Tax on person exempt from value-added tax

Short description  These are non-VAT-registered persons whose

annual profits or receipts do not reach the 3
million Philippine pesos (PHP) VAT
threshold, which was decreased to 1% from
July 1, 2020 to June 30, 2023, but will revert
to 3% thereafter.
Persons Liable  Persons who sell products, assets, or services
that are not VAT-registered and have annual
gross sales or receipts that does not exceed to
P3,000,000 are free from (VAT).
 Persons who lease residential units where the
monthly rental will not exceed P15,000 and
the total annual rentals do not exceed
P3,000,000.
Exempt Persons  Cooperatives
 Self-employed people and professionals
availing of the 8% tax rate on gross sales,
receipts, and other non-operating income.
Formula (including the tax rate) 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 June 30, 2023
(CREATE law) 3%
Percentage tax due PXXX

Tax Base Sale of goods : Gross sales

Sale of services : Gross receipts
Other information, if there's any  The RA 10963 increases the Threshold from
P1,919,500 to P 3,000,000.
 Excess percentage tax payment due to the
decrease of rate from 3% to 1% may be
carried over to succeeding quarters under BIR
Form 2551Q.

Percentage tax on domestic carriers and keepers of garages

Short description  Also known as Common Carries Tax on
domestic, it is imposed on domestic common
carriers who transport passengers by land.
 Common Carries -refers to individuals,
businesses, firms, or associations involved in
the business of conveying passengers or
commodities by land, water, or air for a fee
and offering their services to the general
public, and includes transportation
contractors. (Should refer to local carrier)
Persons Liable  Rental cars driven by the lessee
 Transportation contractors
  Domestic carrier by land for the transport of
passenger
 Keepers of garages.
Exempt Persons  Bancas’ owner
 Owners of animal-drawn two-wheeled
vehicles
Formula (including the tax rate) Tax base Pxxx
Multiply: Tax Rate 3%
Common carrier's tax Pxxx

Tax Base  Actual Gross Receipts

 Minimum Gross Receipts
(Whichever is higher)
Other Information, if there's any
DOMESTIC CARRIER TRANSPORTING BUSINESS TAX
By Land Passengers OPT; Section 117
Cargo/ Goods VAT or Section 116
By Air Passengers, Goods or Cargoes VAT or Section 116
By Sea Passengers, Goods or Cargoes VAT or Section 116

Percentage tax on international carriers

Short description  Also known as Common Carriers Tax on
international carriers on the transportation of
goods or shipments from the Philippines.
 These are businesses in Philippines that is
engaged in international air carriers and
international shipping carriers that transport
cargo from the Philippines to foreign country.
This are subject to a 3% percentage tax on
their quarterly gross receipts.
Persons Liable  International Air Carriers
 International Shipping Carriers
(It refer to foreign carriers doing business in the
Philippines)
Exempt Persons
Formula (including the tax rate) Tax base Pxxx
Multiply: Tax Rate 3%
Common carrier's tax Pxxx

Tax Base
Other information, if there's any
INTERNATIONAL CARRIER
TRANSPORTING
Passengers originating in the Philippines
Passengers originating in the Philippines
Anything that originates in a foreign country
is exempt from paying business taxes in the
Philippines, whether it be domestic or
international shipping/airline.
BUSINESS TAX APPLICABLE
Exempt
OPT: Section 118
 Tax on franchises
Short description  Also known as Franchise Tax on Franchise
Grantees
 This tax is focused at radio and television
broadcasting companies, as well as gas and
water utility companies.
Persons Liable  Franchises on Gas and Water Utilities
 Franchises on Radio and/ or Television
Broadcasting Companies
Exempt Persons
Formula (including the tax rate) Tax base Pxxx
Rate xx%
Franchise tax Pxxx

Tax Base  Gas and Water - 2%

 Radio and/or Television Broadcasting
Companies - 3%
Other information, if there's any  RULES APPLICABLE ON RADIO/
TELEVISION BROADCASTING
COMPANY
ANNUAL GROSS RECEIPT BUSINESS TAX APPLICABLE
More than P 10,000,000 prior year VAT
P10,000,000 and below prior year VAT or OPT

Tax on overseas dispatch, message or conversation originating from Philippines

Short description  Also known as Overseas Communication Tax
(OCT) on overseas communication
originating from the Philippines.
 On the sum charged for each international
dispatch, message, or call telephone,
telegraph, and radio transmissions from the
Philippines Services such as telewriter
exchange, wireless, and other communication
devices are subject to a 10% tax.
Persons Liable  The user of the facility
Exempt Persons  The Philippine government or any of its
political subdivisions or Instrumentalities
 Diplomatic Services
 International Organizations
 News Agencies
Formula (including the tax rate) Payments for services Pxxx
Rate 10%
Overseas communication tax Pxxx

Tax Base  Amount paid for the service received by the

users
Other information, if there's any  The tax 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.

