THE SCOPE OF PERCENTAGE TAX

Coverage Type of % tax Tax rates

1. Services specifically subject to
Specific % tax Various tax rates
percentage tax
2. Sales of goods or other
General % tax 3% percentage tax
services not exempted

Type of % tax VAT registered taxpayers Non-VAT registered taxpayers

Specific % tax X X
General % tax - X

Source of income or receipt % tax rate

1. Interest income, commissions, and discounts
from lending activities, and income from financial
leasing, on the basis of remaining maturities of
instruments from which the receipts were derived:
a. Maturity period of five years or less 5%
b. Maturity period of more than five years 1%
2. Dividend and equity shares in the net income of 0%
subsidiaries
3. On royalties, rentals of property, real or personal, 7%
profits from exchange and all other items treated as
gross income under Section 32 of the NIRC.
4. On net trading gains within the taxable year on 7%
foreign currency, debt securities, derivatives, and
other similar financial instruments.

Source of income or receipt % tax rate

1. Interest income, commissions and discounts
from lending activities, income from financial leasing,
on the basis of remaining maturities of instruments
from which the receipts were derived: `
c. Maturity period is five years or less 5%
d. Maturity period is more than five years 1%
2. From all other items treated as gross income under
the NIRC. 5%

International Operations
Types of carriers Domestic Operation Outgoing Incoming
Domestic carrier 12% VAT 0% VAT Exempt
International carriers
-Passengers n/a Exempt Exempt
-Goods, mails or cargoes n/a 3% OPT Exempt

Sea or air carriers owned by

Domestic corporation Foreign Corporation
Passengers Vatable Exempt
Cargoes/baggages Vatable 3% percentage tax

Mode of transport Passengers Baggage/mails/cargoes

By land 3% percentage tax Vatable
By water/sea Vatable Vatable
By air Vatable Vatable

Quarterly Monthly
Jeepney for hire:
Manila and other cities 2,400 800
Provincial 1,200 400
Public Utility Bus:
Not exceeding passengers 3,600 1,200
Exceeding 30 but not 50 6,000 2,000
Exceeding 50 passengers 7,200 2,400
Taxis:
Manila and other cities 3,600 1,200
Provincial 2,400 800
Car for hire:
With chauffeur 3,000 1,000
Without chauffeur 1,800 600
Places of boxing exhibitions 10%
Places of professional basketball games 15%
Cockpits, cabarets, night or day clubs 18%
Jai-alai and race tracks 30%

Proportion of shares sold, barterd

Taxorrate
exchanged
Up to 25% 4%
Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%

Sales made by Before IPO During IPO After IPO

Corporate issuer No tax IPO as primary offer No tax
Shareholder investor CGT IPO as secondary offer Stock transaction tax

Franchise grantees % tax rate

1. Radio or television broadcasting companies whose 3%
annual gross receipts do not exceed 10,000,000
2. Gas and water utilities 2%

Call Origin Call Destination Business Tax

Philippines Philippines 12% VAT
Abroad Philippines 0% VAT
Philippines Abroad 10% overseas communication tax

Winnings in horse race or jai-alai, in general 10%

Winnings from double, forecast/ quinella and trifecta bets 4%
Owners of winning race horses 10%

Business or Activity Percentage tax Tax Rates

Banks and financial intermediaries Gross receipt tax 5%, 1%, 7%
International carriers International carrier's tax 3%
Common carriers Common carrier's tax 3%
Amusement places Amusement tax 10%, 15%, 18%, 30%
Sales of stocks by an investor Stock transaction tax 60% x 1%
Sale of stocks during an IPO IPO Tax 4%, 2%, 1%
Franchise Franchise tax 3%
Life insurance Premiums tax 2%, 4%, 5%
Overseas calls Overseas communication tax10%
Amusement betting Winnings tax 10%, 4%

Source of income or receipt % tax rate

1. Interest income, commissions, and discounts

from lending activities, and income from financial

leasing, on the basis of remaining maturities of
instruments from which the receipts were derived:
a. Maturity period of five years or less 5%
b. Maturity period of more than five years 1%
2. Dividend and equity shares in the net income of 0%
subsidiaries
3. On royalties, rentals of property, real or personal, 7%
profits from exchange and all other items treated as
gross income under Section 32 of the NIRC.
4. On net trading gains within the taxable year on 7%
foreign currency, debt securities, derivatives, and
other similar financial instruments.
 Source of income or receipt % tax rate
1. Interest income, commissions, and discounts
from lending activities, and income from financial
leasing, on the basis of remaining maturities of
instruments from which the receipts were derived:
a. Maturity period of five years or less 5%
b. Maturity period of more than five years 1%
2. Dividend and equity shares in the net income of 0%
subsidiaries
3. On royalties, rentals of property, real or personal, 7%
profits from exchange and all other items treated as
gross income under Section 32 of the NIRC.
4. On net trading gains within the taxable year on 7%
foreign currency, debt securities, derivatives, and
other similar financial instruments.

Source of income or receipt % tax rate

1. Interest income, commissions and discounts
from lending activities, income from financial leasing,
on the basis of remaining maturities of instruments
from which the receipts were derived: `
c. Maturity period is five years or less 5%
d. Maturity period is more than five years 1%
2. From all other items treated as gross income under
the NIRC. 5%

International Operations
Types of carriers Domestic Operation Outgoing Incoming
Domestic carriers 12% VAT 0% VAT Exempt
International carriers
Passengers N/A Exempt Exempt
Goods, mails or cargoes N/A 3% OPT Exempt

Quarterly Monthly
Jeepney for hire:
Manila and other cities 2,400 800
Provincial 1,200 400
Public Utility Bus:
Not exceeding passengers 3,600 1,200
Exceeding 30 but not 50 6,000 2,000
Exceeding 50 passengers 7,200 2,400
Taxis:
Manila and other cities 3,600 1,200
Provincial 2,400 800
Car for hire:
With chauffeur 3,000 1,000
Without chauffeur 1,800 600
 Places of boxing exhibitions 10%
Places of professional basketball games 15%
Cockpits, cabarets, night or day clubs 18%
Jai-alai and race tracks 30%

Proportion of shares sold, barterd or exchanged Tax rate

Up to 25% 4%
Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%

Franchise grantees % tax rate

1. Radio or television broadcasting companies whose 3%
annual gross receipts do not exceed 10,000,000
2. Gas and water utilities 2%

Life Insurance Non-Life Insurance

Direct premiums 2% Vatable
Reissuance premiums Exempt Exempt
Insurance commissions Vatable Vatable

Call Origin Call Destination Business Tax

Philippines Philippines 12% VAT
Abroad Philippines 0% VAT
Philippines Abroad 10% overseas communication tax

Winnings in horse race or jai-alai, in general 10%

Winnings from double, forecast/ quinella and trifecta bets 4%
Owners of winning race horses 10%
 BANKS
Illustration 1: Basic Computation
Orion Bank had the following interest receipts during the month:
Source of Income Total amount
Interest Income from loans maturing within 2 years 2,500,000 5% ST
Interest income from loans maturing more than 2 years 5% ST
1,000,000
but within 5 years
Interest income on loans maturing more than 5 years 1,200,000 1% LT
Processing fees 300,000 7%
Rent income from foreclosed properties 200,000 7%
Dividends income 50,000 0%

The gross receipt tax of the bank shall be computed as follows:

Interest on short term loans: Total amount Tax rates Percentage Tax
Up to 2 year loans 2,500,000
More than 2 to 5 year loans 1,000,000
Total: 3,500,000 5% 175,000

Interest on long term loans:

More than 5 year maturity 1,200,000 1% 12,000

Dividends 50,000 0% -

Other items of gross income:

Processing fees 300,000
Rent income from foreclosed properties 200,000
500,000 7% 35,000
222,000

Illustration 2: Meaning on the basis of remianing maturities 10 1%

In 2019, East Bank had a 10-year loan with a principal amount of P1,000,000 which was issued on March 31, 2014. (Interest Income - ST/LT? 5%/1%?) 9 1%
The loan pays P20,000 monthly interest income on the last day of every month. 8 1%
7 1%
The applicable gross receipt tax rate for the monthly interest payments on this loan in 2019 shall be: 6
5 1%
5%
Month Remaining maturity Applicable tax rate
January 31, 2019 5 years and 2 months 1% LT 4 5%
February 28, 2019 5 years and 1 month 1% LT 3 5%
March 31, 2019 Exactly 5 years 5% ST 2 5%
April 30, 2019 4 years and 11 months 5% ST 1 5%

