C
115. Income from non-gaming operations of an Offshore Gaming Licensee (OGL) is:
a. Exempt from income tax
b. Subject to 5% Franchise tax
Cc. Subject to value added tax or percentage tax, whichever is applicable
~
2
Answer: C
116. The gaming tax of Offshore Gaming Licensees (OGLs) shall be remitted directly with the
BIR:
Not later than the 10th day following the end of each month
Not later than the 20th day following the end of each month
“aeon
Not later than the 20th day following the end of each quarter
‘Not later than the 25th day following the end of each quarter
Answer: B
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Chapter Vie > Percentage Tapees
Section 126 - Tax on Winnings
117. The Percentage Tax on Winnings is imposed on the winnings of bettors in:
a, Cockfighting
b. Horse race
c. Jai-alai
d rey
“> Answer: B
418. The following shall always be subject to 10% percentage tax, aie
a. Overseas call made by Mr. X, resident of Manila, to his mother in Libya
b. Winnings from horse races by a bettor
¢. Oriental Championship match in the Philippines Recon a Filipino and Mexican
promoted by Bob Arum.
d. Winnings from horse races by a horse owner.
“+ Answer:B
® — Abettor of horse races may be subject to 10% or.4% tax based on net winnings.
%. Basis: Net winnings= Gross winnings or dividends less cost of the winning ticket(s)
9 %of Tax:
* — Ordinary or regular winnings: 10%
=» —_ Special winnings (forecast, double, trifecta, quinela): 4%
Horse owner(s) are subject to 10% tax based on gross winnings.
119. Statement 1: The 10% tax on winnings is based on actual amount paid to the winner.
Statement 2: The rate of tax on winnings in case of double, forecast/quinella and trifecta
shall be four percent (4%).
“+ Answer: D
420. Mang Jose, a horse-owner, received gross winnings of P120, 000 during the current month.
His tax on winnings should be:
a. P6,000 c. P18,000
b. P12,000 : d. P24,000
oe
* Answer: B; (Tax on winnings = P120,000x 10% = P12,000)
121. Leo purchased horse racing tickets amounting to 26,000. Fifty percent (50%) of the tickets
purchased won double, entitling him a prize of P60,000. How much cash will be given to
Leo by the operator?
a. PS7,720. c. P54,300
b. P54,720 d. P51,300
“ Answer: A
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Solution:
Gross winnings P60,000
Less: Tax on winnings
Gross winnings P60,000
_ Cost
of winning tickets (P6,000x 50%) __(3,000)
Net winnings P57,000
x - 4% (2,280)
Amount to be paid to Pedro P57,720
© The cost of the winning tickets shall not be deducted from the amount to be paid to Pedro
because the purchase of ticket and receipt of dividends or winnings are separate transactions.
122. Pedro, a horse bettor, had the following records of his horse races for the month of May of
2023: 5s
Type of Gross Cost of
Horse Winnings Winnings winning tickets
Ana Khan Trifecta P100,000 40,000

Lor Naden Ordinary 250,000 50,000
Fe Licidad Double 325,000 75,000
How much is the business tax on winnings?

a. P32,400 c. P49,000
b. P35,750 d. P68,000
“- Answer: A
Type of
Horse Winnings Net winnings % ° Tax
Ana Khan Trifecta P60,000 4% P2400
Lor Naden Ordinary 200,000 10% 20,000
Fe Licidad Double 250,000 4% 10,000
TOTAL P32,400
123. Mike Ong received P100,000 winnings from cockfighting. Determine his tax iabity
_ |. Subject to 10% OPT (tax on winnings) under Section 126 of the Tax Code
Il. Subject to regular or basic income tax
Ill. Subject to 10% OPT (tax on winnings) under Section 126 of the Tax Code and
20% final tax on passive income
a. | only c. Ill only
b. ll only : d. land Ill
“Answer: B
124. Mannu Gal received P100,000 winnings from horse racing. Determine his tax liability.
|. Subject to 10% OPT (tax on winnings) under Section 126 of the Tax Code
Il. Subject to basic income tax
II]. Subject to 10% OPT (tax on winnings) under Section 126 of the Tax Code and
20% final tax on passive income
a. | only c. Ill only
b. Il only d. | and Ill
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TE
‘ 7
Cha Bri = piety Tages
* Answer: A
125. A race track bettor won the following bets:

* Ondouble, a bet of P200 and dividend of P200 per P20 ticket.
= —Onwinner take all, a bet of P500 and a dividend of P1,000 per P50 ticket
* On forecast, a bet of P1,000 and dividend of P100 per P20 ticket
The total percentage tax due from the winnings should be:
a. P682 c. P1,280
b. P1,182 d. P1,530
“ Answer: B
® ONDOUBLE
=P200 bet/P20 per bet = 10 tickets
= Net winnings per ticket = P200-20 = P180
OPT =P180 x 10 tickets x 4% =P72
& — ON Winner Take All (Ordinary winnings)-

= P500 bet/P50 per bet = 10 tickets
= Net winnings per ticket = P1,000 - 50 = P950
OPT = P950 x 10 tickets x 10% = P950
& ONFORECAST
= P1,000 bet/P20 per bet = 50 tickets
= Net winnings per-ticket = P100-20 = P80
OPT = P80 x 50 tickets x 4% = P160
& — TOTAL Tax on Winnings

= P72 + P950 + 160 = P1,182
SECTION 127 - STOCK TRANSACTION TAX
426. Shares of stock held as investment when sold directly to a buyer shall be subject to:
a. Percentage tax of 6/10 of 1% based on gross selling price or gross value in money
b. Value-added tax of 12% based on gross income
C. Capital gains tax of 15% based on capital gain
d. Percentage on IPO at a rate of either 4%, 2%,; 1% based on gross selling price or
gross value in money.
“- Answer: C
_ 127. Shares of stock held as investment when sold through the local stock exchange shall be
subject to:
a. Percentage tax of 6/10 of 1% based on gross selling price or gross value in money
b. Value-added tax of 12% based on gross income
c. Capital gains tax of 15% based on capital gain
d. Percentage on IPO at a rate of either 4%, 2%,; 1% based
on gross selling price or
gross value in money.
“* Answer: A
9,
23
The
Chapter 72 -Percentage Tapes
128. In 2022, Pedro invested P5,500,000 in the shares of stock of Trader Corporation. The
corporation's shares are listed and are traded in the local. stock exchange. Pedro
subsequently sold the shares in 2023 for P5,000,000 through the local stock exchange.
The percentage tax on the sale is:
a. P15,000 c, P30,000
? b. P25,000 d. P50,000
“+ Answer: C; (Stock Transaction Tax = P5M x .006 = P30,000)
129. Using the same data in the preceding number and assuming the shares were not listed in
the local stock exchange and that Pedro sold the shares to Juan, how much is the
percentage tax on the sale?
a. P15,000 c. P30,000
b. P25,000 d. PO
¢ Answer: D; (The sale is subject to CGT, not percentage tax)
130. One of the following statements iis incorrect.

a. The 6/10 of 1% tax shall be collected by the broker who made the sale iid shall be
remitted within 5 banking days from the date of collection. .
b. The tax paid on sale of shares through local stock exchange shall not be allowable
as deduction for income tax purposes.
c. ~ The 6/10 of 1% stock transaction tax is a final withholding tax on income.
d. The 6/10 of 1% stock transaction tax is collected whether there is an income or a loss
and is a percentage tax.
“+ Answer: C
431. 1st Statement: Sale by a stock dealer of shares of stocks or dealer in securities through the
local stock exchange is subject to the stock transactions tax.
2nd Statement: Sale by a stock dealer of shares of stocks directly to a buyer is subject to
the capital gains tax
c. - Only the first statement is correct.
d. Only the second state statement is correct.
“+4, Answer: B. ; Sale of shares by a stock dealer is subject fo basic income tax and vat. .
432. All of the following except one is liable to 6/10 of 1% stock transaction tax. Which one is
not?
a. Individual taxpayers, whether citizens or alien |
b. | Corporate taxpayers, whether domestic or foreign
c. Estates and Trust
d. Dealers in securities /
“+ Answer: D; Dealers in securities are subject to value added fax.
724
The
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CHAPTER 12 ”