Tax on banks and non-bank financial intermediaries performing quasi-banking functions

Short description  It is collected in all banks and non- bank
financial intermediaries within the Philippines
that are operating quasi-banking functions. It
is also known as, Gross Receipt Tax (GRT)
Persons Liable  Banks or banking Institutions
 Non- bank Financial Intermediaries
 Banks and Non- bank performing quasi-
banking functions.
Exempt Persons
Formula (including the tax rate) Gross Receipts Pxxx
Multiply: Tax Rate xx%
Tax Payable Pxxx

Tax Base a.On interest, commissions and discounts from

lending activities as well as income from financial
leasing, on the basis of remaining maturities of
instruments from which such receipts are derived:

Maturity period is five (5) years or less 5%

Maturity period is more than five (5) years 1%
b. On dividends and equity shares in net
income of subsidiaries 0%
c. On royalties, rentals of property, real or
personal, profits from exchange and all
other items treated as gross income under
Section 32 of the Code 7%
d. On net trading gains within the taxable
year on foreign currency, debt securities,
derivatives and other similar financial
instruments 7%
Other information, if there's any  The cumulative or total value of the Net
trading gain/loss since the first month of
taxable year must be the one reported in the
monthly percentage tax return or Gross
Receipt tax to be able to compute the Net
trading gain within the taxable year.
 Sales of receivables are not subject to VAT.
 Net trading gains derived by banks and non-
bank are exempted from VAT, but subject to
Gross Receipt tax

Tax on other non-bank financial intermediaries not performing quasi-banking functions

Short description  It is also known as, Gross Receipt Tax (GRT).
This are one of the source of consumers’
 credit and the best example of this are
insurance firms, pawn shops, venture
capitalists, exchange rate, etc.
Persons Liable  Individual, firms, and companies that act as
an intermediaries, but not performing quasi-
banking.
Exempt Persons
Formula (including the tax rate) Gross Receipts Pxxx
Multiply: Tax Rate xx%
Tax Payable Pxxx

Tax Base  From interest, commissions, discounts and

all other items treated as gross income under
the Code 5%
 On interest, commissions and discounts from
lending activities as well as income from
financial leasing, on the basis of remaining
maturities of the instruments from which such
receipts are derived:

Maturity period is five (5) years or less 5%

Maturity period is more than five (5) years 1%
Other information, if there's any  The taxable receipts in financial leasing shall
only consist of interest income.
 The gross receipts under operating lease
agreements is the gross rental amount.

Tax on life insurance premiums

Short description  Also known as Premiums Tax
 A premium is the cost of an insurance policy.
This word includes health, auto, house, and
life insurance rates. Those who fail to pay
their insurance premiums risk losing
coverage. Some policies require annual,
quarterly, monthly, or semi-annual premiums.
Comparing insurance quotes can help
someone to save money.
 SECTION 123 entitled. “Tax on Life
Insurance Premiums” Based on the total
premiums collected from all Filipinos
involved in any form of life insurance,
excluding only cooperative firms or
organizations. The tax is 2%.
 Cooperatives and associations are owned and
operated by their members with the primary
purpose of self-protection.
Persons Liable  Life Insurance Company/Agent/Corporation
 Insurance agents authorized under the
Insurance Code to procure policies of
insurance for companies not authorized to
 transact business in the Philippines
Exempt Persons
Formula (including the tax rate) Premiums collected Pxxx
Rate 2%
Premiums tax Pxxx

Tax Base  Life insurance premiums are taxed based on

the total amount of premiums collected.
Paying the premiums in cash or bank notes,
credit cards or any other form of cash
substitute does not make a difference.
Other information, if there's any

Tax on agents of foreign insurance companies

Short description  Also known as Premiums Tax on agents of
nonresident foreign insurance companies
Persons Liable  Fire, Marine or Miscellaneous Agents of non-
resident Foreign Corporations engaged in
insurance business
 Agents of Non-resident Foreign Corporations
engaged in insurance business
Exempt Persons
Formula (including the tax rate) Premiums collected Pxxx
Rate 4%
(the rate is twice the rate of Sec. 123)
Premiums Tax Pxxx

Tax Base  This type of percentage tax has the tax base of
the total premiums collected.
Other information, if there's any  Owners of property who acquire insurance
directly from foreign corporations must pay a
5% tax on premiums.