The monthly gross receipt tax on the interest income on this loan shall be:
January February March April
Interest income 20,000 20,000 20,000 20,000
Gross receipt tax rate 1% 1% 5% 5%
Gross receipt tax 200 200 1,000 1,000
1,400.00

Illustration 3
The United Kalinga Unibank received a total of 8,000,000 interest income from short term deposits with other banks during the month.
The interest was net of 20% final income tax. Gross Interest 10,000,000
Final Tax 2,000,000 20%
Gross receipts (8,000,000 / 80%) 10,000,000 grossed-up since net of final tax Net Interest 8,000,000 80%
Multiply by: 7%
Gross receipt tax 700,000 8,000,000 / 80%

Gross x % tax
 NET TRADING

Illustration 1:
A bank had the following income respectively in April 2016 and May 2016:
April 2016 May 2016 Same year
Interest income from short-term loans 100,000 100,000 5%
Rentals 50,000 50,000 7%
Net trading (loss) gain - 10,000 20,000 7%
NTL NTG

The percentage tax shall be computed as follows:

NTG x 7%
For month of April: NTL Same year Offset to a NTG
Different year Disregard, you cannot carry over
Gross receipt tax on interest -
short term (100,000 x 5%) 5,000
Gross receipt tax on rent (50,000 x 7%) 3,500
Net trading loss - * net is loss is not deductible, it is carried over in
Gross receipt tax 8,500 the same year. (offset to trading gain)

For the month of May:

Gross receipt tax on interest -
short term (100,000 x 5%) 5,000
Gross receipt tax on rent (50,000 x 7%) 3,500
Net trading gain (20,000-10,000) x 7% 700 * cumulative net gain to date
Gross receipt tax 9,200

April 2016 -10,000

May 2016 20,000
Illustration 2: Cumulative 10,000 NTG
A bank had the following data:
December 2020 January 2021 different year
Net trading gains (loss) - 10,000 20,000 7%

Gross receipt tax:

December 2020 Nil
January 2021 1,400 (20,000 x 7%)
Note: The net trading loss in 2015 is not deductible in 2016.
 LEASES
Illustration 1: The effective interest method for finance lease
HIM Finance Corporation imports machineries from abroad and sells them under a deferred financing scheme.
On February 1, 2019, it sold a machine with an acquisition cost of 257,710 for 300,000 payable
in monthly installment of 100,000 starting March 1, 2019.
The loan earns 8% effective interest.

Payable 300,000 ST - 5% 300,000 / 100,000 = 3 months

Asset Price 257,710 LT - 1%
Interest 42,290

(CV x ER 8%)
Date Beg Bal Int. Income Collection Principal Reduction End Bal
Feb 1, 2019 257,710 257,710 PV
Mar 1, 2019 257,710 20,617 100,000 79,383 178,327
Apr 1, 2019 178,327 14,266 100,000 85,734 92,593
May 1, 2019 92,593 7,407 100,000 92,593 0
42,290

Illustration 2: Operating Lease

Itogon Industrial Bank foreclosed a property in March.
It leased the property to a commercial lessee for a period of 10 years.
The lessee pays 50,000 monthly rental on the property.

Answer:
The 50,000 monthly rental shall be included in the monthly gross receipts for purposes of the gross receipt tax.
This 50,000 monthly rental is purely an income.

Bank & Non-bank w/ QBF Rental Income - 7%

Non-bank w/o QBF Rental Income - 5%

PRE-TERMINATION
Illustration
On January 1, 2015, Pinoy Bank loaned 1,000,000 to a client payable within 10 years. (LT - 1%)
The loan pays 10% interest payable every December 31 with the first interest payment due December 31, 2015. (Interest Income)
Legend:
On June 30, 2021, the client pre-terminated the loan by repaying the principal in full. (preterminated at 6.5 years) ST 5%
LT 1%
The following are the interest income and the gross receipt taxes paid since the origination of the loan:

Remaining
Year Interest Tax rate Amount following the original due date
maturity
2015 9 years 100,000 1% 1,000 LT
2016 8 years 100,000 1% 1,000 LT
2017 7 years 100,000 1% 1,000 LT
2018 6 years 100,000 1% 1,000 LT
2019 5 years 100,000 5% 5,000 ST
2020 4 years 100,000 5% 5,000 ST
Total: 14,000

Upon pre-termination in June 30, 2021, the loan shall be reclassified.

The remaining maturities of the loan shall be re-counted up to the date of pre-termination.
The correct gross receipt tax shall be recomputed and adjustment shall be made:

Remaining
Year Interest Tax rate Amount due date as if June 30, 2021
maturity
2015 5.5 years 100,000 1% 1,000 LT
2016 4.5 years 100,000 5% 5,000 ST
2017 3.5 years 100,000 5% 5,000 ST
2018 2.5 years 100,000 5% 5,000 ST
2019 1.5 years 100,000 5% 5,000 ST
2020 < 1 year 100,000 5% 5,000 ST
2021 none 50,000 5% 2,500 ST
Total gross receipt tax 28,500
Less: Gross receipt tax previously reported and paid 14,000
Gross receipt tax due as recomputed 14,500
 FLIGHTS
Illustration:

The Philippine operations of Malaysian Airlines, a foreign air-carrier

reported the following gross receipts for the month of April 2020:

(exempt - foreign consumption)

Incoming Outgoing Total
Transport of passengers 24,000,000 36,000,000 60,000,000 Exempt - Chapter 4
Transport of baggage 8,000,000 11,000,000 19,000,000 3% OPT - Chapter 5
Total 32,000,000 47,000,000 79,000,000

20% of the outgoing flight was billed abroad while 40% of the incoming freight
was billed in the Philippines. (irrelevant - the place of billing is ignored)

The percentage tax shall be:

Gross Philippine Billings 11,000,000
Multiply by: 3%
Percentage tax 330,000

Guide: International Operations

Types of carriers Domestic Operation Outgoing Incoming
Domestic carriers 12% VAT 0% VAT Exempt
International carriers
Passengers N/A Exempt Exempt
Goods, mails or cargoes N/A 3% OPT Exempt
 COMMON CARRIERS
Illustration 1
Cendong is an operator of five jeepneys and two buses.
The monthly receipts of his vehicles were summarized below:

(Land - OPT) (VAT)

Passengers Cargoes Total
Tricycle 20,000 - 20,000 Mere subsistence
Jeepneys 150,000 10,000 160,000
Buses 200,000 40,000 240,000
Total 370,000 50,000 420,000

1) Assuming Cendong is a VAT registered business, his monthly

percentage tax due shall be:

Gross receipt 350,000

Multiply by: 3%
Percentage tax due 10,500

Note:
* 50,000 from cargoes are subject to VAT
* 20,000 is subject to local contractors' tax

Assuming Cendong is a non-VAT registered, his percentage tax due shall be:

(Land - OPT) (General PT)

Quarterly Monthly
Passengers Cargoes Total Jeepney for hire:
Tricycle 20,000 - 20,000 Manila and other cities 2,400 800
Jeepneys 150,000 10,000 160,000 Provincial 1,200 400
Buses 200,000 40,000 240,000 Public Utility Bus:
Total 370,000 50,000 420,000 Not exceeding passengers 3,600 1,200
Exceeding 30 but not 50 6,000 2,000
Exceeding 50 passengers 7,200 2,400
Gross receipt 400,000 Taxis:
Multiply by: 3% Manila and other cities 3,600 1,200
Percentage tax due 12,000 10,500 SPT Provincial 2,400 800
Car for hire:
1,500 GPT With chauffeur 3,000 1,000
Without chauffeur 1,800 600
Illustration 2
Mang Bentong is an operator of a taxi and a car for hire in Cebu City.
The taxi reported gross receipts of 26,000 in the month.
The car for hire was indefinitely garaged for repair when its chauffeur bumped it on a bus.
The car registered only 600 receipts in the month.

The gross percentage tax shall be computed as:

Actual Minimum Taxable
Taxi 26,000 1,200 26,000
Car for hire 600 1,000 1,000 * minimum presumptive
Gross receipt 27,000
Multiply by: 3%
Percentage tax due 810
 AMUSEMENTS
Illustration 1: Places of Exhibitions

North Dome, Inc. operates a coliseum which caters to various athletic and artistic competitions or events.
During the quarter, North Dome, Inc. reported receipts from the following events:

Professional non-titled boxing bouts 200,000 10% Places of boxing exhibitions 10%
Philippine Championship boxing bouts 300,000 10% Places of professional basketball games 15%
Professional basketball games 400,000 15% Cockpits, cabarets, night or day clubs 18%
Amateur basketball games 500,000 Jai-alai and race tracks 30%
Concert of various musical artists 400,000
Total receipts 1,800,000

The quarterly percentage taxes shall be computed as follows:

Professional non-titled boxing bouts 200,000
Philippine Championship boxing bouts 300,000
Total 500,000
% tax rate 10% 50,000

Professional basketball games 400,000

% tax rate 15% 60,000
Total amusement tax 110,000

Illustration 2: Cabaret
Jake is an operator of a disco (cabaret) and bowling alleys.
During a particular quarter, it reported the following:

(18% PT) (Vatable)

Cabaret Bowling alleys
Gate receipts 200,000 200,000 vatable
Sales of foods and beverages 800,000 150,000 vatable

The quarterly percentage tax shall be comouted as follows:

Gross receipts - cabaret 200,000

Sale of food items 800,000
Total receipts from cabaret business 1,000,000
% tax rate 18%
Amusement tax 180,000

Illustration 3: Hotel Disco

La Venice Hotel, Inc. operates a hotel with a disco and restaurant.
The following were its sales and receipts during a particular quarter:

Room rentals 2,000,000 Vatable

Parking rentals 100,000 Vatable
Sales from hotel restaurant 1,200,000 Vatable
Sale of foods and beverages from disco 1,000,000 18% PT
Gate receipts from disco 200,000 18% PT

The quarterly percentage tax will be computed as follows:

Sale of foods and beverages from disco 1,000,000

Gate receipts from disco 200,000
Total amusemnt receipts 1,200,000
% tax rate 18%
Amusement tax 216,000

Illustration 4: Cockpit
Pegasus Sports Complex, a cockpit operated Mr. Ken Chi, had the
following receipts during the quarter:

Gate receipts 200,000 18%

Plasada (10% tongs on winnings on every sultada) 800,000 18%
Sales of foods and drinks (restaurant operated by pegasus) 400,000 18%
Rent income 50,000 18%
Total receipts 1,450,000

Total percentage tax due is:

Total receipts 1,450,000
% tax rate 18%
Amusement tax 261,000

Illustration 5:
Assume that the restaurant in Illustration 4 is operated by Mrs. Tinola Kasador, a non-VAT taxpayer.

Gate receipts 200,000 18% 36,000

Plasada (10% tongs on winnings on every sultada) 800,000 18% 144,000
Sales of foods and drinks (restaurant operated by Mrs. Tinola) 400,000 3% 12,000 GPT
Rent income 50,000 18% 9,000
Total receipts 1,450,000 201,000
amusement tax

GPT VAT, 3%
SPT BICAPFLOW
 STT
Illustration:
Orion Securities effected the sale of the following stocks during a trading day:

Type of Stocks Owner Selling Price Cost

Through the trading facilities of PSE:
Preferred stocks Client 3,000,000 2,900,000 STT
Common stocks Client 2,800,000 3,000,000 STT
Stock options Client 400,000 450,000 STT
Common stocks Orion Securities 4,000,000 3,000,000 Own stocks inventory

Directly to buyer:
Common stocks Client 800,000 500,000 15% CGT
Preferred stocks Orion Securities 2,000,000 2,100,000 15% CGT

Percentage tax computation:

Type of Stocks Owner Selling Price
Preferred stocks Client 3,000,000
Common stocks Client 2,800,000
Stock options Client 400,000
Total selling price of stocks 6,200,000
Multiply by 60% x 1% 37,200 Stock transaction tax

Rules on Sale or Disposal of Stocks:

Through PSE
Non-dealer STT 60% of 1% STT on the selling price
Dealer RIT RIT on the gain on sale

Directly to Buyer
Non-dealer CGT 15% CGT
Dealer RIT RIT on the gain on sale

IPO
Illustration 1:
Queen Corporation is owned by the following shareholders: Proportion of shares sold, barterd or exchanged Tax rate
Up to 25% 4%
Mr. Almanac 25,000 shares Over 25% but not over 33 1/3% 2%
Mr. Boar 20,000 shares (for sale 15,000 shares during IPO) - secondary Over 33 1/3% 1%
Mrs. Cat 40,000 shares
Ms. Donkey 10,000 shares Sales made by Before IPO During IPO After IPO
Mr. Eagle 5,000 shares Corporate issuer No tax IPO as primary offer No tax
Total shares 100,000 shares Shareholder investor CGT IPO as secondary offer Stock transaction tax