KINDS OF PERCENTAGE TAXEs:

egg(*}\ bk - TAX ON PERSONS EXEMPT FROM VALUE-ADDED TAX

Section 116 of the Tax Code, as amended by CREATE Law provides:

SUMMARY: PERCENTAGE TAX OR VAT

AGSR® < P3M AGSR* > P3M

OPT under NOT also Subject to Percentage

PERCENTAGE TAX ON DOMESTIC CARRIERS AND KEEPERS OF GARAGES

Section 117 of the Tax Code, as amended, provides:

* Common Carriers - refers to the persons, corporations, firms or associations

1) Cars for rent or hire driven by the lessee (rent-a-car);

SUMMARY: ‘Common Carrier's Tax (CCT) on Do Pei yi mer Led eed

DOMESTIC Common Carriers

Local Transport From Philippines To a foreign

an : Vat or OPT : Zero-rated (0%) vat ; y

7 - PERCENTAGE TAX ON INTERNATIONAL CARRIERS

SUMMARY: CCT on INTERNATIONAL CARRIERS (Résident Foreign Corporations)

oy p fe) bE) - TAX ON FRANCHISES

Requisites for franchises on Radio and/ or Television Broadcasting

- TAX ON OVERSEAS DISPATCH, MESSAGE OR CONVERSATION

| Sec. 120 of the Tax Code, as amended, provides:

* Person Liable — The user of the facility

Be: , 4) News Agencies.

TAX ON BANKS AND NON-BANK FINANCIAL INTERMEDIARIES PERFORMING

GROSS RECEIPTS TAX

Provided, finally, That the generally accepted accounting principles as may be

Cegp te) ieee) - TAX ON OTHER NON-BANK FINANCIAL INTERMEDIARIES NOT

Gross receipts or income derived from: Tax Rate |

b) Interest, commissions and discounts from Lending activities and

SUMMARY: Gross Receipts Tax (GRT) on Financial Intermediaries

$e. 121 ‘Banks and Non-bank See. 122+ OTHER Non-bank )

On Gros: Receipts (GR) derived On GR derived from interest,

On GR derived from dividends ae)

Cn GR derived from royalties, On GR derived from Interest,

On GR derived from Net Trading x

Greist) pb rs- TAX ON LIFE INSURANCE PREMIUMS

Premiums collected PXXxx

The following premiums are exempt from tax:

| Sec. 124 of the Tax Code, as amended, provides:

1) Fire, Marine or Miscellaneous Agents of non-resident Foreign Corporations

Premiums collected . PXxX

Premium payments Pxxx

SyagON BES - AMUSEMENT TAXES

c) | Terrpercent (10%) in the case of boxing exhibitions:

d) Fifteen percent (15%) in the case of professional basketball games as envisioned in

* Persons Liable — Proprietor, lessee or operator of cockpits, cabarets, night or

**Requisites for Exemption of Boxing Exhibitions:

erp te) me eeyy\ - GAMING TAX on Services Rendered ro Offshore Gaming

Section 125-A of the Tax Code (GAMING TAX), provides:

¢ INCOME FROM GAMING OPERATIONS ,

“Income from Gaming Operations refers to income or earnings realized or

FORMULA based on RR 20. 2021 dated December 1, 2021;

Vs, APMMR i Pxx

HIGHER amount bet, GGRand APMMR sé

¢ PAYMENT OF GAMING TAX

¢ INCOME FROM NON-GAMING OPERATIONS

The non-gaming revenues of operations of all OGLs shall be subject value

¢ DEFINITION OF TERMS (Based on RR 20-2021 dated November 26, 2021)

: © — Philippine Offshore Gaming Operation (POGO)

® Offshore Gaming Licensee (OGL)

in doing business in the Philippines.

_. 9 POGO Licensing Authority

Section 126-A of the Tax Code (TAX ON WINNINGS), provides:

~+, Persons Liable: