BUSINESS TAX, an Internal Revenue tax imposed on persons or entities who sell goods or services in

the course of business.

Business tax is a tax imposed on the gross sales or receipts of a VAT or NON-VAT taxpayer.

Business tax is either 12% VAT or 3% and OPT

Non-VAT:

3%, on Sales, Gross receipts of not more than P3,000,000 per year.

OPT, Specific % regardless if the Sale, Gross Receipts is exceeding P3,000,000 per year;
OTHER PERCENTAGE TAXES (OPT)

Domestic carriers and keepers of garages, Gross receipts x 3%

International air/shipping carriers doing business in the Philippines

Gross receipts on transport of cargo from the Philippines to a foreign country x 3%

Franchise grantees:
Gas and water utilities, 2%
Radio and television broadcasting companies whose annual gross receipts of the preceding year do not

exceed Php10,000,000 and did not opt to register as VAT taxpayer, 3%

Overseas dispatch, message or conversation originating from the Philippines Amount paid for the service x 10%

Banks and non-bank financial intermediaries performing quasi-banking functions

Interest: • If maturity period is five years or less x 5%
• If maturity period is more than five years x 1%

Dividends and equity shares and net income of subsidiaries X 0%

Royalties, rentals of property, real or personal, profits from exchange and all other items treated as
gross income under Sec. 32 of the Tax Code, as amended, 7%
Life Insurance Company/Agent/Corporation (except purely cooperative companies or associations)
Total premiums collected X 2%

Agents of foreign insurance companies (except reinsurance premium):

Insurance agents authorized under the Insurance Code to procure policies of insurance for companies not
authorized to transact business in the Philippines
Total premiums collected X 4%

Owners of property obtaining insurance directly with foreign insurance companies

Total premiums paid X 5%

Proprietor, lessee or operator of the following:

Cockpits, Cabarets, Night or Day Clubs, videoke bars, karaoke bars, karaoke televisions, karaoke boxes and music
lounges
Gross receipts X 18%
Boxing exhibitions (except when the World or Oriental Championship is at stake in any division,
provided further that at least one of the contenders for World Championship is a citizen of the
Philippines and said exhibitions are promoted by a citizen/s of the Philippines or by a corporation/
association at least 60% of the capital of which is owned by said citizen/s)
Gross receipts X 10%

Professional basketball games (in lieu of all other percentage taxes of whatever nature and
description)
Gross receipts X 15%

Jai-alai and race track

Gross receipts X 30%
Winnings on horse races
· Winnings or 'dividends’ X 10%
· Winnings from double forecast/quinella and trifecta bets X 4%
· Prizes of owners of winning race horses X 10%

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 of securities Gross selling price or gross value in
money 6/10 of 1%
 BUSINESS REGISTRATION, Irrevocable for 3 years

NON-VAT OPTION VAT

(OPT) NON-VAT or VAT (12%)

Sales or Gross receipts are

EXEMPT from VAT: More than P3,000,000/year
If Sales or Gross Receipts is
(Section 109 +TRAIN LAW) Not More than P3,000,000/year Not:
Exempt
Sales or Gross Receipts
OPT Not:
Domestic carriers and keepers of garages Among OPT
International air/shipping carriers
Franchise grantees (water/electric)
Banks and non-bank financial intermediaries performing quasi-banking functions
Insurance
Amusement places
 COMPARISON OF BUSINESS TAXES on BUSINESS TRANSFERS

VAT NON -VAT

Sales/Gross Receipts, More than P3M/year Sales/Gross Receipts, P3M or below /year

Tax Rates, 12% INPUT, 12% OUT PUT Tax Rates, generally 3%, but OPT ranging from 1% to
30%
CALCULATION, OUTPUT VAT – INPUT VAT CALCULATION, Sales/Gross Receipts X %

BURDEN of Tax, Indirect tax BURDEN of Tax, Direct tax

ACCOUNTING of Tax, OUT PUT VAT is accounted as ACCOUNTING of Tax, recorded as expense
Liability and INPUT VAT is treated as Asset.

TAX RETURN, 2550Q TAX RETURN, 2551Q