Queen Corporation conducted an IPO involving 40,000 unissued shares to be sold to the public at P5 per share. Primary
Mr Boar decided to sell 15,000 of his shares to the public during the IPO at P5 per share. Secondary

Step 1: Proportion of IPO shares

a. Primary offer percentage = 40,000 / (100,000 + 40,000) = 28.75% equivalent to 2% IPO tax Formula: Primary / Outstanding after IPO

b. Secondary offer percentage = 15,000 / 100,000 = 15% equivalent to 4% IPO tax Formula: Secondary / Outstanding before IPO

The IPO tax shall be:

Primary offering (40,000 shares x P5 x 2%) 4,000 to be paid by Queen Corporation
Secondary offering (15,000 shares x P5 x 4%) 3,000 to be paid by Mr. Boar, the selling shareholder

Illustration 2:
Assuming further that the IPO, Queen Corporation conducted another block sale of 50,000 of its shares for P5 per share. 1st - IPO tax - 4% / 2% / 1%
Ms. Donkey also sold her 10,000 shares after the IPO per P6 per share. 2nd - STT - 60% of 1%

Answer:
The subsequent sale by Queen Corporation after the IPO is called a "follow through offering."
This is no longer subject to the IPO tax since the tax applies only to the initial listing of closely held corporation.

The sale of Ms. Donkey involving 10,000 shares after the listing of Queen Corporation
in the PSE is subject to the usual 60% of 1% stock transaction tax.
STT = 10,000 x P6 x 60% x 1% = 360
 FRANCHISES
Illustration 1: Radio Franchise Grantees
Radio Filipino exceeded the P10,000,000 annual gross receipts last year due to (Required to register)
increase in ads income brought about by the national election.
Radio Filipino is only expected to reach its P6,000,000 average annual receipt this year.

Answer:
Radio Filipino should be subjected to VAT on all receipts starting this year.
Once the P10M threshold is exceeded, TV or radio broadcasting companies will be perpetually covered.
If receipts > 10M 12% VAT
If receipts < 10M 3% PT

Illustration 2: Gas Utilities

City Gas Corporation, a gas utility, consistently had gross sales exceeding P10,000,000 every year.
During the month, it had a P12,000,000 sales.

Franchise tax to be paid:

Sales 12,000,000
tax rate 2%
Franchise tax payable 240,000

Illustration 3: Water Utilities

Baguio Water District reported a P12,000,000 receipt in a month
from water bills of Baguio City residents.

Franchise tax to be paid:

Sales 12,000,000
tax rate 2%
Franchise tax payable 240,000

Note:
* Local water districts is subject to 2% franchise tax not VAT.
* Franchise tax does not apply to water refilling station or purification stations selling bottled mineral water,
this are vatable entities on sale of water.

INSURANCE
Illustration 1:
Absolute Insurance underwrites both life and non-life insurance policies
The following were the premiums collected in a month:

Life Policies Non - life

Cash Collections 2,000,000 2% PT 1,500,000 (vatable)
Checks 400,000 2% PT 600,000 (vatable)
Promissory note 500,000 2% PT 400,000 (not included)
Total 2,900,000 2,500,000

The percentage tax will be computed as follows:

Cash Collections 2,000,000
Checks 400,000
Promissory note 500,000
Total 2,900,000
Percentage tax rate 2%
Premiums tax 58,000

Note: Promissory note is exceptionally included for life insurance policy premiums in computation for the premiums tax.
Primossory note is not included if non-life insurance policies, hence, not subject to VAT.
 FOREIGN INS
Illustration 1:
Mang Pandoy insured his buildings with a foreign insurer.
He paid P150,000 premiums during the month.

Answer:
Mang Pandoy shall report the transaction to the Insurance Commission and the BIR
and pay P7,500 premiums tax. (150,000 x 5%) to the BIR.
This transaciton shall be subject to withholding VAT, but the same is specifically subject to percentage tax.