Tax on owners of property obtaining insurance with nonresident foreign insurance companies
Short description  Also known as Premiums Tax on owners of
property
Persons Liable  Owners of property directly obtaining
insurance from Non-resident Foreign
Corporations engaged in insurance business.
 Owners of property directly obtaining
insurance to Non-resident Foreign
Corporation engaged in insurance business
Exempt Persons
Formula (including the tax rate) Premium payments Pxxx
Rate 5%
Premiums tax Pxxx
Tax Base  Premium Payment
Other information, if there's any
 Amusement taxes
Short description  When we talk about "amusement tax," we're
talking about the tax that is levied on a range
of different sorts of entertainment.
Persons Liable  Proprietor, lessee or operator of cockpits,
cabarets, night or day clubs, boxing
exhibitions, professional basketball games,
Jai-Alai and racetracks.
Exempt Persons  World or Oriental Championships is at stake;
 One of the contenders is a citizen of the
Philippines; and
 Promoted by citizens of the Philippines or by
a corporation or association at least sixty
percent (60%) of the capital of which is
owned by such citizen.
Formula (including the tax rate) Gross receipts Pxxx
Rate xxx%
Amusement tax Pxxx

Tax Base  Gross Receipts

Other information, if there's any
 Gross Receipt - For the amusement tax to be
computed, the entertainment facility owner,
lessee, or operator must collect all of the
amusement facility's gross receipts. Gross
revenues include any money made from the
sale of broadcasting, radio, or filming rights.

Tax on winnings
Short description  Lottery and gaming winnings taxes are taxes
that are charged on the winnings that winners
received.
Persons Liable  Owners of the winning horse; and
 Bettor in a horse race or jal-alal
Exempt Persons
Formula (including the tax rate) Owner of the winning horse
Prize/Winnings Pxxx
Rate 10%
Tax on winnings Pxxx

Bettor in a horse race or jai-alai

Gross winnings Pxxx
Less: Cost of winning ticket xxx
Net winnings Pxxx
Rate xx%**
Tax on winnings Pxxx

Tax Base
Other information, if there's any
 Tax on stocks transactions
Short description  Also known as Stock Transaction Tax (STT)
 Kinds of Stock Transaction Tax (STT):
1. Tax on Sale, Barter or Exchange of Shares of
Stock Listed and Traded through the Local
Stock Exchange (LSE); Sec. 127(A), NIRC
2. Tax on Shares of Stock Sold or Exchanged
through Initial Public Offering Sec. 127(B),
NIRC-REPEALED UNDER BAYANIHAN
ACT II (Sept. 15, 2020).
 SECTION 127(A) Tax on Sale, Barter or
Exchange of Shares of Stock Listed and
Traded through the Local Stock Exchange
(LSE)
Persons Liable  This form of percentage tax is levied against
the person who sells or transfers shares of
stock
Exempt Persons  Securities dealers are exempt from this type
of percentage tax.
Formula (including the tax rate) Gross selling price Pxxx
x Rate .006
Stock Transaction Tax Pxxx

Tax Base  Gross Selling

 Gross Value in Money
Other information, if there's any  Seller is not a dealer in securities and shares
sold is listed and traded through the LSE.

Tax on sale, barter or exchange of shares of stock listed and traded through the local stock exchange or
through initial public offering
Short description  Under this Section, any gain generated from the sale, barter,
exchange, or other dispose of shares of stock is free from normal
individual or corporation income tax. For income tax purposes,
the tax paid under this Section is not deductible.
 Sale is made through the Local Stock Exchange (LSE) and it is an
initial public offering of a "closely held corporation.
Persons Liable  Primary Offering - Issuing Corporation
 Secondary Offering - Seller
Exempt Persons  Follow-on/Follow-through Offering of Shares
Formula (including the tax Gross selling price Pxxx
rate) x Rate xxx**
Stock Transaction Tax Pxxx

Tax Base  Gross Selling Price

 Gross Value in Money
Other information, if there's
any