Without Agent 5%
With Agent 4%

Legend:
Domestic Insurance 2%
Foreign Insurance With Agent 4%
Without Agent 5%
Reinsurance 0%

OVERSEAS

Illustration 1
Quick Telecommunications has the following receipts during the quarter:

Call Origin Call Destination Amount Collected

Philippines Philippines 20,000,000 12% VAT
Abroad Philippines 8,000,000 0% VAT
Philippines Abroad 5,000,000 10% PT

Quarterly tax:
Gross receipts from outgoing calls 5,000,000
Rate 10%
Percentage tax due 500,000
WINNINGS
 Winnings in horse race or jai-alai, in general 10%
Winnings from double, forecast/ quinella and trifecta bets 4%
Owners of winning race horses 10%

Gamby Hippodrome operates a race track.

It had the following dividends for winning tickets during an event:

Total winnings on straight bets

80,000 10%
(cost of winning tickets, 10,000)
Total winnings on daily double, forecast and quinella
40,000 4%
(cost of winning tickets, 600)
A winner of trifecta (combination bets)
30,000 4%
(cost of winning tickets, 200)
Prize of the owner winning horses 100,000 10%
Total prizes, winnings or dividends 250,000

The following tax must have been withheld from these winnings before their
release to the winners:

Total winnings on daily double, forecast and quinella 39,400

(40,000 - 600)
A winner of trifecta (combination bets)
(30,000 - 200) 29,800
Total: 69,200 4% 2,768

Prize of the owner winning horses 100,000

Total winnings on straight bets
(80,000 - 10,000) 70,000
Total: 170,000 10% 17,000
Total percentage tax on winnings 19,768

The net pay-out shall be :

Total winnings 250,000
Less:
Percentage tax withheld 19,768
Net pay-out to winners 230,232

Illustration 2
Mrs. Petra hit the trifecta with a pay-out of 58,000 from her 100 ticket.
How much will she receive from her winnings?

58,000 - (58,000 - 100) x 4% = 55, 684 Gross 58,000 100%

PT 2,316 4% (58,000 -100 x 4%)
Net 55,684 96%

Illustration 3 Operator of jai-alai

On a particular event, an operator of jai-alai reported a total receipts of P1,000,000 from jai-alai bets.
There was a total P650,000 total winnings of various picks made by bettors.
The cost of winning picks was P50,000.

Tha jai-alai operator must withhold the following tax on the winnings:

Jai-alai winnings (650,000 - 50,000) 600,000

rate 10%
Percentage tax on winnings 60,000
 GOCCS
Illustration 1
During the quarter, Mr. Avila, a non-VAT taxpayer, sold various Government
office supplies to a government agency for P200,000 and to Private
private customers for P80,000.

The government agency shall pay Mr. Avila the following proceeds
net of the 3% percentage tax.

Sales 200,000
3% final withholding tax 6,000 FWT
Net proceeds to be released to Mr. Avila 194,000

The percentage tax payable for the quarter shall be computed as:
Sales subject to government withholding
(194,000 / 97%) 200,000
Sales to private customers 80,000
Gross sales 280,000
Multiply by: 3%
Percentage tax due: 8,400
Less: Tax credit (final withholding tax) 6,000 Withholding tax - BIR 2307
Percentage tax payable: 2,400

Illustration 2
Goodyear Corporation, a non-VAT taxpayer paying the 3% percentage tax,
had the following receipts in the quarter:

Taxable sales to the government entities 150,000 3% 4,500 145,500

Taxable sales to private entities 60,000
Exempt sales 180,000 x
Total sales: 390,000

The total creditable percentage tax withheld at source was P4,500.

The percentage tax payable for the month shall be:

Taxable sales to the government entities 150,000

Taxable sales to private entities 60,000
Total taxable sales 210,000
Multiply by: 3%
Percentage tax due 6,300
Less withheld at source 4,500
Percentage tax payable 1,800

OTHERS
Illustration 1:
Diak Restaurant had the annual receipts of P1.5M.
During the month, Diak Restaurant generated P200,000 gross receipts.

Restaurant operation is not among those services or transactions specifically subject to percentage tax.
The gross receipts are vatable.
But since Diak, did not exceed the VAT threshold 3M, Diak shall pay the 3% general percentage tax.

Illustration 2:
Mr. Black Jack is an operator of 40 taxis with annual receipts exceeding P3M.
and a store with annual sales not exceeding P3M.
The following are the sales and receipts during the month:
Legend:
Receipts from taxi units 2,000,000 3% common carriers tax SPT SPT VAT allowed
Sales of fruits 100,000 exempt SPT GPT allowed
Sales of other merchandise 180,000 3% GPT GPT VAT not allowed
Total revenue 2,280,000